Alaska Budget $900 Million Short; Job Cuts Likely

Alaska Gov. Bill Sheffield gathered hundreds of state employees together after work Wednesday and told them that Alaska is not going to have $900 million it thought it would have. He warned of job and pay cuts.

“I’ll take a pay cut myself--15%,” said Sheffield, who makes $81,648. “And my commissioners and immediate staff will match any pay cut we negotiate with state employees.”

Alaskan oil production accounts for more than 85% of state revenues, and falling world oil prices have been steadily eating away at the state’s income.

A two-word banner headline in an “extra” edition of the Anchorage Times read, “More Layoffs,” but officials could not say how many state workers might lose their jobs. Sheffield Administration officials were also examining possible savings from cutting wages and shortening the work week.

Two weeks into the new fiscal year, the state does not have sufficient money for its budget, Sheffield said.

“That means the budget we’re operating on now could be off the mark by 40%, or $900 million,” Sheffield told state workers.

Sheffield made his remarks before he was to go on television and give the grim economic news to the state’s half million residents.

The $900-million shortfall is money Alaska hoped to get through various oil royalties and taxes. This comes on the heels of an announcement last spring that the state could expect a $1-billion shortfall, prompting cuts in the fiscal 1987 budget that state officials then were working on. The new cuts are to be made on this already trimmed state budget.

Sheffield said he was asking all state departments to cut their budgets by an additional 15%. He said various capital projects could be put on hold.