Walker announces $1.29 billion in vetoes, reduces dividend to $1,000 this year

Gov. Bill Walker announced a slew of vetoes to the state spending plan today, including a cut that would reduce this year's Permanent Fund dividend checks to $1,000 – less than half of last year’s payout.

With a veto, Walker prevented $666.4 million from being transferred into the fund's earnings reserve, reducing the check Alaskans will receive in the fall. The cut was part of $1.3 billion in widespread vetoes and deferred state spending unveiled at a downtown news conference.

“If we don’t make a change in the dividend program," Walker said, invoking a point he has made often, "it goes away in four years."

While the governor convinced the Senate to pass S.B. 128, the bill containing the cornerstone of his proposal to fix state government's financial problems, the House ended a special session without signing off. Lawmakers are scheduled to reconvene on July 11 to take up that proposal and others.

But the most politically difficult piece of the PFD restructure -- reducing payouts Alaskans receive -- is already done.

The governor said that by making unpopular cuts, he is seeking to remove excuses from lawmakers who have resisted approving elements of a long-term financial plan for the state.

A day before the most recent special session ended, Senate President Kevin Meyer, R-Anchorage, suggested the governor take this approach to make the tough vote on S.B. 128 a little easier for House Republicans on the fence.

"If (Walker) does force $1,000 dividends, he's going to take the hit," Meyer said at the time. "I think then it's going to be easier for the House guys to put some structure in place."

That is the most visible change Walker made to the Legislature-approve budget, but he also used his veto power to slash spending on many fronts, accomplishing other key pieces of his financial proposal.

While the Legislature passed a version of oil and gas tax credit reform in H.B. 247, the governor vetoed an additional $430 million in credits.

He also slashed funds for two mega-projects, the Knik Arm Crossing and the Susitna-Watana Hydroelectric Project.

Here are the governor's top 10 vetoes:

1. $430 million – Elimination of the money needed to pay oil and gas tax credits.

2. $80 million – Reducing the deposit into the higher education investment fund, a source of long-term funding for needs-based financial assistance to Alaska students and for the Alaska Performance Scholarship.

3. $30.5 million – Reducing school debt reimbursement by 25 percent.

4. $18.9 million – Elimination of the funding needed to advance the U-Med Northern Access Road.

5. $17.2 million – Department of Natural Resources RSA

6. $10.4 million – Reducing rural school construction funds by 25 percent

7. $6.35 million – K-12 foundation funding reduction

8. $6.35 million – K-12 pupil transportation one-time funding reduction

9. $5 million – DHSS disorder services

10. $5 million – Debt issue payment less than budgeted