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Alaska governor urges budget compromise to avoid state shutdown

(Reuters) - Alaska Governor Bill Walker urged state legislatures on Tuesday to compromise on a budget in order to avoid an unprecedented government shutdown next month.

FILE PHOTO: Alaska Governor-elect Bill Walker after a meeting with U.S. President Barack Obama and other Governor-elects from seven U.S. states at the White House in Washington, U.S., on December 5, 2014. REUTERS/Larry Downing/File Photo

The state has a multibillion dollar deficit that must be sorted before July 1, the start of Alaska’ new fiscal year, in order to avoid shuttering government offices and services.

Last week, Alaska warned thousands of state workers about potential layoffs unless legislators can agree on a fix to the fiscal crisis. The legislature has been convening through a special session, but Walker described the negotiations as in “a stalemate.”

On Monday, Walker proposed a compromise package that would reduce the state’s deficit from at least $3.7 billion last year to a $300 million shortfall.

“I’m not wild about the compromise,” said Walker, an independent, during a news conference on Tuesday. “But we’re running out of time.”

Pete Kelly, a Republican representing Fairbanks and the Republican-led Senate president, told reporters on Tuesday evening that the governor’s message was “well received but that doesn’t mean we’ll agree to everything.” The Senate was evaluating the package, but a reduced budget was “still the priority,” Kelly said.

Leaders of the Democratic-controlled House declined to comment.

Since 2013, Alaska has struggled with substantial consecutive budget deficits, in part caused by the state’s large reliance on oil revenues and the continued low prices of oil.

The state has balanced its budget over the last few years by drawing $10 billion from its savings without adding new revenues. The state’s budget has been slashed from $7.8 billion in 2013 to $4.3 billion proposed for 2018.

“I know some people say, ‘We need to do some cuts.’ We’ve been doing that,” Walker said on Tuesday. “We have done that significantly.”

Almost 2,300 state positions were eliminated in recent years, along with 70 state programs, and over 40 state facilities, such as prisons, youth detention, and motor vehicle sites, have been closed, Walker said.

Reporting by Robin Respaut in San Francisco; Editing by Lisa Shumaker