During his campaign and throughout his term as governor so far, Gov. Bill Walker has frequently said he wasn’t governing to be re-elected. Last week, he proved it. With a spate of vetoes targeting almost every partisan sacred cow in the Alaska budget — education, oil tax credits, public broadcasting, transportation and even the wildly popular Alaska Permanent Fund dividend — Gov. Walker angered a broad swath of Alaskans. But if he suffers politically for his decision, it has nonetheless been a great service to the state. Not only does the governor’s action close this year’s budget by a substantial fraction, preserving fast-diminishing state savings, it also removes every realistic excuse legislators could have to avoid taking action on revenue measures that will put the state back on an even fiscal keel in future years.
It speaks to Alaskans’ mindset that the primary cause of dissension the governor faced after his vetoes was the approximately 50 percent reduction in the allocation to the annual dividend received by Alaskans. Though the Senate passed a measure that would have made a similar reduction as part of Gov. Walker’s permanent fund earning restructuring plan, Senate Bill 128, legislators in the House backed away from their effort to do so as Democrats demanded more oil tax credit cuts and Republicans wanted more reductions in state spending. In his vetoes, Gov. Walker took all three actions, making good on his promise to legislators that he would take all the blame for unpopular budget moves while letting them take credit for a more sustainable path.
In making the cuts he did, Gov. Walker removed all obstacles to debate of a longer-term fiscal solution for the state. As he has already reduced the dividend to $1,000 per recipient, legislators won’t suffer political fallout for doing so themselves if they pass permanent fund earnings reform. Members of the Republican-led majority caucus can’t make a realistic claim that the budget should receive greater cuts, as the governor cut hundreds of millions of dollars in spending beyond the reductions made in the budget legislators passed. Members of the Democratic minority caucus can’t proclaim not enough has been done to stem tax credit payouts to oil companies, as Gov. Walker has axed more than $400 million of the sum paid to producers this year. To be sure, there will be negative impacts from the governor’s action. While the dividend is free money for Alaskans, losing a portion of it will hurt the budgets of low-income families and those saving for college or fuel bills. Cuts to education and the university will have a negative effect on Alaska students. And some of the transportation projects put on hold, such as the Wendell Avenue bridge replacement, have been needed for years.
But if Alaska is to achieve balance in its budget, there will be accompanying pain as it reduces spending to a level the state can better afford. Gov. Walker has done the heavy lifting for legislators, potentially torpedoing his own prospects for re-election so members of the Legislature will have no worry about the effect of enacting revenue measures on their own chances in November.
The governor has had the courage to take the hit. Now it’s legislators’ turn to step up to the plate and deliver the revenue measures that will put the state on a course toward a balanced budget when their special session begins July 11.
— Fairbanks Daily News-Miner, July 3