Walker defends vetoes, budget cuts during unprecedented visit to Mat-Su Assembly

PALMER — Gov. Bill Walker shared more potentially grim news about Alaska's precarious financial future during a visit to the state's fastest-growing borough, as local governments around the state deal with deep budget cuts in the face of a growing fiscal crisis.

Walker told the Matanuska-Susitna Borough Assembly Tuesday night he got word hours earlier that national bond-rating agency Moody's Investors Service is holding "an immediate meeting" on Alaska's rating — a meeting originally scheduled for Aug. 9.

"And I don't think that's going to be good news," he said. "They waited to see what happened with the legislative process and nothing happened."

Moody's already downgraded the state's top-ranked AAA general obligation rating to AA1 in light of Alaska's massive deficit brought on by free-falling oil prices. The country's other two major ratings agencies also downgraded Alaska, making it more expensive for state officials to sell bonds to pay for big projects.

Walker came to the Mat-Su Assembly chambers in Palmer Tuesday night to explain his late June vetoes of $1.29 billion from legislative budget bills and a $1,000 cap on this year's Permanent Fund dividend. The governor blamed the vetoes on the Legislature's failure to find new revenue sources — among them his proposal for an income tax — to address Alaska's $4 billion budget deficit despite two special sessions that cost the state $12,000 a day, Walker said.

Anticipated cuts resulting from the governor's vetoes in Mat-Su total about $8.5 million — $5.7 million for the borough and $2.8 million for the school district, officials say.

The borough has already implemented a hiring freeze, reduced travel and training and is putting off capital projects but still has $1.9 million in additional cuts to make, officials say.

Walker, a former Valdez mayor, said he appreciated the Mat-Su Assembly's decision to tackle budget cuts with an immediate special meeting earlier this month.

"I do not like pushing (more things) on your plate. I really don't," he said. "I need your help, I really do."

The audience Tuesday included numerous Valley legislators, including House Republicans Lynn Gattis, Wes Keller, Shelley Hughes and Cathy Tilton, and Senator Mike Dunleavy.

Hughes, in comments before the governor spoke, said the state can't make up lost oil revenues "out of the pockets of families and small, medium-sized businesses."

"What we need to do, and I see it as a blessing in disguise, that we need to recognize that the spending that we've been doing at state and local (levels) maybe can't be what it's been before," she said.

Mat-Su Borough Mayor Vern Halter said Walker's visit Tuesday marked the first of a sitting governor to the Assembly. It marks one of several the governor is making to defend his vetoes around the state. Walker called in to the Anchorage Assembly earlier this month and said Tuesday night he plans to travel to Fairbanks to field questions from elected officials and the public. He's also planning to call in or appear at other municipal meetings, a spokesman said.

"There's no secrets here," he said after the question-and-answer session ended. "This is just the raw facts of what we need to do."

A handful of protesters who support an effort to recall Walker picketed outside the Assembly chambers as a politically mixed crowd inside voiced alarm at the PFD decision and other vetoes but also at the Legislature's failure to find new revenue.

"People don't want to lose their PFDs but when you lose that much revenue you have to look at new revenue," said Wasilla resident Kevin Brew. "It's not a plan to blow through your savings. I'm somebody that didn't vote for the governor but I admire his courage. I don't like being fed this bowl of garbage that we didn't cut enough."