Walker pivots focus to revenue

PALMER — The last time Gov. Bill Walker was in the Mat-Su Valley to discuss the state of the state, he stood before the Mat-Su Borough Assembly a most unpopular man.

It was July 19, and the $4 billion in budget cuts he proposed had just recently failed to be undone and replaced by the state legislature.

In addition to halving the PFD, the governor’s plan cut huge chunks out of the all-around budget, leaving the MSB in a $5.7 million hole.

On Wednesday, Walker was the guest of honor at the State Fair Luncheon, hosted by the Palmer Chamber of Commerce. By the time he was done speaking about the condition the state finds itself in, he received a standing ovation, even as his speech hinted strongly that some form of state taxation was coming Alaskans’ way.

“We have got to balance our checkbook,” Walker told the crowd at the MTA Borealis tent. “But we can’t cut our way out. We’ve cut spending by 44 percent… and we are working at cutting more, but we’ve got to do the revenue side as well.”

Asked after the luncheon whether Alaskans should interpret his change in tone from talking about cuts, which made him terribly unpopular earlier in the summer, as an indication that some form of state wide taxation is on its way.

“The cuts are an ongoing process,” Walker said. “We need to focus on the deficit and that’s going to take revenue. The PFD (cut) takes care of about half of it, and that’s a big first step, but there are other pieces.”

Walker said that almost certainly the new taxation would come either in the form of an income tax or a sales tax, but not both.

“(Alaskans) should be aware that we have to do something,” Walker said. “Income tax is what (the legislature) initially looked at with $2.6 billion of out-of-state taxes that, if they stayed in Alaska would be $30 million in revenue… Then the legislature said, ‘hey, we want sales taxes.’… “I think it will be one or the other, but not both.”

Walker told the crowd he was hopeful the new legislature would be able to pass a comprehensive budget addressing cuts and revenues. He said afterward that people have been coming around to his point of view.

“I’ve spoken at probably a dozen events since the Mat-Su Borough meeting and I’ve been pleased with the reception,” Walker said. “It’s not that people agree with me — they may not agree on anything you’ve done — but they agree we need to do something. That really hearkens confidence in me that we’re going to do something, because, as I’ve said, all deficits roll downhill.”

Walker said he attributes the warming reception he’s been receiving to Alaskans’ abilities to adapt.

“I think they’re aware of the problem,” he said. “I call Alaskans ‘imagineers’. They figure it out, make some changes. In rural Alaska, they’re probably the most impacted — a thousand dollars is a more proprietary issue there than in urban areas, but they’re very accommodating and they understand the ‘why.’”