Gov. Bill Walker is in Juneau preparing for tomorrow’s start to the legislative session. Regardless of other considerations, the big challenge will be finding common ground with lawmakers over how to fix the state’s large and growing budget deficit.
In a conversation this morning, Walker says the longer the state waits the more challenging solving the problem becomes:
WALKER: Some believe that the price of oil will bounce up again… and that will save the day. I’m not one of those. I believe those who say we’re going to be at this price of oil for some time going forward. With sanctions coming off of Iran, that’ll release another 500,000 barrels of oil a day into the world oil market. Waiting will cost us significantly. The longer we wait the more we spend drawing down our savings. It begins to reach a point where some of our options go away as how we can resolve this problem once we’ve spent some of our savings.
TOWNSEND: Republican lawmakers have talked about the needs to make deeper cuts. Are there any state services or state programs that you think should really be off the table?
WALKER: I think there will be discussion about additional cuts. What I hope doesn’t happen is that while we’re wrestling over $100 million here, $100 million there, we still have a $3.5 billion deficit. So we need to make sure we’re putting the appropriate emphasis on the solution. Cuts will be part of that. Reductions will certainly be part of that. But will (cuts) balance the budget? Absolutely not. And as we know, if we laid off every state employee, it would not put much of a dent in the deficit. So it’s much bigger than that.
TOWNSEND: But are there programs or certain services that you think just shouldn’t be part of the mix for cuts?
WALKER: I think we’ll see pretty much everything on the table this session. As far as both cuts and what’s on the income side.
TOWNSEND: Governor, you campaigned as a bipartisan, or nonpartisan, candidate. During your first year in office you frustrated both Democratic and Republican lawmakers. Are you going to approach this session any differently in terms of how you relate to lawmakers?
WALKER: Well… differently. I think things are different based upon the circumstances that we have. We’re in a very different set of circumstances than before. I think last year we were headed this way but nobody really knew if it was going to get as bad as it is now. And now we’re here. I don’t think there’s any question about that. I think being a nonpartisan governor is going to be an advantage to me because it’s not like I’m picking sides based on my party affiliation… trying to draw people over to my side of the line so to speak. I don’t have any lines… and I don’t have a party. So I think in some respects it will be easier, for me, in this session to deal with some of these issues. Because really they’re not partisan issues. They’re Alaskan issues.
TOWNSEND: Your plan includes a lot of new taxes on various industries — an increase in the minimum oil tax, the first state income tax in almost 36 years. Many lawmakers are resistant to taxes. How do you plan to get past that resistance?
WALKER: Well I’m resistant to taxes. I don’t like taxes either! But what I dislike more than taxes is drawing down $400,000 an hour… is what our deficit is. That we need to be aware of. You know, we need to remember that right now Alaska has the lowest personal taxes in the nation — and we pay out a dividend. If this (budget) plan is adopted in its entirety, we’ll still be the second-lowest on personal taxation in the nation, as well as still having a dividend.
TOWNSEND: A major part of your plan is an overhaul of oil tax credits. You’d raise about a half billion dollars by replacing some existing tax credits with a loan fund and raising the minimum tax. Do you worry about the impact on the oil industry with prices so low?
WALKER: I worry about the impact on Alaska with (oil) prices so low. Our credit program is the most aggressive in the nation, and that was instituted at a time when oil prices were much higher… and we just can’t afford that anymore. That’s one of the programs we just can’t afford. In meeting with all the companies — the independents (and the others) — they all understand that. They would like us to keep paying the credits that we’re paying but we just can’t do that. We’re on track to — just with the credit program — next year was on track to be over a billion dollars in the credit program. That’s… boy… it’s pretty tough to justify when revenues are this low.
Governor Bill Walker speaking from Juneau. Throughout the week we’ll hear from legislative leaders regarding their ideas for balancing the budget.