Alaska passes budget to avoid partial government shutdown

[June 12, 2015]  JUNEAU (Reuters) - Alaska Governor Bill Walker on Thursday rescinded his plan to furlough more than 10,000 state employees after state lawmakers reached a $5 billion budget agreement, avoiding a partial government shutdown from July 1.

Walker's administration mailed letters to employees deemed non-essential earlier this month, alerting them to a possible temporary layoff. On Friday, the same employees will get a letter lifting the notice.

"We are disappointed that our thousands of employees had to anticipate a shut down," Walker said. "We apologize for that."

Lawmakers had been at odds for more than four months on how to fund day-to-day operations with Alaska beset by a budget shortfall as large as $4 billion, worsened by a global oil price plunge.

The House and Senate have differed on how much they can cut without hurting services to the state's 750,000 residents.

In April, the legislature approved a budget that would fund certain government operations but only into the fall.

Walker vetoed those sections, seeking a fully-funded budget that covers expenses through June 2016, forcing lawmakers to hammer out differences.

Among those issues were funding levels for public education, the state's universities, the marine highway system and restoring pay raises to state workers, a portion of which were tied to contracts.

Had no agreement been reached, some 10,000 workers in jobs ranging from communications to issuing permits and certain non-emergency road maintenance would have been laid off temporarily.

Additionally, the 11 marine highway ferries that serve Alaska's coastal communities, plus one Canadian and Washington state port, would also have been suspended.

(Editing by Curtis Skinner and Simon Cameron-Moore)

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