As most Alaskans know, a sharp drop in the price of oil over the last year-and-a-half blew a gaping hole in the state’s budget. This year, revenues are expected to cover just 40 percent of our costs.
When your family’s income suddenly drops by more than half, you cut spending. That’s exactly what we did. Working with the Legislature, we cut state general fund spending by 19 percent in a single year.
It’s not easy, but I believe every challenge is an opportunity. This is an opportunity to evaluate all the services government provides and eliminate any that are redundant or unnecessary; identify partners to help provide some services; and find ways to provide essential services more efficiently.
My team is working hard to do these things. Several departments — Labor & Workforce Development, Environmental Conservation, and Law — are consolidating divisions. We are working with legislators and the nonprofit Pew Foundation on a “Smart Justice” project to reduce crime and save money. We are teaming with local communities, nonprofits, federal agencies and others to share the load.
We are also working across departments to do things more efficiently. We’re looking at everything — the way we purchase supplies, plane tickets, and software, for example. We’re getting smarter about technology — eliminating paper checks for child support, and doing more videoconferencing and less travel.
Nothing is sacred except Alaska’s best interest.
Despite our efforts to minimize the pain of budget cuts, it’s impossible to cut $1 billion in a single year without some impacts to public services. Many of you have already noticed reduced snow clearing and pared-back ferry schedules. And as we continue to cut the budget, you will see other impacts.
But the reality is this: we could lay off every state employee paid with state general funds — road crews, correctional officers, troopers — and it would still not close the budget gap.
Spending cuts alone will simply not get us there. And cutting too much too fast can do great harm to our economy.
When oil prices fell in the 1980s, deep state spending cuts triggered a devastating recession and real estate crash. Thousands of Alaskans lost their homes, their jobs, their shirts. I don’t want to see that happen again.
And there is no need for it to happen.
Alaska has great strengths. We have built prodigious savings. We have vast untapped natural resources. The U.S. Chamber of Commerce Foundation recently ranked Alaska second in the nation for positive business climate. Our individual tax burden is the lowest in the nation.
We have the tools to solve our budget challenge and create a bright future for Alaska. We just need the wisdom and the will to act.
On Wednesday, I shared my administration’s proposal for bringing our budget into balance. It might not make me the most popular governor, but I didn’t run to be popular. I ran because I love Alaska and am committed to doing the best by our state and our people.
Donna and I are blessed with four grandchildren. When I come to work each day, I am motivated by appreciation for all this state has given me and my family — and my fervent wish that my grandchildren and yours will have the same opportunities in this beautiful, God-given state we call home.
Bill Walker is governor of Alaska.