(SitNews) Juneau, Alaska - With the extensive drop in market oil prices contributing to a large budget deficit for the state, Governor Bill Walker (I-Alaska) issued an administrative order Friday to direct all state agencies to stop non-obligated spending on six projects.

Taking immediate action to ensure Alaska remains in a healthy fiscal position, state agencies were ordered by the Governor to halt to the maximum extent possible discretionary expenditures for the following six projects: Ambler Road, Juneau Access Road, Susitna-Watana Dam, Kodiak Launch Complex, Knik Arm Crossing and Alaska Stand Alone Pipeline Project.

“Our budget deficit grows deeper as oil prices go lower,” Governor Walker said. “These are large projects that require significantly more state investment to complete. I’ve requested that state agencies not enter into any new contracts until we’ve had a chance to look at the various projects.”

Walker and his team began working on his administrative order shortly after cutting the costliest projects out of the capital budget giving agency heads direction on exactly how to proceed with their respective projects.

Governor Walker requested the Department of Transportation and Public Facilities, Department of Natural Resources, Alaska Energy Authority, Alaska Aerospace Corporation, Knik Arm Bridge and Toll Authority and Alaska Gasline Development Corporation submit by January 5th to the Office of Management and Budget a report detailing operating costs so far, all funding obligations, as well as the potential effects of delaying, suspending or terminating contracts.

“This is a way for us to not commit new money into projects that may not be continued during this fiscally challenging time,” Governor Walker said.

On December 23rd, responding to the urgency to reduce state spending in light of falling oil prices, the Senate and House Joint Leadership delivered a letter to Governor Walker requesting immediate budget implementations, including travel reductions and a freeze on hiring new state employees. The letter also requests that amendments for the FY 2016 operating budget be delivered as close to the start of session as possible, rather than waiting until the statutory deadline of February 18.

The letter was signed by incoming Senate President Kevin Meyer (R-Anchorage), Speaker of the House Mike Chenault (R-Nikiski), as well the incoming Senate Finance Co-Chairs Senators Anna MacKinnon (R-Eagle River/East Anchorage) and Pete Kelly (R-Fairbanks) and House Finance Co-Chairs Representatives Steve Thompson (R-Fairbanks) and Mark Neuman (R-Big Lake).

"For the past two years, we have been focused on stabilizing and then reducing the budget," said Senator Meyer. "With the recent drop in oil prices and the fact that 90 percent of the state's discretionary budget is funded by oil production, the need to cut spending has become even more urgent. That's why we are requesting immediate action from Governor Walker on certain issues and asking for him to expedite his submission of the budgets to the Legislature."

The letter suggested the following actions:

• Implement immediate hiring freeze including all department vacancies
  Limit agency travel to essential administrative duties or emergency response
• Request departments produce FY 2015 accounting report for first six months of the fiscal year to see which agencies are working within the budget structure, which agencies are in danger of exceeding budget and thus requiring a supplemental budget, and which agencies have far greater resources available to them than necessary to carry out agency mission
• Identify targeted reductions in discretionary agency operations, while preserving funding for essential services and all ongoing gas line and other statewide projects critical to education, energy security, infrastructure and the public safety of Alaskans
• Review capital appropriations authorized more than five fiscal years ago and make recommendations to re-appropriate funds for projects that have been delayed, are not moving forward, or that should not move forward in this fiscal environment because of the phased nature or cost of the project.

The letter continued: "Further, we understand you have suspended work on the statutorily required ten-year fiscal plans, which demonstrate how you intend to balance budgets for each of the next ten years. Given the current fiscal
situation, we respectfully request that these fiscal plans are completed by the beginning of the legislative session to be used in the fiscal policy and budget discussions during the upcoming legislative session."

"We appreciate that he's still settling in, assembling his cabinet and learning the scope of his office," said Speaker Chenault. "At the same time, under today's fiscal situation, we intend to hit the ground running once the gavel falls in Juneau. We only have 90 days to enact a budget; our Finance Committee Co-Chairs want departments before their subcommittees as soon as possible, ready to begin the discussions and negotiations needed to bring down operating costs."

Edited by Mary Kauffman, SitNews

On the Web:

Administrative Order No. 271
http://gov.alaska.gov/Walker_media/documents/20141226-administrative-order-271.pdf

December 23, 2014 Walker Budget Letter
https://www.alaskasenate.org/2014/files/7714/1961/
7387/12262014_Walker_Budget_Letter.pdf

Sources of News: 

Office of the Governor
www.gov.state.ak.us

Alaska Senate
www.alaskasenate.org

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