State budget challenge faces Alaska's new Governor
December 15, 2014
“I’m confident that together, we Alaskans can manage our way through it,” Governor Walker said. “We need to develop a smart plan so that our children and grandchildren can have stability 30 years from now. My team and I have rolled up our sleeves to work on the budget in almost daily meetings. We want a plan in place that will not just get us over the hump now, but provide a strong future for decades to come.” The Walker administration at 1 p.m. today submitted the previous Parnell administration’s work-in-progress operating budget without endorsement. The Walker administration did, however, strip down the capital budget to $106 million, which only includes line items that have federal or other match-funding, as well as the legally obligated Kivalina School planning funds. Governor Walker’s team will spend the next few weeks reviewing all capital projects and operating budget before submitting its final revisions no later than February 18. The budget dialogues will include legislators, community leaders and constituent groups. “Any growth from that $106 million capital budget will be done with the utmost scrutiny, and with an eye toward items that reduce future obligations,” said Pat Pitney, Director of Office of Management and Budget. Alaska’s state government is almost entirely funded from oil taxes. Alaska’s oil production pays for our roads, schools and buildings. But oil prices are at a five-year low and expected to remain low for the near term, which means Alaska is facing a significant budget gap for FY2015 (July 1, 2014 – June 31, 2015). The FY2015 budget was set last year at $6.1 billion. Assuming the average oil price stays at $76 per barrel, the state is expected to get $2.6 billion in revenue, leaving a gap of $3.5 billion. Even after cutting from the operating and capital budgets, the state will face a similar gap for FY2016 (July 1, 2015 – June 31, 2016). The state does have savings in the statutory and constitutional budget reserves from previous times of high oil prices that can bridge the gap. However, Governor Walker and Lieutenant Governor Mallott urged Alaskans to pull together to prioritize our spending, identify inefficiencies and cut waste in order to minimize dipping into savings. The administration said it wants the public to weigh in on the process. “We invite all Alaskans to give us their thoughts,” said Lieutenant Governor Mallott. “Together, we need to reinvent state government and rationalize our fiscal policy. Every Alaskan will have an idea on how to deal with this situation. There is no smarter group than Alaskans to deal with Alaskan issues. ” In the coming weeks, the administration will set up a system through which Alaskans can share their ideas. Again, a Walker administration endorsed FY2016 operating and capital budget will be released prior to the February 18, 2015 amended budget deadline.
Edited by Mary Kauffman, SitNews
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