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Hold on project funds Walker tells agencies no more spending on ASAP, Susitna-Watana, 4 others Kristen Nelson Petroleum News
Republican legislative leaders and Alaska’s new governor, Bill Walker, share a concern about the state’s projected $3 billion deficit for this fiscal year.
House and Senate leaders requested plans from the governor for cutting costs; the governor ordered a hold on discretionary spending for six big capital projects.
But while legislators requested that the governor preserve funding for - among other things - “all ongoing gas line” projects, the governor directed no further spending on the Alaska Stand Alone Pipeline Project, the smaller line the state has been funding alongside its work on the larger, export focused, Alaska Liquefied Natural Gas project.
In addition to ASAP, the governor’s list includes the Ambler Road project, the Juneau access project, the Susitna-Watana Dam, the Kodiak Launch Complex and the Knik Arm crossing.
In an administrative order signed Dec. 26 the governor said: “With the extensive drop in market oil prices contributing to a large budget deficit, there is a need to take immediate and responsible action to ensure the State remains in a healthy fiscal position.”
He said state agencies have been directed “to halt to the maximum extent possible discretionary expenditures” for the named projects.
No discretionary spending The agencies - the Alaska Department of Transportation and Public Facilities and the Alaska Department of Natural Resources for the Ambler Road project; DOT for the Juneau access project; the Alaska Energy Authority for the Susitna-Watana Dam; the Alaska Aerospace Corp. for the Kodiak Launch Complex; the Knik Arm Bridge and Toll Authority and DOT for the Knik Arm crossing project; and the Alaska Gasline Development Corp. for ASAP - were told not to incur “new or additional expenses or obligations including hiring personnel or entering into or amending any contracts” unless amending a contract would reduce costs.
They were also told not to spend “unobligated or unencumbered funds that have been appropriated to the agency by the Alaska Legislature” and not to spend funds from federal agencies or other sources “unless such funds have been obligated or encumbered by the agency.”
“To the extent spending is non-discretionary, such as contractually required spending and salaries of existing agency personnel,” the agencies are to continue work on the projects “until further notice,” the governor said.
Agencies are to submit a report to the Office of Management and Budget by 5 p.m. Jan. 5 including a spreadsheet of discretionary funding obligations subject to the order; “a spreadsheet of non-discretionary funding obligations, including contracts, and the sources of funds for payment of those obligations, and potential costs to delay, suspend or terminate each contract or obligation; budgeted personnel costs for the remainder of fiscal year 2015; and “operating costs status to date.”
Legislature requests cuts Republican leaders of the House and Senate, including the co-chairs of the Finance committees for both bodies, had written the governor Dec. 23, requesting the governor’s plans for addressing the anticipated deficit in the FY 2015 budget.
They requested an immediate hiring freeze on all departmental vacancies; limit on agency travel; request that departments produce fiscal year 2015 reports “of all authorized, expended, and encumbered funds for the first six years of the fiscal year,” allowing the Legislature “to see which agencies are working within the budget structure, which agencies are in danger of exceeding their budget ... and which agencies have far greater resources available to them than are necessary to carry out the mission of the agency for the remainder of the fiscal year.”
They also asked the governor to identify targeted reductions in discretionary operations, “while preserving funding for essential services and all ongoing gas line and other statewide projects critical to education, energy security, infrastructure and the public safety of Alaskans.”
For capital appropriations authorized more than five fiscal years ago, the legislators asked for a review of those capital appropriations and recommendations on re-appropriating projects for delayed projects.
Legislators also asked that amendments to the fiscal year 2016 operating budget be delivered as close to the start of the legislative session as possible, rather than waiting for the statutory deadline of Feb. 18.
Stabilizing, reducing “For the past two years, we have been focused on stabilizing and then reducing the budget,” incoming Senate President Kevin Meyer, R-Anchorage, said in a statement. “With the recent drop in oil prices and the fact that 90 percent of the state’s discretionary budget is funded by oil production, the need to cut spending has become even more urgent.”
Legislators also noted in their letter to Walker that the new administration has “suspended work on the statutorily required ten-year fiscal plans,” and requested that those plans be completed by the beginning of the legislative session.
“We appreciate that he’s still settling in, assembling his cabinet and learning the scope of his office,” House Speaker Mike Chenault, R-Nikiski, said in the statement. “At the same time, under today’s fiscal situation, we intend to hit the ground running once the gavel falls in Juneau.” With only 90 days to enact a budget, the co-chairs of the Finance committees “want departments before their subcommittees as soon as possible, ready to begin the discussions and negotiations needed to bring down operating costs.”
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