Dunleavy Administration Saying it Inherits a $1.6 Billion Deficit

    Gov. Mike Dunleavy.

    Juneau, Alaska (KINY) - The governor's team say they will revise the budget of former Gov. Bill Walker that was submitted Friday.

    Governor Mike Dunleavy's administration submitted former Gov. Bill Walker's proposed $11.5 billion FY2020 budget on Friday to "meet the statutory deadline and to demonstrate its ongoing commitment to be honest with Alaskans about the state’s budget shortfall."

    According to Alaska Department of Revenue Commissioner Bruce Tangeman, "The root of the problem with the Walker administration’s budget lies in a single number – its unrealistic projection that oil will sell for $75 dollars per barrel between July 2019 and June 2020."

    Tangeman said using a more realistic oil price forecast of $64 dollars per barrel, the deficit balloons to $1.6 billion dollars.

    “The Dunleavy administration is all about truth in budgeting,” Tangeman said Friday. “We performed a thorough analysis of the revenue estimates submitted by the previous administration and, it became clear it did not represent the true size of the budget deficit.”

    "That figure will be the starting point for vigorous discussions with state agencies, legislators and the public," Tangeman said. "The Walker $11.5 billion-dollar spending plan is unsustainable and leaves substantial room for spending reductions and budgetary reforms that reflect the state’s current fiscal situation."

    Office of Management and Budget Director Donna Arduin added that, in the weeks ahead, the Dunleavy administration will revise the budget it submitted Friday "to reign in state spending and prioritize the core services and programs that really matter to Alaskans."

    “All items of state expenditures are on the table,” Arduin said. “The state must learn to live within its means and we get there by making the tough spending choices.”

    Senators Donny Olson (D-Golovin) and Bill Wielechowski (D-Anchorage), both incoming members of Senate Finance for the 31st Alaska Legislature, released statements on the proposed budget.

    "It really made an impact on my constituents when Governor Dunleavy promised back payment of three years of cut dividends during the campaign," Olson said. "People in rural Alaska depend on the dividend for the high costs of transportation, food, and energy. I am glad to see that Governor Dunleavy is going forward with a full 2019 dividend and hope to work with him to figure out a process to pay back three years of reduced dividends."

    "I am pleased to see Governor Dunleavy is following the historic statutory formula to fund a full 2019 Permanent Fund Dividend," Wielechowski said. "I anticipate the governor working towards fully repaying past dividends as promised from his campaign. Unfortunately, Alaska's deficit will increase to $1.6 billion under his budget, mostly because of a drop in oil prices and no significant increase in oil production next year. The state is still losing over $1.2 billion a year in per barrel oil tax credits that were supposed to boost production. This government program is clearly not working as oil production is still projected to decline. It is time to eliminate this oil tax credit to close our budget gap, instead of forcing working Alaskan families to shoulder the burden of balancing the budget."

    Budget documents are now available on the OMB website, and the Department of Revenue’s Fall 2018 Revenue Sources Book is available here.


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