Gov. Mike Dunleavy on Friday ordered a freeze on most state hiring, out-of-state travel and new regulations as oil prices tumble. Dunleavy outlined the freeze in an administrative order released Friday afternoon.
Oil production in Alaska is expected to increase in the coming years as new projects like Pikka come online. But, at the same time, the price of a barrel of North Slope crude fell more than $10 in April, and federal forecasters say they expect oil prices to fall further in the coming months. Oil no longer provides a majority of the state’s revenue. But it’s still a significant factor, and an especially volatile one.
Dunleavy’s office declined an interview request Monday. In a statement, Dunleavy said falling prices meant the state had no choice but to institute the freezes.
“This is the right thing to do,” Dunleavy said. “Alaskans expect us to manage their resources wisely. With oil prices dropping and our savings accounts unable to carry us through even one year of full state operations, we have no choice but to act now. ”
Rep. DeLena Johnson, R-Palmer, said the freezes were a fast-acting mechanism to address the drop in state revenues.
“He's just looking to make some cuts wherever he can, and that's probably the quickest and fastest way he can do it,” she said.
But some lawmakers say they’re concerned about the impact of the hiring, travel and regulation freeze on the operations of state government. Rep. Will Stapp, R-Fairbanks, said he largely agreed with Dunleavy’s decision to impose the freezes, but he said he was wary of the consequences.
“I think some of those things are probably in order if you look at the oil price and where we’re at in the budget,” he said. “I would certainly like to see the implications. I think, probably, the hiring freeze should probably be on a case-by-case basis.”
Some agencies, especially those dealing with public safety, are exempt from the freeze. The Division of Public Assistance, which administers aid programs like Medicaid and SNAP, is also exempt. The exempt positions include Alaska State Troopers, correctional and probation officers, airport police and fire officials, and “employees that provide patient, resident, or food services at 24-hour institutions.”
The out-of-state travel freeze applies regardless of funding source, meaning state employees can’t travel outside Alaska even if a third party pays for it. In-state travel is restricted to essential business.
State agencies can apply for waivers of the hiring and travel freezes.
The freezes come after a number of high-profile trips by the governor to Washington, D.C. and Asia. Dunleavy was listed as a featured speaker at the conservative Hudson Institute and an investment conference in Maryland on Monday.
“The freeze is aimed at limiting non-essential travel. The Governor will continue to travel when needed to directly support Alaska’s core interests,” Dunleavy spokesperson Jeff Turner said in an email. “Additionally, waivers can be requested by a state agency for travel related to protecting the safety of the public or meet essential State needs.”
House Speaker Bryce Edgmon, I-Dillingham, said he finds it hard to square the cost-control measures with the fact that Dunleavy’s first-draft budget came with a $1.5 billion deficit.
“It doesn’t make sense to me,” he said.
Edgmon said he hoped the freeze would not prevent administration officials from working with legislators in the final days of the legislative session. Dunleavy has already warned administration staff to stay away from the Capitol in the session’s closing days ahead of May 21.
Sen. Bert Stedman, R-Sitka, said lawmakers were able to come up with a balanced budget without a hiring freeze, and he said he’s worried about the impact of a freeze on state services.
“There's a lot of vacancies in the state, and those positions are funded,” he said.
Roughly one in six state jobs were vacant at the beginning of this year. Stedman said he was especially concerned about the Alaska Marine Highway System, where about half the jobs were vacant at the beginning of the year.
“You can't run the Marine Highway without licensed staff, a licensed crew, and you don't get licensed crew unless you hire them,” he said.
The head of the largest union for state employees, Alaska State Employees Association Executive Director Heidi Drygas, said she worried that the hiring freeze could burn out an already stressed state workforce.
“I worry they are more of a face-saving measure than actually saving state funds,” she said. “I say that because it could actually cost more. Right now we are paying state employees huge amounts of overtime because the work has to be done.”
Drygas said it’s long past time for lawmakers and the governor to come together on a long-term plan for the state’s fiscal future.
Dunleavy sent a letter to the heads of the state House and Senate inviting them to join a “joint team” to come up with a fiscal plan.
In that letter, Dunleavy said he “cannot support standalone tax measures.” The House and Senate recently approved a tax bill that aims to bring in more tax revenue from out-of-state corporations. The bill is awaiting the governor’s signature or veto.
