Recently, the Juneau Empire published an op-ed from Juneau community member Win Gruening about the state of Alaska’s budget. We welcome Mr. Gruening’s input and value all ideas for solving Alaska’s budget problems. As you know, the state is facing budget gaps of more than $3 billion a year. Absent change, we’ll deplete our budget reserve in less than two years.
[Win Gruening My Turn: Has Alaska cut the fat out of the budget?]
The Walker-Mallott administration’s first response to the state’s fiscal crisis has been to reduce spending.
State spending is down 44 percent from the FY 2013 peak and since Gov. Bill Walker took office in December 2014, he and the Legislature have cut the state’s unrestricted general fund spending by over $1.5 billion; $595 million cut in tax credits for the oil and gas industry, $381 million in executive branch agency reductions, $5.3 million in cuts to the judicial branch, $12.9 million for the Legislature, the K-12 budget was reduced $102.7 million, and the capital budget is down $499 million. On top of all of these reductions, the Permanent Fund Dividend for this year was reduced to preserve $665 million in state savings. These actions will help put the state on a sustainable path and safeguard permanent fund earnings and future dividends.
Gov. Walker has also paused many construction projects across the state and closed down two mega-projects — the Knik Arm Bridge and the Susitna-Watana Dam. He has issued travel and hiring restrictions, and directed all agencies to create administrative efficiencies that bring real savings.
The executive branch payroll is down by more than $70 million since 2014. The number of state workers including all the agencies, the university, courts and the Legislature is down 1,900 through layoffs and natural attrition of workers. This is comparable to the number of layoffs in the oil and gas industry over the past two years.
Some have argued not enough state workers have lost their jobs. The difference between the state and the private sector is the state does not have the option of simply shutting its doors and discontinuing services to the public. The state has to reduce most public services legislatively or ramp down gradually to avoid harm to the public or the economy.
Some suggest that labor agreements are too generous to state workers. In fact, for the first time since the 1990s, the contracts the Walker administration has negotiated include no cost of living increases. These are for multiple years. In addition, state employee unions have agreed to two furlough days each year — something that hasn’t been done in decades.
We are also working to hold down the cost of employee health care. For the first time, all legislative and court system employees and most employees in the executive branch will pay a premium co-pay starting in January.
Is there more we can do to cut the budget? Of course there is. We will continue to scrutinize all spending to eliminate waste. We are working with communities as we target programs to cut and facilities to close. And we will continue to work with the Legislature to pass a revenue solution that will put our state on a more sustainable course.
We welcome the continuing dialogue with Alaskans as we work for a stronger economic future for all Alaskans. To learn more about the governor’s New Sustainable Alaska Plan to cut our budget and restructure our revenues, please go to www.gov.alaska.gov.
• Pat Pitney is the director of the Office of Management and Budget, and Sheldeon Fisher is the Department of Administration Commissioner.
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