Update: Walker halves dividends, cuts $1.5 billion from budget

Update | 5:07 p.m.

Legislators from both parties criticized Walker’s actions.

Fairbanks Republican Rep. Steve Thompson said delaying road construction work will cost a lot of jobs.

Anchorage Democratic Sen. Bill Wielechowski said he’d like to see the legislature override the PFD decision. Three-quarters of the 60 legislators must agree to successfully override any of the vetoes.

“The real losers today are working Alaskans, who are really going to suffer,” Wielechowski said. “A family of four is going to lose over $4,000 from this action. And I think there are better ways to do it. I’m surprised the governor took this action and I’m going to encourage fellow legislators to override this veto. ”

Nikiski Republican House Speaker Mike Chenault said it’s not clear whether there will be enough votes for override Walker’s vetoes in the special legislative session beginning July 11.

“It might have been nicer if early on, at the beginning of session, he would have came in with a smaller budget than what they originally proposed, so, you know, we’ll look at it, determine what’s the right thing to do and try to accomplish that,” Chenault said.

Rachel Waldholz of Alaska’s Energy Desk contributed to this report.

Original story | 1:39 p.m.

Lt. Gov. Byron Mallott & Gov. Bill Walker - budget vetoes
Gov. Bill Walker announces line-item budget vetoes at the Atwood Building in Anchorage on Wednesday. Lt. Gov. Byron Mallott is also pictured. (Photo by Rachel Waldholz/Alaska’s Energy Desk)

Gov. Bill Walker cut Permanent Fund dividends Wednesday to $1,000 per person, about half the projected amount. The cut was one of a series of reductions that Walker made to lower the state’s budget by $1.5 billion.

Walker said he made the changes to reduce the amount of savings the state must spend to cover the budget. And he said he cut dividends to preserve PFDs into the future. The state is on track to exhaust its savings in four years without cuts.

He said he’ll take the blame for reducing dividends. He expressed hope that this will make it easier for lawmakers to approve his long-term fiscal plan for state government.

“What I’ve tried to do is take away from them the risk that they may suffer … at the polls, so that’s off the table,” Walker said. “And any excuses now – it’s just pure politics.”

Walker vetoed $1.29 billion from the budget. The cuts include a $58 million reduction to schools, including shifting $30 million in bond reimbursement to local schools. The state will delay $430 million in oil and gas tax credits into future years. The University of Alaska will see a $10 million cut.

In addition to the vetoes, Walker delayed $250 million in road and bridge repairs. And he shut down two megaprojects: the Knik Arm bridge and the Susitna-Watana dam.

Walker said the state can’t balance its budget only through cuts.

“We’re not cutting our way into prosperity,” he said. “We’re using the only tools we have available to us to do all we can to reduce the deficit.”

Walker signed the operating, mental health and capital budgets for the fiscal year that starts Friday. He also signed a bill that will restructure oil and gas tax credits, but not by as much as he wanted.

Andrew Kitchenman

State Government Reporter, Alaska Public Media & KTOO

State government plays an outsized role in the life of Alaskans. As the state continues to go through the painful process of deciding what its priorities are, I bring Alaskans to the scene of a government in transition.

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