Gov. Walker’s budget vetoes total $1.29B; dividend cut in half

Governor Bill Walker announced vetoes totaling $1.29 billion at a press conference in Anchorage on Wednesday, June 29, 2016. (Screenshot via web stream courtesy Gov. Walker's office)
Governor Bill Walker announced vetoes totaling $1.29 billion at a press conference in Anchorage on Wednesday, June 29, 2016. (Screenshot via web stream courtesy Gov. Walker’s office)

Governor Bill Walker cut Permanent Fund dividends Wednesday to $1,000 per person, about half of the projected amount.

The cut was one of a series of reductions that Walker made to lower the state’s budget by $1.5 billion.

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Walker says he made the changes to reduce the amount of savings the state must spend to cover the budget. And he says he cut dividends to preserve PFDs into the future. The state is on track to exhaust its savings in four years without cuts.

He says he’ll take the blame for reducing PFDs. He expressed hope that this will make it easier for lawmakers to approve his long-term fiscal plan for state government.

“So what I’ve tried to do is take away from them the risk that they may suffer in – at the polls, so that’s off the table,” Walker said. “And any excuses now – it’s just pure politics.”

Walker vetoed $1.29 billion from the budget.

The cuts include a $58 million reduction to schools, including shifting $30 million in bond reimbursement to local schools. The state will delay $430 million in oil and gas tax credits into future years. The University of Alaska will see a $10 million cut.

In addition to the vetoes, Walker delayed $250 million in road and bridge repairs, and he shut down two mega projects: the Knik Arm bridge and the Susitna-Watana dam.

Walker says the state can’t balance its budget only through cuts.

“We’re not cutting our way into prosperity,” Walker said. “We’re using the only tools we have available to us to do all we can to reduce the deficit.”

Walker signed the operating, mental health and capital budgets for the fiscal year that starts Friday.

He also signed a bill that will restructure oil and gas tax credits, but not by as much as he wanted.

Legislators from both parties criticized Walker’s actions.

Fairbanks Republican Rep. Steve Thompson said delaying road construction work will cost a lot of jobs.

Anchorage Democratic Sen. Bill Wielechowski said he’d like to see the legislature override the PFD decision. Three-quarters of the 60 legislators must agree to successfully override any of the vetoes.

“The real losers today are working Alaskans, who are really going to suffer,” Wielechowski said. “A family of four is going to lose over $4,000 from this action. And I think there are better ways to do it. I’m surprised the governor took this action and I’m going to encourage fellow legislators to override this veto. ”

Nikiski Republican House Speaker Mike Chenault said it’s not clear whether there will be enough votes for override Walker’s vetoes in the special legislative session beginning July 11.

“It might have been nicer if early on, at the beginning of session, he would have came in with a smaller budget than what they originally proposed, so, you know, we’ll look at it, determine what’s the right thing to do and try to accomplish that,” Chenault said.

Rachel Waldholz of Alaska’s Energy Desk contributed to this report.

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