Walker Announces Budget Vetoes, Warns Of Layoffs

Alaska is heading toward a government shutdown — that’s the message Gov. Bill Walker relayed to state workers, in a letter warning them of budget vetoes and layoff notices. APRN’s Alexandra Gutierrez reports on the continuing gridlock over the state’s finances.

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In a press conference, Walker described the situation as “unprecedented.”

“It’s not where we want to be in any shape or form,” Walker told reporters. “It’s not where we thought we would be.”

Walker announced that he was signing the operating budget that the Legislature sent him, but making large vetoes to it in the process. He said parts of government could shut down as early as July, and that up to 15,000 state workers could receive layoff notices in June. He said much of government would be affected.

“DMV. License renewals. Registration renewals,” Walker listed. “It just goes on. You know, worker’s comp. It’s a long list of impacts.”

Walker’s signed budget pays for the court system and prisons, for the Pioneer homes, and for debt service to maintain the state’s credit rating. But many agencies would see major cuts, education would lose funding, the state’s Medicaid program would only make payouts for six months.

Walker said the cuts were necessary because the Legislature authorized $5 billion in state spending when only $2 billion are readily available. While Alaska has a $10 billion rainy day account, a three-quarter vote is needed to access the funds, and lawmakers have not reached a deal to tap it.

“We have the money,” said Walker. “We just can’t get sufficient votes or the budget to match so they can access the funds that are there. Here we are with a triple-A bond rating, and we’re talking this scenario of a potential shutdown.”

The Republican majorities and Democratic minorities are in a stalemate over education funding and the expansion of Medicaid, and no compromise has been reached on those issues three weeks into a special session. Walker said the amount in dispute comes out to about $100 million, just a fraction of the state’s multi-billion deficit.

“While we are focused on arguing over three percent, we’re not even looking at resolution for the 97 percent of the problem,” said Walker.

Sen. Pete Kelly, who co-chairs of the Senate’s finance committee, said in a phone interview that his caucus does not want to add money to the state’s operating budget, and does not want to incorporate the Democrats’ changes. The Fairbanks Republicans said the minority is responsible for the current gridlock.

“[The budget]’s only not fully funded because the House Democrats wouldn’t vote to get into that savings account,” said Kelly in a phone interview.

While Kelly did not provide specifics on negotiations, he did express optimism that a solution could be reached to avoid a partial government shutdown.

“I don’t think they’ll have to have the layoff notices, because I think this can get fixed fairly quickly,” said Kelly.

Meanwhile, Rep. Les Gara, an Anchorage Democrat, faults Senate Republicans.

“The moment you have people like the Senate President saying he refuses to negotiate, and everything has to be his way, and it has to be a fully Republican budget, it’s really hard to put together a bipartisan deal,” said Gara in a phone interview.

When asked who was responsible for the impasse, Gov. Bill Walker did not name any group but simply said it was the Legislature’s problem to fix.

Lawmakers plan to hold a floor session in Anchorage on Thursday, and will continue budget negotiations there. The special session is scheduled to end on May 27.