JUNEAU — Nothing will be off the table as the state cuts spending to reduce projected multibillion-dollar budget deficits, Gov. Bill Walker said.
In an interview Monday, on the eve of the new legislative session, Walker said he wants to look at the budget over several years. He said he has in mind a target for cuts over the next three years but isn’t ready to disclose it.
Even taking a longer view, he said he doesn’t expect state leaders to just dabble around the edges of the fiscal situation this session.
Departments are looking for efficiencies and ways they can better work together, Walker said. But he wasn’t sure what kind of reductions that might result in and said it certainly wouldn’t close the gaping budget hole.
Walker, who took office Dec. 1, is expected to release more details on his budget plans this week. He submitted his predecessor’s operating budget and a bare-bones capital budget that generally included projects with federal match money as placeholders to meet a Dec. 15 deadline for submitting budget plans to the Legislature. He has until Feb. 18 to submit revised budgets but said he wants to get them to lawmakers as soon as possible.
“What we have said is, there really isn’t any area that is protected from adjustment,” Walker said.
The state is facing a $3.5 billion budget deficit this year and a potentially larger deficit next year amid the fall in oil prices, according to a new analysis by the Legislative Finance Division. Alaska relies heavily on oil revenue to fund the cost of government, and the state is expected to use savings to help it get by.
The analysis shows that the statutory budget reserve fund, which is easier for lawmakers to draw from than other funds, is expected to be dry by the end of this fiscal year. The constitutional budget reserve, which requires a three-fourths vote in the House and Senate to tap, is projected to have $9.3 billion at the end of the year. The state also has billions in a Permanent Fund earnings reserve account.
Increases in statewide costs, such as pension system payments, debt service, and oil and gas production tax credits, account for a large portion of the increases in the operating budget over the last nine years, the analysis says. Other major budget drivers are Medicaid and education.
Walker said he thinks the state will save money if it expands Medicaid coverage, as he hopes to do.
The governor said he doesn’t want to get too tangled in the debate over possible new revenue this year.
“I think everybody’s in agreement, I think, that we need to make these budget adjustments first,” he said.
House Majority Leader Charisse Millett, R-Anchorage, said the focus of her GOP-led caucus will be on cutting the budget where possible and making tough decisions, with input from Alaskans.