Governor warns of layoffs without budget deal with lawmakers

JUNEAU — If the Alaska Legislature continues to stall on passing a fully funded state operating budget, 15,000 of about 16,000 state employees will be sent layoff notices in preparation for a partial government shutdown, Gov. Bill Walker announced Monday afternoon.

Walker sent an email to state employees Monday morning, warning them that they might lose their jobs if legislators don’t come to an agreement on the budget. The House minority and majority have been in negotiations on millions of dollars in add-backs to school funding and other budget items since mid-April. So far, they haven’t reached an agreement.

“One consequence of HB 72 being unfunded for 2016 is most state employees will receive a layoff notice in early June if the Legislature fails to pass a fully funded budget by that time,” Walker wrote. “We have until July 1 before we need to start shutting down any state functions that are not necessary to protect the life, health and safety of Alaskans. However, we have contractual and moral obligations to let our employees know they may be temporarily laid off July 1 if the budget is unfunded.”

The Legislature forwarded Walker a budget two weeks ago that spends $5 billion but only accounts for $2 billion in revenue. Walker decided to sign the budget bill into law, but he vetoed items that pushed state spending past the available $2 billion.

That equals a 72 percent budget cut to almost all state departments, Walker said.

He said the move is not ideal, but it’s the best option available to him.

“We thought based on the meetings we had had, we wouldn’t be in this place,” Walker said in a Monday news conference. “Because the (budget) bill was transmitted to us, the 15-day clock caused us to take the position that we have. … We hope that the Legislature will also recognize the severity of what we’re doing. … It’s not where we want to be.”

If Walker had not taken action on the bill before Tuesday, it would have defaulted into law.

Office of Management and Budget Director Pat Pitney said the alternative, vetoing the budget bill in entirety, would have caused “complete chaos starting today.”

“There would be no operating funding whatsoever,” she said.

If a budget doesn’t come through, layoffs would begin at the start of the next fiscal year: July 1. The state is obligated to give employees 30 days’ notice.

Walker said the departments of Public Safety and Corrections will remain fully funded. The Department of Health and Social Services will have full funding for the first six months of the fiscal year.

Funding for state courts and the Legislature also remains intact.

Walker said in his news conference that the Department of Education’s budget, partially responsible for Alaska public school funding, would be among the entities cut 72 percent if an operating budget isn’t passed.

Department of Transportation and Public Facilities spokesman Jeremy Woodrow said it’s not yet clear what will happen to Alaska Marine Highway System operations after July 1 if a budget does not pass.

The House majority announced in an email Monday that both bodies of the Legislature will convene in Anchorage on Thursday to “continue work that is in progress on finalizing a funded budget for FY16 and consider other legislation on the special session proclamation including Alaska Safe Children’s Act and Medicaid Expansion.”

Walker said at the news conference he’s hopeful “that (the Legislature resolves) this… during the remaining nine days in the special session so we don’t have to send out notices to employees,” but he reiterated that his “call for the special session was in Juneau.”

Legislators can hold committee hearings elsewhere, he said, but “as far as actually holding a session of the Legislature, they’re going to hold that in Juneau.” He said he’ll put out another proclamation about his location requirement if it comes to that.

Rep. Sam Kito, D-Juneau, said budget negotiations are continuing between his caucus leader, Rep. Chris Tuck, D-Anchorage, and House Speaker Rep. Mike Chenault, R-Nikiski. The House minority sent out an email release Monday afternoon insisting that they are not the ones pushing for government shutdown.

“Our coalition does not want a government shutdown and have been working daily to prevent a shutdown,” Tuck said in the release. “This current impasse is due to the majority’s refusal to consider the huge spending cuts we have put forward while simultaneously slashing education funding and turning away millions from the federal government to expand Medicaid in Alaska.”

Kito said he questions the legality of the full Legislature convening in Anchorage this week because it goes against Walker’s proclamation.

“What they do, if they do actually take actions in Anchorage, that will not be legal action,” he said.

He said he’s considering “as an individual filing a suit against the Legislature for violating the session call.”

Kito said the majority is “doing lots of different things to try and show that they don’t need to have (the minority’s) participation” to fully fund the budget, including considering draws from different state savings accounts that don’t need a three-quarters vote.

Walker said in his conference that he’s open to a draw from the Permanent Fund earnings reserve to balance the budget. Tapping the account is not politically popular because it is the source of the annual Permanent Fund Dividend.

“The Legislature is the funding source,” Walker said. “We wont be particularly judgmental on the funds that come in — we need a funded budget. It’s their decision where to obtain the funds.”

Walker said the ball is in the Legislature’s court to pass a budget before the clock runs out.

“They’re they ones that provide the funding, so it’s really up to them to resolve this,” he said.

“Sending out 15,000 notices is not political gamesmanship. That’s the burden that has shifted to us to figure out how to run this state with the limitations that have been put on us.”

• Contact reporter Katie Moritz at 523-2294 or at Follow her on Twitter @katecmoritz.


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