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ANCHORAGE—Governor Bill Walker’s fiscal year 2018 (July 1, 2017 – June 30, 2018) budget reduces state spending while supporting vital services and protecting the permanent fund dividend. The proposed $4.2 billion unrestricted general fund (UGF) operating budget is 23 percent lower than when Governor Walker took office two years ago. To lead by example, Governor Walker will take a one-third pay cut.
“We have reduced state spending by more than $1.7 billion, and will continue to seek efficiencies and contain costs,” Governor Walker said. “We have closed dozens of state facilities across Alaska, impacting services Alaskans have grown accustomed to receiving. But Alaskans are increasingly looking for budget stability to protect Alaska’s economy. We can’t cut our way to prosperity. Since 2013, we have cut state spending by 44 percent. To fund services Alaskans rely on, it’s critical to discuss new revenue. We look forward to working with the legislature to pass a sustainable fiscal plan during the upcoming session.”
The Walker-Mallott administration’s three-part fiscal plan for this year’s budget is to 1) continue cutting the size of government; 2) re-plumb the state’s wealth through sustainable use of the Permanent Fund Earnings Reserve to ensure the dividend program continues while providing funding for essential state services; and 3) generate new revenue through broad-based taxes.
There are currently 2,500 fewer state employees than two years ago, and 400 more state jobs are expected to be eliminated by December 2017.
“When it comes to reducing the number of employees on the state payroll, we tried to minimize harm to the overall economy as well as give staff reasonable notice,” said Office of Management and Budget Director Pat Pitney. “Any time an Alaskan loses his or her job, it hurts Alaskan families and the ripple effect hurts Alaskan businesses.”
“While my pay cut will certainly not balance the state’s budget, I believe it is important to lead by example,” Governor Walker said. “These are tough times for many Alaskans and fixing the state’s deficit requires that we all make sacrifices and pull together.”
Governor Walker also halted all state spending on the Juneau Access Project.
Leveraging the State’s Wealth: Permanent Fund Protection Act
Governor Walker re- introduced the version of the Permanent Fund Protection Act (PFPA) that passed the Senate earlier this year. The bill creates a formula for a sustainable draw from the Permanent Fund’s Earnings Reserve Account (ERA) to provide consistent funding for government services, such as public safety, education and transportation. The PFPA also better ensures a dividend of at least $1,000 for 2017, and maintains dividends for about the same amount for years to come.
Governor Walker also proposed a motor fuels tax which, if passed by the legislature, would be the first significant statewide increase Alaskans have paid since 1970. The revenue generated would cover transportation costs, like road maintenance and snow removal.
Even with the improved oil price forecast, the Walker-Mallott administration’s FY2018 budget proposal leaves an $890 million gap between spending and revenue. Governor Walker said he looks forward to working with members of the legislature to determine the most responsible means to sustainably balance the budget and close the gap this year. The revenue measures the Governor introduced earlier this year can be re-introduced following discussions with the legislature.
Link to OMB website: https://www.omb.alaska.gov/html/budget-report/fy2018-budget/proposed.html
Source:State of Alaska