Alaska’s New Governor, Facing Budget Crunch, Puts Big Projects on Pause

AASHTO Journal, 9 January 2015

Stung by falling state revenues as oil prices plunge, Gov. Bill Walker ordered all state agencies to suspend non-obligated spending on six infrastructure projects that are under way, including several transportation facilities.

“Our budget deficit grows deeper as oil prices go lower,” Walker said in a Dec. 27 announcement. “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.”

Walker, who took office Dec. 1, is one of several governors facing budget crunches caused at least partly by the collapse in oil prices. He submitted a budget plan that cut the costliest projects out of Alaska’s capital budget and prepared the administrative order to give his agency heads direction on their respective projects.

He asked 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 Corp. to submit reports detailing their operating costs to date, plus all funding obligations and the potential effects of delaying 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.

Walker’s administrative order allows contractually required spending to continue “until further notice.” Agencies were to submit their reports to the governor’s budget office by Jan. 5.

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