Andrew Kitchenman

Gov. Bill Walker called for the entire legislature to work together with him to close the state’s budget shortfall. His annual State of the State Address on Thursday night reflected the state’s grave budget situation.

Walker said the budget crisis was a long time coming. He said the state has had a hole in what he called its fiscal boat since oil production began to drop in the 1980s.

“As governor, I am flexible on the details of a fiscal plan as long as the outcome meets the basic test of fairness and sustainability. I am not flexible on the need to get there this year,” Walker said. “It’s time to fix the hole in the boat.”

Walker said he was warned some of his proposals would hasten the end of his political life, but that he puts the state’s interests above his own.

He’s proposed reducing the annual Permanent Fund dividend. And he would also introduce a new personal income tax and raise other taxes, while cutting spending.

Walker drew on his own family history for inspiration. The Good Friday earthquake of 1964 destroyed the family construction business in Valdez, among others. He and his father found work as school janitors.

“We were fortunate to have the work. We struggled right up until the construction of the Trans-Alaska Oil Pipeline System. But we survived by cutting our expenses and developing new sources of revenue. We survived through hard work, and pulling together as a family,” he said. “Today, Alaska’s been struck by an earthquake of a different kind. Oil prices are plummeting and oil production is declining.”

The state is seeking to close a $3.5 billion budget shortfall.

After the address, politicians from both parties expressed a willingness to work with the governor.

Sen. John Coghill, R-North Pole, said fellow Republicans agreed with much of what Walker said. But, his party is looking for deeper spending cuts. And Coghill suggested that while there may be progress, the legislature is unlikely to close the entire shortfall this year.

“Some of the details that he has put forward are going to be tougher to, uh, to shuffle together than as alluded to in the speech,” Coghill said.

Rep. Chris Tuck, leader of the House Democrats, said he liked Walker’s call for working together. He said the speech reflected the less divisive tone that’s surrounded the start of the legislative session.

“It is going to require all of us to pull together and, uh, Republican, Democrat, doesn’t matter,” Tuck said. “There used to be a time in Alaska’s  history where we all pulled together to  do what’s best for Alaska, and we’re back in those times now.”

The speech came near the end of the first week of the legislative session. Last year, the legislature ran well past their 90-day deadline to adopt a budget.

Related story: What did Alaskans want to hear from Gov. Walker?

Alaskans are increasingly concerned about the $3.5 billion state budget shortfall. And they’re interested in using both state spending cuts and new revenue to close the gap.

That’s according to the Rasmuson Foundation’s Plan4Alaska, which surveyed 812 Alaskans earlier this month.

Compared with a similar survey in July, the share of residents who are extremely concerned about the shortfall rose from 31 percent to 43 percent.

Two-thirds of residents want to close the shortfall with both spending cuts and new revenue, while 30 percent want only cuts.

Rasmuson Foundation President Diane Kaplan said a majority in every region of the state supported a statewide sales tax. That’s true even in areas that already have local sales taxes.

And while introducing a state personal income tax is the least popular option, with only 40 percent supporting the idea, support is higher if the tax were limited to those with higher incomes.

“We then looked a little more deeply on the income tax and we asked, ‘Would you support an income tax for people who earn $100,000 or greater?’” Kaplan said. “A majority of Alaskans except those who earn $100,000 or more thought that was a great idea.”

Cutting spending is popular, with 55 percent supporting $500 million in cuts. But when asked for areas to reduce spending, fewer people could identify specific cuts.

Gov. Bill Walker’s new budget plan, which includes a smaller amount of spending cuts, has the support of 55 percent of residents who’ve heard of it. But most people don’t know much about it.