In Interview Governor Admits His Plan Doesn’t Cut Budget ***UPDATED With Gov’s Response***

This story has an update below it that contains the Governor’s office response to the article.

Yesterday on Kenai radio station KSRM’s Tall, Dark and Handsome Show hosted by Duane Bannock, Governor Bill Walker called in to discuss his administration’s recently released budget. In the interview the Governor seemed to admit that spending cuts he has touted as part of the budget do not actually exist.

In a press release dated December 15th, the Governor’s office had this to say: (emphasis added)

“Rolled out last week in Anchorage, the plan addresses the state’s $3.5 billion budget deficit using a combination of spending cuts, new revenue, wealth management and investment.”

Governor Walker also released the Alaska Permanent Fund Protection Act (APFPA) today, which re-plumbs funding for state services to stabilize the state’s budget. The Governor’s fiscal plan calls for continued cuts, implementing the APFPA, and adopting broad-based taxes and fees.

This year’s state operating budget is $4.8 billion, down from $6.1 billion when Governor Walker took office one year ago. Additionally, proposed FY2017 state funding for agencies is $140 million less than FY2016 and $544 million less than FY2015–a cut of 11 percent from state operating costs since FY2015.”

In his discussion with the Governor, Bannock contended the state operating budget has in fact not been cut, but rather has been increased by 9.3%. In the clip posted below the two have a back and forth over the role of oil tax credits in the budget that concludes with Bannock saying:

“You haven’t cut the budget, Governor. The budget’s gone up!”

To which Governor Walker replies:

“ya…..we have..I understand your point Duane.”

Audio Courtesy KSRM AM 920

The Governor then offers some of his budget people as guests on Bannock’s show to explain the increases.

Reached for comment today Bannock said:

“I’’m disappointed that the Governor could not explain the nearly $500.0b increase in General Fund spending for the operating budget …… I will follow-up with his recommendation to have DoR Commish Hoffbeck and OMB Director Pitney on the T,D&H Show to ‘get into the weeds’ of his spending plan.”

It was an extraordinary interview, both because of Bannock’s skill at pressing the Governor and the Governor’s inability to explain or defend basic elements of his own budget.

Here is a longer clip that provides even better context.

Tall, Dark and Handsome Show Part 1

Tall, Dark and Handsome Show Part 2


In fairness to the Governor, here is the response to this article I recieved from his office:

“When the Governor was talking to Duane about cuts/ increases to the budget he said the following:

“We want to cash out the oil and gas credit program that has accrued. In order to do that we need to increase funds in order to do that. What the proposal is that we convert that into a low-interest loan program rather than a cash program on the credits. We need to cash out those that are in the cue. We can’t do that without increasing the budget.”

What he was referring to was the $1.2 billion “new legislation placeholder” listed on line 35. The Governor will be introducing legislation during the regular session that would turn the oil and gas tax credit program into a low-interest loan program. As a part of this bill, money would be appropriated to pay out the remaining oil and gas tax credits that are owed by the state. That is what the $1.2 billion placeholder accounts for. This is separate than the existing oil and gas tax credit program that is listed on line 33.

As you will see on line 11, aside from this $1.2 billion placeholder, total agency operations spending went from $7.629 billion in FY 16 to $7.548 billion in FY 17.”


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