|Protecting Your Rights: Serving Sand Lake, Spenard, and Turnagain|
|July 7, 2016
Dear Friends and Neighbors,
Last week, Governor Walker used his line-item veto to cut $1.29 billion from the state budget. His vetoes include reductions in state spending, oil and gas tax credits, and the 2016 Permanent Fund Dividend.
Governor’s Budget Vetoes
The Governor’s budget vetoes focused on four areas: oil and gas tax credits, mega projects, education, and the 2016 Permanent Fund Dividend.
The Governor cut $430 million in scheduled credit payments to oil and gas development companies. The reason for the cut was to reduce state spending and preserve state savings. Alaska statutes require a minimum payment each year of approximately $30 million for credits, but do not require a greater payment. The veto means the state will only make the required minimum payment.
In addition, the Governor halted two costly mega projects: the Knik Arm Bridge and the Susitna-Watana Dam. With Governor Walker’s veto, these two projects will not move forward. He paused, but did not cancel, eight state-funded highway projects, including the U-Med District Northern Access Road project, which had been transferred to the University’s budget. Halting and pausing these infrastructure projects will save $250 million.
Next, the Governor made numerous cuts to education. Below, I’ve highlighted a number of these reductions:
Many of the items listed above, including the $6.35 million cut to the K-12 base student allocation and the $10 million cut to the University of Alaska, had been previously restored in the legislature’s budget compromise.
Finally, the Governor’s largest line item veto was a $665 million cut to the 2016 Permanent Fund Dividend. With this reduction, the 2016 PFD payment (contained in the 2017 budget) is capped at $1,000.
In the fall of 2015, the Walker-Mallott administration introduced a comprehensive plan to address Alaska’s financial challenges. No one has proposed another plan that addresses our financial challenges, but the legislature did not adopt the Governor’s plan. Throughout the session, I have emphasized the importance of a responsible action plan for Alaska that includes cost savings, new revenue, and restructuring the Permanent Fund to protect it for many years to come. I continue to believe that education is Alaska’s best investment for the future.
If the legislature continues to draw down state savings, the Constitutional Budget Reserve and the Earnings Reserve, without a comprehensive financial plan that reduces the budget deficit, we will eliminate all of our savings and be unable to pay a Permanent Fund Dividends by 2020. The Governor’s line-item vetoes bring Alaska’s budget closer to the Governor’s comprehensive plan than the budget passed by the legislature earlier this year.
Under the Alaska Constitution, the legislature has five days after it convenes in special session to override the Governor’s vetoes by a ¾ vote of both the House and the Senate. The 5-day timeline begins with the start of the Fifth Special Session on Monday, July 11, 2016.
Upcoming 5th Special Session
As we approach the 5th Special Session, I remain committed to representing our shared values. Governor Walker’s cuts have started much debate in our community and throughout Alaska. Some strongly support the Governor’s decisions, others vehemently oppose those decisions. A great teacher once remarked that “there are no simple solutions to complex problems.” For those who agree that educating our children is our best investment for the future, I am not sure if there are enough votes to override the Governor’s cuts. Similarly, I’m not certain whether 45 legislators will vote to override any of the other line-item vetoes, including the Permanent Fund Dividend reduction. I will continue to review the question of a veto override and the legislation proposed for the special session in the context of our financial challenges and the need for a responsible action plan for Alaska.
As always, please let us know if you have any questions or concerns.
Rep. Matt Claman
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