Updated with press release from Gov. Bill Walker below: On the heels of a letter that the Legislature sent to Gov. Bill Walker imploring him to take immediate action to reduce the budget, Walker issued Administrative Order No. 271 on Friday night, demanding that agencies halt to the “maximum extent possible” discretionary expenditures for the following projects:
- Ambler Road
- Juneau Road
- Susitna-Watana Dam
- Kodiak Launch Complex
- Knik Arm Bridge
- Alaska Stand Alone Pipeline project (AKA the bullet line.)
The order demands that the agencies in charge of the projects not incur additional spending, including hiring new employees, entering into new contracts, and not to spend any unobligated funds from state, federal or any other sources.
The governor is also demanding that agencies produce discretionary-spending reports and other information, such as project-operating costs, by Jan. 5.
Read the order here. Read the press release, which was sent out Saturday morning, below:
Governor Bill Walker issued an administrative order on Friday, December 26, to direct all state agencies to stop non-obligated spending on the following six projects: Ambler Road, Juneau Access Road, Susitna-Watana Dam, Kodiak Launch Complex, Knik Arm Crossing and Alaska Stand Alone Pipeline Project.
“Our budget deficit grows deeper as oil prices go lower,” Governor Walker said. “These are large projects that require significantly more state investment to complete. I’ve requested that state agencies not enter into any new contracts until we’ve had a chance to look at the various projects.”
Governor Walker and his team began working on this administrative order shortly after cutting the costliest projects out of the capital budget—so that agency heads have direction on exactly how to proceed with their respective projects.
Governor Walker requested the Department of Transportation and Public Facilities, Department of Natural Resources, Alaska Energy Authority, Alaska Aerospace Corporation, Knik Arm Bridge and Toll Authority and Alaska Gasline Development Corporation submit by January 5 to the Office of Management and Budget a report detailing operating costs so far, all funding obligations, as well as the potential effects of delaying, suspending or terminating contracts.
“This is a way for us to not commit new money into projects that may not be continued during this fiscally challenging time,” Governor Walker said.
Could probably save more by consolidating programs on the main campuses and pruning the small programs. How many students in fisheries 50, 100, more ? The university has branch campuses in many places to get legislators to vote for the budget when the time comes, whether it is efficient or not. All those little campuses and little programs have high overhead administrators.
Great. That saves about 50 bucks. Only 3 billion to go.
You are probably right. But I would have thought that some projects now not complete, possibly including some bond-funded projects, have yet to receive their art project. And that could apply to revenue-funded projects such as those at Ted Stevens Airport, municipal school construction (which is mostly paid by the state so as with so much in government the people making the spending decisions can be as giddy as anyone is who spends someone else’s money), and smaller projects to be built during the 2015 construction season. Buying art is in conflict with the oil-driven budget problems and with finding a reasonable fix.
Garand,
I agree that the tax film credit should be subject to the same critical cost/benefit analysis that every other expenditure should have to stand. I also agree that the citizens of Alaska should be encouraged to participate in this effort to a degree not provided by legislative testimony alone. I was very disappointed in the quality and practicality of that survey the Governor’s office fielded to ask for citizen input. He should try again without the offer of any “rewards” and also keep that venue open over time. I suggest he apply the KISS principal this time around.
The problem, as others have pointed out, is the scale of the problem. Because we must now so significantly reduce spending to match revenues, there will be no “magic bullet” from a single or few sources of cuts, nor should we allow the creation of bonded debt, or assume that we could make some short-term adjustments while we just use our cash reserves to ” wait out” this crisis. I suggest that anyone who suggests that is either self deluding themselves or just plain lying.
Living within our means as a state is going to consist of hundreds, if not thousands, of adjustments to our fiscal behavior over time and certainly should include the lesson that a rise in commodity prices and/or another boost in production of oil, gas or any other non-renewable resource will no longer allow us to return to the spending behavior of the past.
I agree that the tv show tax credit ought to go however, the one percent for art is cured by not approving any capital projects. Buying art on credit is a really bad idea but it’s also not an emergency right now. At least as long as we don’t build a wall to hang it on……
I cannot believe no one has yet mentioned the Hollywood tax credit which is not a credit at all but simply a payment of oil revenue to anyone wanting to do a film production in Alaska. These Alaska reality television shows are all paid for with state petroleum revenues!
Another program that both costs too much and sends the wrong message is the so-called one percent for art. Bond proceeds are used to buy art so Alaskans 20 years from now will be paying for art purchased today. Using one-time oil revenues is bad enough but using debt to finance the purchase of art is truly outrageous and totally out of step with current fiscal realities. Allowing the film subsidy and the 1% for art to continue one more day sends the wrong message to Alaskans about their government.
Governor Walker needs to balance recurring expenditures with recurring revenues, and he needs to do it before drawing upon the budget reserve funds. He also needs to hear constructive ideas all of us have so far as how to reduce spending.
The state university at Fairbanks could save hundreds of thousands of dollars by relocating staff and students in the School of Fisheries and Ocean Sciences … to – wait for it — areas near the fish and oceans they are studying! What a concept! Gov Walker should check out the SFOS travel budget and see how inflated it is. Meanwhile, the university marine science facility at Kodiak is nearly empty of staff and students, who are all landlocked in the middle of the state. It makes as much sense as having the Alaska Fisheries Science Center located in Seattle. Jeesh ….
Garand, you got it right re no debt reimbursement for school construction, no more dollars into the public education sinkhole aka NEA, no Medicaid expansion to pacify the ANTHC, and make it abundantly clear to the boroughs, school districts and municipalities that don’t even think about asking for grants through legislative requests. No more nice-to-haves and “wants”. Take it out of your hide.
@Garand Fellow, Your marbles are rattling again.
Everyone knows that the long after the Permanent Fund is empty the state will still be writing hot checks to cover Medicaid and the rest of the ‘entitlements’.
Meanwhile, Back at the ranch, TOTAL SA is nearing completion of a 27 Billion Dollar project, to date the largest Arctic LNG project and plans to use 16 Ice Breaking Tankers to move LNG product from a field of 22 producing wells and a LNG plant on Russia’s Yamal Peninsula….
Designed to produce as much as 16.5 million metric tons of LNG a year on the peninsula at the Ob River estuary, which is ice-bound nine months of the year, Yamal is central to Total’s plans to boost output and Russia’s bid to export more of the fuel.
According to TOTAL SA this is one of the largest industrial projects in the Arctic and more than 200 wells are planned.
With the project more than half completed and production / shipping expected to start in 2017, the project has run into financing problems as president Obama has placed economic sanctions against Russia causing TOTAL SA to look for non dollar funding. According to TOTAL SA, they now expect to have a variety of funding sources in place shortly, including China and several EU sources and expect no more than a one year delay in project completion.
Well I’ll be damned…… Who would’ve thought? Build a LNG plant and a port near the production wells and build a few ice breaking LNG ships and you can enter the worldwide market at about half the price of our fabled pipeline to nowhere..
Even worse, the Russian’s appear to be building it whether Daddy War Bucks likes it or not.
Great start from Governor Walker. He’ll need to do more, and will.
Fairbanks LNG should be added to the list. It is worrisome that it wasn’t. I think he’s getting bad advice from Whittaker. The Governor will learn soon enough. He’s a smart guy.
Long overdue, saying no to the Babbitts, especially the leeches from Mat-Su. Damn that dam. Hopefully the Knik Knack bridge, the spaced out port in Kodiak, and the Juneau road to nowhere will get a final, well-deserved, stake through their black hearts.
Get the AK Railroad under control. They are the agency of waste.
Governor Walker is to be congratulated for taking action to preserve cash. Many actions, probably including this one, are of the sort that unintended consequences and unforeseen implications are part of the result but that is no reason to delay making decisions.
I hope Governor Walker considers many other actions. Telling municipalities to not count on school debt reimbursement and to delay all new debt would be a great idea. And telling all Alaskans to not count of municipal revenue sharing for FY2016 would be a fair and prudent warning. Cautioning agencies to not count on bringing back seasonal employees could be worthwhile. Putting a moratorium on all state travel is necessary in order to show good faith. Skype is cheaper than Alaska Airlines in every case.
Education and Medicaid interest groups need to be put on notice that nothing is beyond the reach of this fiscal imbalance. That is, balancing the budget is the highest priority, and whether the budget is balanced will be measured not by comparing the budgets of different years but by looking at whether there is a required draw on cash reserves.
So how did the Alaska Class Ferries survive this round of cuts? Surely they should have gotten the ax given that they are carrying a price tag of 120 million.
LOL… er, yeah I’m working on building a railroad to Hawaii too !!
😛
p.s. Amanda, can you make those spam tests a little harder ??
….like; What is the cube-root of 11 ??
….or, What is the total amount of crude shipped thru TAPS over the past 40 years ??
Multiply that by the average value of crude over the past 40 years,
and then ask ourselves: “What have we accomplished with all that ??”
🙂
>> In AK propane can be like bread & milk;
Propane can be used to pull people together with unity and strengthen our social fabric,
it can be a valued commodity distributed by the church & community cooperatives.
Proper propane distribution can reduce the cost of both physical & mental healthcare,
it can be tied to telemedicine statewide.
There is no reason so celebrate or gloat. This action is absolutely necessary and more actual cutting will be required. Now it is the turn of the Alaska Legislature to objectively deal with reality by understanding what a “non-renewable resource based economy” is and how it can sustain future generations of Alaskans.
Lol just a couple of clarifications- the idea of LNG locomotives isn’t new, I just never imagined it on the ARR, and, CIR, I figure you meant barge delivery to SE and Nome.
MS
p.s. Amanda, can you make those spam tests a little easier?
Wow. I never thought of converting locomotives to gas on the ARR. I have heard, though, that one important point on the Donlin Creek timeline is the day Caterpillar announces LNG prime movers for mining equipment.
Your price point for building tanks sounds reasonable, and they could be built in Ketchikan, too.
Here in Bethel we advocate for LNG. In fact the City has tried applying for funding a couple of times to do a small study of the local economics of importing it.
I sure hope someone on the 3rd floor reads this blog,
As usual, CIR, great stuff.
MS
AC, you had this story up before the governor’s office issued a press release. What’s the disconnect between action and notice. Walker’s press operation , many times, seems like the last to know. What’s up with that? This was done on Friday and there wasn’t a release until Saturday. This new administration isn’t into transparency for some reason. What are they trying to hide?
I don’t understand a whole lot abouit energy economics. I do know that the Fairbanks gas project isn’t turning out to be anything like the politicians said. It aint cutting the cost to heat my home by much considering how many millions they are talking about investing. Wish the Gov would lokk at stopping this too.
Yup, the Fairbanks LNG Gas Trucking Project doesn’t make much sense,
it does make a little sense when viewed as a desperate last ditch emergency effort.
LPG Gas Trucking makes a lot more sense if it’s done in an organized way.
LPG Gas Trucking is a much smaller sized project than LNG-trucking,
and it delivers useful portable easy to store propane in smaller quantities to
frozen people who really need it.
The Biggest Bang for the under $10million LNG Buck is;
rapidly deploy LNG ISOtank intermodal shipping statewide.
$10mil will get this started;
it will build a few ISOtanks in Seward,
it will move some filled LNG-ISOtanks by truck from Nikiski to Crown Point,
it will get one SD70MAC locomotive converted to LNG-dualfuel,
it will get a couple dozen LNG-ISOtanks delivered by rail to Fairbanks,
it will get a couple dozen LNG-ISOtanks delivered by rail to Juneau,
it will get a couple dozen LNG-ISOtanks delivered by rail to Nome,
and it might even get a few LNG-ISOtanks delivered to Hawaii.
…er well, $12mil maybe 😛
But soon you will see $20mil in returns if the entire program is properly managed.
AK-Railroad has the potential to replace TAPS as Alaska’s economic backbone.
Kudos to Governor Walker !!!
Captain Zero would have never been so bold.
Did you forget the Fairbanks gas trucking project? It just doesn’t make sense.