JUNEAU — Gov. Bill Walker issued a blunt demand to state lawmakers Wednesday, telling them they could find themselves back in a special session unless they pass a sustainable budget that uses a "broad-based tax," budget cuts and earnings from the Permanent Fund.
In a letter to legislators, Walker said he keeps hearing from them that "a complete solution" to the state's $4 billion budget deficit is not realistic this year.
"Alaska's future requires and deserves a 100 percent solution now," Walker wrote, adding that he'd allow a "reasonable" amount of time to implement a plan as long as it passed both houses of the Legislature.
But he waved a stick at legislators as well, telling them: "We can still get this difficult work done now to avoid the need for additional legislative sessions on this issue."
As Sen. John Coghill, R-North Pole, put it: "He didn't call a special session yet. But that sure is the indicator."
Walker's letter comes after Republican Senate leaders recently dismissed the governor's calls for taxes. The Senate leaders said they would likely close part of the deficit this year instead of the whole thing.
In a news conference Monday, Sen. Peter Micciche, R-Soldotna, said: "My personal goal is well over half of the budget gap this year."
Walker, by contrast, in December unveiled a plan to balance the state budget by 2018. It includes spending cuts, a small personal income tax and a proposal to restructure the $52 billion Permanent Fund to generate investment revenue for state government.
The proposal would sharply reduce Alaskans' annual dividend checks, but Walker says it's needed to fix a budget imbalance that would otherwise drain the fund that pays residents' dividends within a few years.
Since December, lawmakers have balked at the tax components of Walker's package, which also include increases to existing taxes on consumption and natural resource extraction. But the opposition grew louder last week when the Senate Finance Committee held a news conference and effectively declared the tax proposals dead.
"There's been some tendency on the part of the administration to start throwing around orders to the Legislature, and we just don't respond to that," Fairbanks GOP Sen. Pete Kelly, a committee co-chair, said at the time. He added: "I'm not getting into the tax business while I know government is still too big."
Walker has already hinted at the demands outlined in Wednesday's letter, but not nearly as directly.
He sent a letter to lawmakers two weeks ago laying out what he called his "real expectations" for the legislative session, which he described vaguely as a "clear path to a balanced and sustainable budget this year."
Then, at a news conference Monday, he said he'd call a special session if lawmakers didn't pass any tax or revenue proposals.
Wednesday's letter, said Walker's communications director, Grace Jang, was the governor's effort "to be as clear as possible about what his expectations are."
"He wants to close as much of the gap as possible," she said in a phone interview. "And he feels that it's not difficult to do -- it's politically uncomfortable, but it's not impossible."
In the letter, Walker said a sustainable, balanced budget requires both spending cuts and a restructuring of the Permanent Fund. It also needs "new revenues to include some form of a broad-based tax," he said.
Walker has often said his own proposal is flexible and written in "pencil, not pen." But Wednesday's letter said his three general concepts -- taxes, spending cuts and a restructuring of the Permanent Fund -- are "written in pen."
"How they come together, however, is still very much in pencil," Walker added.
A handout attached to the letter said Walker's administration would only accept a plan to spend money from the Permanent Fund if it establishes rules for annual spending. Lump-sum spending from the fund without a formula to guide it will not work, he said.
Walker's letter was welcomed by Democratic minority lawmakers who have pressed their Republican counterparts to give more serious consideration to Walker's tax proposals.
"I think we need more pen and less pencil," said Rep. Adam Wool, D-Fairbanks. Wool, who owns a bar and concert venue in Fairbanks, said his interpretation of Walker's message could be summed up by a 1975 song by the band Funkadelic: "Get Off Your Ass and Jam."
Coghill, who earlier this week said it would be a "mistake" for Walker to call a special session on taxes, said Walker is entitled to air his legislative goals like he did Wednesday.
"But by getting all frustrated and doing dramatic things, it doesn't get it faster," Coghill said in an interview. "He wants to hurry up something that can't be hurried up."
Coghill, the Senate's majority leader, said lawmakers are already working "diligently, deliberately and thoughtfully" on major, "big deal" policy changes to the Permanent Fund and to the state's oil tax regime.
The Senate Finance Committee heard expert and public testimony Wednesday on Walker's proposal to restructure the Permanent Fund. The House Resources Committee, meanwhile, held a marathon meeting late into Tuesday night to advance the governor's legislation scaling back tax credits for oil companies.
"If we get this thing solved and we're down to the last two weeks he might pull up a broad-based tax," Coghill said, referring to Walker. "We're not trying to ignore it. We're just trying to do it one thing at a time."
In fact, most of Walker's tax bills -- there are eight of them in each chamber -- are still stuck in their initial committees in the House and Senate, and haven't advanced to the finance committees, the last step before going to the floor for a vote. Only two of the 16 tax bills, between the House and Senate, are scheduled for hearings within the next week.
Asked if lawmakers should be doing more work on the tax measures, Coghill said no.
"It's totally appropriate, the way that it's been handled," he said. "You have to look at the impacts of each bill as you're going through."