For third straight year, Gov. Walker proposes budget drawing from Permanent Fund earnings

Alaska Gov. Bill Walker talks about his budget proposal in Anchorage on Friday as Revenue Commissioner Sheldon Fisher and budget director Pat Pitney look on. The budget for the fiscal year that begins in July 2018 would draw from Permanent Fund earnings. (Photo by Wesley Early/Alaska Public Media)

For the third straight year, Gov. Bill Walker has proposed a budget that would draw money from Alaska Permanent Fund earnings to pay for state government and reduce the permanent fund dividend. But this time, Walker left a nearly half-billion dollar gap to be filled with other savings.

Listen now

Gov. Walker proposed a slightly smaller budget for this fiscal year that begins in July, with the portion of the budget that lawmakers focus on falling from $4.2 billion to $4 billion. Nearly half of the budget — or $1.9 billion — would be paid with Permanent Fund earnings.

But for the first time, administration officials said the earnings draw is necessary because the state’s other piggy bank, the Constitutional Budget Reserve, is running low.

The budget does add funding in one area — $34 million for public safety.

“Alaskans don’t feel safe, you know? They just don’t feel safe with what’s happening with crime,” Walker said. “And so our goal is to improve that and increase their level of safety.”

Walker proposed a permanent fund dividend of $1,216, which is more than the last two years but less than the amount previously set by the state law.

The governor kept a proposal for a 1.5 percent tax on pay from employment. But he limited the tax to the next three years. And he said all of the money would be spent on deferred maintenance on public facilities.

Walker also proposed some changes to how the state sets its budget.

“There’s no question the process is broken that we use in Alaska on budgeting,” he said.

Per diem payments to lawmakers would stop if they don’t pass a budget in the 90-day session set by state law. Lawmakers’ salaries would also be delayed if they miss this deadline, as would the governor’s if the administration misses its Dec. 15 deadline to propose a budget.

“I think we need to give ourselves a pink slip before we give pink slips to other people,” Walker said.

Another change would shift the state to a two-year budget, in which the Legislature would pass two budgets in one year, and then make amendments to the second budget the following year.

And administration officials proposed some accounting changes that they say will make the sources of the money that pay for the budget more transparent.

Walker also proposed paying off the tax credits the state owes oil and gas companies by selling bonds.

The Legislature will begin work on the budget when the new session starts on Jan. 16.