NEWS: Much Good and Some Bad in Governor Walker’s Line Item Budget Vetoes

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The Alaska Independent Democratic Coalition Supports Veto of $430 Million in Unsustainable Oil Industry Payments

June 29, 2016

Anchorage – Earlier today, Alaska Governor Bill Walker used his line-item veto power to cut $1.29 billion from the FY 2017 budgets.  The veto includes $430 million in tax credit and other payments to the oil and gas industry down to the statutory minimum requirement of $30 million.  The veto of the oil tax credit money is supported by members of the Alaska Independent Democratic Coalition (AIDC) in the Alaska House of Representatives.

“Our budget is being burdened by this unsustainable system of tax credits that results in the State of Alaska covering hundreds of millions in losses incurred by oil and gas companies, many of which are among the richest corporations on earth,” said AIDC Leader Rep. Chris Tuck (D-Anchorage).  “Legislative efforts to fix this system only got part way there this year.  That forced the Governor to make the bold decision to use his veto power to make sure our budget is not overwhelmed by subsidy payments to the oil industry.”

Earlier this month, the Alaska Legislature narrowly approved House Bill 247, which the Governor signed today.  The bill partially fixes some of the flaws in the system of providing tax credits to the oil and gas industry, but the members of the Alaska Independent Democratic Coalition opposed the bill because it continues unsustainable subsidies that will cost Alaska hundreds of millions of dollars a year, especially if oil prices remain low.  Specifically, HB 247 did not address the unsustainable credit system on the North Slope that results in the State covering 35 percent of oil company losses, even if they pay little or no production tax. 

“Paying out more in tax credits than we receive in production taxes doesn’t make sense and is just bad business. I want to thank Governor Walker for his leadership and courage in using his veto pen as a short-term solution,” said Rep. Dan Ortiz (I-Ketchikan).  “I remain hopeful that a long-term solution can be achieved that will allow us to deal with this flawed system once and for all.”

In addition to the veto of $430 million in oil tax credit payments, Governor Walker is pausing eight state funded highway projects across the state including the overly expensive U-Med District Northern Access Road project.  Additionally, the Governor is halting the Knick Arm Bridge and Susitna-Watana Dam megaprojects projects, a decision which the Alaska Independent Democratic Coalition has long supported.

Some of the other items vetoed by the Governor, including a $6.4 million cut to the K-12 base student allocation and a $10 million cut to the University of Alaska, are concerning to the members of the Alaska Independent Democratic Coalition because much of that funding was restored as part of the budget deal agreed to during the Fourth Special Session that wrapped up earlier this month.  

The largest line item budget veto announced today was a cut of $665 million to upcoming Permanent Fund Dividend (PFD) payments.  If this cut remains unchanged, the 2017 PFD payment will be capped at $1,000 instead of the anticipated $2,000 based on the traditional calculations of Permanent Fund earnings.

“The Governor is playing politics with the budget to get a Permanent Fund restructuring vote.  Calling us back into a historic Fifth Special Session won’t change legislator’s minds,” said Rep. Tuck.  “We work for the people of Alaska, not for the Governor.” 

While some of the Governor’s cuts are alarming, the members of the Alaska Independent Democratic Coalition remain committed to the goal they share with Governor Walker to preserve Alaska’s dwindling savings and spur the Alaska Legislature to pass a comprehensive and fair fiscal plan.

For more information, please contact Alaska Independent Democratic Coalition Press Secretary Mike Mason at (907) 444-0889.



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Contact Info:
Graham Judson Press Secretary
(907) 465-5284
120 4th St, Juneau, AK 99801