Suspense around Gov. Bill Walker’s budget started building on Wednesday.
That morning, Budget Director Pat Pitney announced a budget was on its way, and warned the Senate Finance Committee the cuts would slash state spending by 9 percent over the previous year.
“The public discussion just based on these reductions are going to be loud,” Pitney said. “This will not be viewed as low hanging fruit.”
A few hours later, an e-mail from the governor went out to all state employees that alluded to layoffs and acknowledged the next few months would “undoubtedly be a time of uncertainty and stress.”
Some legislators even stayed up until midnight, hoping to see the document.
Agency spending details finally dropped at noon Thursday. The proposal identifies more than 300 positions for downsizing, with a quarter of those jobs coming from the university system. It cuts $136 million from the placeholder budget Walker submitted in December, for a total of $12.8 billion in spending on state operations. The Department of Corrections loses $12 million, with a cut to the community jails program. Grant programs and senior benefits also face cuts.
At a press conference, the governor described the decisions as difficult but necessary.
“At roughly a $10 million a day deficit, we had to do something,” Walker said. “We had to take some step forward.”
With 24,000 state employees on payroll, the proposed layoffs amount to one percent of the workforce. About half of those positions are currently vacant. Members of Walker’s cabinet have discussed the potential for buyouts or retirement incentives for senior state employees, but still needs to conduct an analysis to see if that would make sense.
When asked if further reductions are necessary, Walker described his budget as a starting point for legislators, but expressed concerned that dramatic layoffs could have a ripple effect through the state’s economy.
“Could we have cut deeper? Of course. Could we have cut less? Perhaps,” he said. “But it’s that sort of surgical, fine place to be so that we do it in such a way that we don’t create the tailspin we saw in the ’80s.”
Lawmakers are not expecting to have a good sense of the budget until Monday, after their finance analysts have had a chance to review the numbers. But House Finance Co-Chair Mark Neuman, a Republican from Big Lake, says they will be looking at the budget with an eye for further cuts, given the drop in state revenue from low oil prices.
“We have a $3.5 billion deficit, so we’re going to go through that. So, we’re going to go through the committee process, but I would expect some further reductions than that,” Neuman said.
State employee unions are trying to take the cuts in stride.
“You’re never satisfied with any layoffs, but the 300 number doesn’t seem to be all that large,” said Jim Duncan with the Alaska State Employees Association. “But it is important for those people who might fall within that — it’s a very critical situation.”
Duncan adds that layoffs are not final until the Legislature passes the budget and the governor signs it, and that the union has procedures in place for employees facing layoffs.
Meanwhile, groups that advocate for smaller government do not think the cuts go far enough.
“We’re of the belief that the governor failed to take aggressive action in substantially reduced unrestricted general fund spending, and it is our hope that the Legislature will have the courage to do what Gov. Walker refused to do,” said Jeremy Price, state director for Americans for Prosperity’s Alaska chapter.
Walker has until Feb. 18 to finalize his budget, and says that adjustments are possible if the administration finds other potential cuts.
