- Associated Press - Monday, December 15, 2014

JUNEAU, Alaska (AP) - Gov. Bill Walker on Monday submitted a stripped-down capital budget as a starting point for spending discussions amid a bleak revenue forecast.

He also submitted an operating budget for fiscal year 2016 that was developed by his predecessor, former Gov. Sean Parnell, and that Walker has not endorsed.

Monday marked the statutory deadline for Walker to submit budget plans to the Legislature; it also marked two weeks on the job for Walker, who was sworn in on Dec. 1.

The administration plans to submit revised spending plans by Feb. 18 and to solicit public input on ways to prioritize spending, cut waste or address any inefficiencies as it puts those plans together.

“Together, we need to reinvent state government and rationalize our fiscal policy,” Lt. Gov. Byron Mallott said in a news release.

The state is bracing for a $3.5-billion budget deficit for the current year amid lower-than-expected oil prices and a $3.2-billion hole for 2016 even at the levels laid out in the budget submissions Monday.

The draft capital budget includes $106.7 million in unrestricted general funds, compared with about $220 million in such funds proposed by Parnell. The Walker submission includes projects with federal or other matching funds - such as transportation or water projects - plus planning funds for a replacement school in Kivalina that the administration says is part of a legal obligation for the state.

Walker’s budget director, Pat Pitney, said the capital budget submitted Monday is not endorsed by Walker and meant to satisfy the submission deadline. Officials plan to evaluate over the next month what needs to be included in the package, she said.

Several controversial large-scale projects, such as the proposed Susitna-Watana dam, are not in the draft capital budget. Pitney said the transition team requested the administration look at the potential return on state investment for large projects.

Pitney said any add-ons to the capital budget will be closely scrutinized.

The state will also look at whether money appropriated for past capital projects that haven’t gotten off the ground can be redirected elsewhere, she said.

The administration so far has not set a proposed overall spending cap, she said. However, “We want to stay as constrained as possible so we use the minimum amount of savings,” Pitney said. “Even the minimum amount of savings is going to be significant.”

The state has billions of dollars in budget reserve funds that, depending on spending levels, oil prices and oil production, could extend into the next decade or be depleted in the next few years, according to the revenue forecast.

“Really, we’re trying to say, how limited can we be and not damage the economy and do the things that we know we’re going to need going forward, looking at five years, looking at 10 years, looking at 30 years from now?” Pitney said.

Walker, in a release, said he was confident that Alaskans can manage their way through the situation.

“My team and I have rolled up our sleeves to work on the budget in almost daily meetings,” he said. “We want a plan in place that will not just get us over the hump now, but provide a strong future for decades to come.”

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