The new fiscal year starts on Friday and Governor Walker used his veto powers today to begin to fill the $4 billion hole in the State’s budget. The Governor announced a total of $1.3 billion in vetoes and savings. The single largest amount was the $665 million in the reduction of the Permanent Fund Dividend. In a news conference, Walker said, “high dividends are not sustainable, and reduction in the payout is needed to keep the fund alive”. Without changes to the program, the dividend will go away in a few short years.
He also deferred payment for oil and gas tax credits that totaled $430 million. Road and bridge projects were deferred to save $250 million this year, while two mega-projects, the Knik Arm Bridge and Susitna-Watana Dam, were halted. Government, K-12 education and the University saw vetoes of $190 million.
As many have noted over the past year, tough decisions needed to be made to help balance the state’s budget. The Legislature passed a budget this year that did little to fill the gap with anything other than savings, so the Governor used his veto power to move towards a sustainable budget. Governor Walker warned that strong discipline is necessary and he exercised that discipline today. Cuts made to programs are difficult, but Walker has noted that cuts are necessary to fill the budget gaps. The change to the PFD shows discipline and ensures that Alaskans receive a dividend in the future, rather than lose it completely, which would happen if action was not taken.
The Constitutional Budget Reserve is running out quickly and should not be used to fund such a significant part of the state budget, as it has in the recent past. There is still work to be done to help balance the budget but the action taken by Governor Walker is a step forward and shows Alaskans that he is trying. Hopefully this will motivate the Legislature to act further when they start the latest special session on July 11.
For details on the Governor’s vetoes, visit Alaska.gov