Alaska's once-fat budget faces more shrinkage as the state stares down the barrel of a massive deficit.
Gov. Bill Walker on Friday released his predecessor's proposed budget, a version that cuts state spending by $600 million from the current year, according to an analysis by the new administration.
But it sounds as if the budget will get smaller still.
Walker, who took office Monday, said he was releasing Gov. Sean Parnell's fiscal year 2016 budget -- set to start July 1 -- in order to meet a Dec. 15 deadline and because of his commitment to transparency. Walker called it a "work-in-progress" budget that he was not endorsing.
He said would use the budget as a starting point but make his own changes, including reductions to capital projects, according to a statement from his office.
"We will not have as many capital projects on December 15 as the outgoing administration has in its proposal," said Office of Management and Budget Director Pat Pitney in the statement.
Capital projects in Parnell's budget are already down from $600 million in the current year to $200 million in the proposed budget, according to an analysis by Walker's Office of Management and Budget.
"We want to carefully evaluate all capital expenditures," said Pitney, a recommendation made by Walker's transition team.
Among other projects, the capital budget proposes funding two projects that were targeted for review by Walker's transition team: $20 million for the Susitna-Watana Dam and $8 million for the Ambler road project.
Parnell, who lost his bid for re-election last month, provided the budget on his last day in office, Monday. He had said it would contain hundreds of millions of dollars less in spending, part of an effort to rein in costs that ballooned during years of high oil prices and tax revenues.
That situation has changed dramatically. Economists say the state faces a $3.3 billion deficit because oil prices have recently tanked, sliding to less than $70 a barrel and blowing a hole in the state's main source of income: revenues from oil production.
The deficit is expected to wipe away a large chunk from state savings accounts that still contain more than $10 billion, a figure that does not include the $50 billion Alaska Permanent Fund.
Parnell and lawmakers have already reduced the state budget considerably in recent years, most notably scaling back a capital budget that had swelled.
Parnell's proposed budget calls for $5.5 billion in unrestricted general funds, down from $6.1 billion, according to the OMB review.
That is more than $2 billion less than the $7.8 billion budget in 2013.
To meet the Dec. 15 due date to the Legislature, Walker will submit the operating budget to the Legislature unchanged.
But the administration of Walker and running mate Byron Mallott plans to make more budgetary changes after that, meeting the Feb. 18 deadline for an amended budget, the statement said.
During his campaign, Walker had said he would ask agency heads to trim budgets by 5 percent. It was unclear on Friday if that request had been made.
A department-by-department analysis of Parnell's proposed operating budget, provided by the OMB, shows the Education and Early Development Department taking one of the biggest hits when it comes to state spending. It's proposed to fall 4.8 percent or $83 million, dropping to $1.33 billion.
In that list, funding for the governor's office faces one of the biggest percentage reductions, dropping from $33.6 million to $28.2 million, a drop of $5.4 million or 16 percent.
In another area of big savings, oil and gas tax credits paid out by the state drop, from $625 million in the current year to $525 million.