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On Wednesday, Alaska Governor Bill Walker announced a veto that will create a cut in the annual oil revenue disbursement to Alaska residents from the state.
The Governor salvaged $1000 for each resident, compared to last year when residents received $2,072. The move was a budgetary measure, since the state faces massive debt. The governor’s office has indicated that all budget-cutting options were being considered.
Oil revenue is the main source of income for the state, and the slump in prices has resulted in a $3 billion deficit for the coming year. Walker will recall the Alaskan legislature in July to vote on the issue. Those legislators could find themselves in the difficult position of either approving the $1,000 cap or facing constituents who will receive no money if Walker vetoes the check appropriation bill. That appropriation would total around $1.4 billion.
Walker introduced the bill to cap the checks at $1,000 earlier in the year. The bill passed in the state Senate, but did not make it out of committee in the House last month. Walker has also told Alaskans that if changes were not made, the oil wealth program could come to an end, and that the oil fund could disappear in four years.
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At present the fund is at approximately $52 billion. Halving the oil wealth program is not the only measure that Walker has considered. He has also proposed bringing back state income tax. T.V. station KTUU in Anchorage said that Walker’s veto will keep $666.4 million from going into the fund’s earnings reserve.
The fund was created in 1976 to compensate the state and residents following the completion of the Trans-Alaska pipeline. Twenty-five percent the funds were to go to “income producing investments.” The fund was designed with future generations in mind for a time in which oil would not be a source of income.
Lincoln Brown for Oilprice.com
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Lincoln Brown is the former News and Program Director for KVEL radio in Vernal, Utah. He hosted “The Lincoln Brown Show” and was penned a…