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AASHTO Journal

Alaska Governor’s Budget Proposal Calls for More Spending Cuts, Increases in Fuel Taxes

Gov. Bill Walker has proposed more cuts to Alaska's services in the budget he put before the Legislature, has chosen not to pursue a big highway project and is asking lawmakers to approve sharp increases in motor fuel taxes.

In a state heavily dependent on oil revenues, Walker said that even with an improved oil price forecast the fiscal 2018 budget would have an $890 million gap between proposed spending and expected receipts.

Walker in his Dec. 15 budget announcement said he has already cut state spending by $1.7 billion since he took office two years earlier but that more action was needed to close the gap.

capitol0816.jpgHe also released a list of spending cut examples that said the belt-tightening has diminished the ability of the Department of Transportation and Public Facilities "to deliver needed transportation services including snow and ice removal, pot hole and guardrail repair, rural airport operations, and regular scheduled ferries."

Walker announced a halt to spending on the Juneau Access Improvements Project, which would have built a 50-mile road north from Juneau to a yet-to-be-built ferry terminal on the Katzehin River. "I am a builder by background and understand the importance of construction projects, but I am very concerned with our current multi-billion dollar fiscal crisis and must prioritize the need for fiscal resolution," Walker said.

His budget plan asks lawmakers to triple taxes in two phases on highway, aviation and marine fuels, to raise an additional $40 million in the first year and $80 million in the second after the full increases take effect.

Walker's plan noted that Alaska now has the nation's lowest taxes on highway motor fuels of eight cents a gallon, and last raised them in 1970. His proposal would double the motor fuel taxes on July 1 to 16 cents a gallon, then hike them another eight cents a year later to 24 cents a gallon.

A budget overview document also noted that the DOT&PF is cutting in-house design staff to outsource that function.

"Over the next two years, the Department of Transportation will downsize existing staff and privatize the majority of its design department, maintaining only a small core for project management and oversight," the overview said. "Outsourcing design has the added advantage of bolstering the private-sector economy while maximizing the number of projects completed with the available transportation funding. There are 76 position reductions associated with outsourcing design and up to 300 more to follow in future budgets."

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