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State employees warned of possible layoffs as Alaska budget impasse continues

Alaska Gov. Bill Walker on Monday used his veto pen to slash $3 billion in spending from the state Legislature's unfunded $5 billion budget, saying Alaska will be able to provide only critical government services beginning in July if lawmakers can't agree on a new spending plan that includes all the money required to pay for it.

Walker also sent a letter to the state's 23,000 workers Monday warning that most would get layoff notices in June without a legislative compromise leading into the state's next fiscal year, which starts July 1.

The governor's line-item vetoes cut close to three-quarters of the funding from most state agencies, as well as from the state's $1.2 billion in education formula spending. Walker preserved the full budgets for the judicial system, the corrections department and the state's public safety department, which includes the Alaska State Troopers.

"Sometimes things get done at the wire, and we'll see if that happens," Walker said at a news conference in Anchorage Monday. "The only responsible thing for us to do is what we've done, and to prepare for the worst-case scenario -- and hope and pray that we don't get there."

Walker's move comes as Republican legislative leaders remain at an impasse with House Democrats, whose approval is needed to reach a constitutional voting threshold required to tap billions of dollars in a state savings account called the Constitutional Budget Reserve.

The state needs the money in the account to cover a multibillion-dollar budget gap that opened following a crash in oil prices. Revenues from oil taxes and royalties have typically paid for the vast majority of Alaska's state government and services.

House Speaker Mike Chenault, R-Nikiski, said in a phone interview Monday that Walker's moves were "not surprising." But Chenault said he still expects an agreement on a fully funded budget within 10 days, and he added that he spoke with his Democratic counterpart about elements of a spending deal on Friday.

"I don't know if I would have sent out letters this early to employees and caused them any undue hardship," Chenault said, though he acknowledged that some of the state's union contracts require a 30-day notice of layoffs. "I don't believe that he's going to have to send out any pink slips."

The priorities Walker is moving to protect include prisons, detention centers, the state troopers, senior homes, the Alaska Psychiatric Institute and health-care payments. Most other state services would be shut down shortly after July 1.

State workers reacted to Monday's developments with frustration and apprehension, public employee union officials said.

"There's people that are significantly worried because they tend to be the only earners in their families, and this is their income," said Shannon Adamson, a regional representative for a union that represents 95 navigation officers on the state's ferry system. "Then there's people who think it's just a political game."

After the Legislature passed a budget in late April with less than half the revenue required to pay for it, Walker immediately called lawmakers back for a special session to pass a fully funded budget.

But there have been few strides toward a new budget deal in the ensuing negotiations, which have been punctuated by an extended recess called by legislators.

Democrats have said they won't support a spending plan backed by the Republican-led majorities in the House and Senate that includes cuts to the state's per-student funding formula, as well as cancelations of planned wage increases for state workers.

Walker, at his news conference, didn't directly respond to a question about who was responsible for the political paralysis, saying it's not his job to "assign blame."

Chenault, in an interview, said it was "unfortunate that a deal hasn't been accepted yet" by House Democrats and added that it's "irresponsible" for them to try to spend more of the state's money.

The minority leader, Anchorage Rep. Chris Tuck, released his own statement blaming the impasse on Republicans' unwillingness to consider cuts in state spending on big infrastructure projects and oil tax credits, "while simultaneously slashing education funding."

"Let me be perfectly clear: Our coalition does not want a government shutdown, and has been working daily to prevent a shutdown," the statement quoted Tuck as saying.

Jim Duncan, the leader of the state's largest public employee union, said he held the Republican legislative leaders "entirely responsible."

"They control the process," Duncan said in a phone interview.

Duncan said he was hopeful legislative leaders would "get this done." But, he added, "No one can predict what they will do, and they have their own agendas."

Alaska Dispatch News reporter Dermot Cole contributed to this report.