JUNEAU — Gov. Bill Walker said Thursday that he will veto a purchase of the Legislature's office building in Anchorage if lawmakers propose it, a threat that one Senate leader suggested could draw retaliation.
Walker said paying $32.5 million for the newly renovated Anchorage Legislative Information Office, or LIO, on Fourth Avenue would be inconsistent with the steep cuts being proposed by his administration and by lawmakers in the face of the state's $4 billion budget deficit.
"I'm done with the LIO," Walker said in an interview. He added: "It's casting no disrespect on those that were involved in the process, but there's something really wrong with that transaction."
Walker's position was first reported by the Associated Press.
Veto threats from Walker have been relatively rare, and a longstanding tradition holds that the governor and the Legislature make no changes to the other branch's proposed budgets.
Walker said his veto warning came as a simple response to a reporter's question. He insisted: "I'm not trying to blow up the session."
But the announcement Thursday quickly reverberated through the Capitol, and Sen. Anna MacKinnon, R-Eagle River and co-chair of the Senate Finance Committee, said lawmakers might respond in kind.
"He's getting into legislative business," said MacKinnon, who put the $32.5 million purchase in the Senate's proposed capital budget after it was approved last month by a committee of legislative leaders. "If he wants the Legislature in his business, let's go for it."
The Anchorage office dilemma has bedeviled lawmakers for a full year.
The Legislature moved in January 2015 after a renovation that installed glass walls, glass elevators and trash cans with motion-sensing lids. Annual payments for the space rose to $4 million from $682,000.
The renovation, by developers Mark Pfeffer and Bob Acree, was part of a no-bid lease extension negotiated by Rep. Mike Hawker, R-Anchorage, and lawmakers last year began exploring a move, with some saying the building was too expensive given the budget deficit.
Then, a judge last month ruled the lease was illegal and invalid, saying that the extensive renovations made the deal more than a simple extension and should have been subject to competitive bidding rules.
Lawmakers were considering a move to the state-owned Atwood Building, an eight-minute walk away. But instead, the Legislative Council, a committee packed with GOP leaders, voted to buy the Fourth Avenue building — justifying their decision, in part, with an independent analysis that said lawmakers' per-square-foot rate would be lower than in the Atwood Building.
Walker said Thursday that he was familiar with the analysis but was skeptical of the state purchasing a new property.
"There are so many other options available other than spending $32.5 million on that building," he said.
Walker added that Anchorage lawmakers could also use office space in their own districts if they choose not to move into the Atwood Building. And he downplayed the risk of a lawsuit by the developers, noting that the Legislature has an "appropriation clause" that makes the lease — already struck down by a lower-court judge — subject to the state setting aside money to pay for it.
A spokeswoman for the developers, Amy Slinker, responded to Walker's announcement Thursday with an emailed statement.
"The Legislative Council proposed a solution. We have agreed to it," the statement quoted Slinker as saying. "We stand ready to work with the parties to accomplish the council's directive."
MacKinnon said legislative leaders proposed the purchase because it was cost effective.
"I think the governor has acted in a way that is inconsistent with the best financial choices for the Legislature," she said.
Democrats disagreed. Rep. Scott Kawasaki, D-Fairbanks, said Walker's veto threat was a "great move."
The Fourth Avenue building, he added, is the "single greatest example of legislative largess." And the Legislature's Republican leaders have done Walker no favors, either, Kawasaki said.
"This Legislature has hammered his bills, refused to support his appointments on political grounds," Kawasaki said.
Now, after months of meetings to resolve the situation with the Anchorage office space, lawmakers will have to come up with a different plan.
"I really can't tell you what we're going to do at this point," Sen. Gary Stevens, R-Kodiak and chair of the Legislative Council, said in an interview late Thursday. "All I can say is it's just one damn thing after another. This goes on and on, doesn't it?"