02/05/2015 05:26 EST | Updated 04/07/2015 05:59 EDT

Alaska governor proposes cutting nearly 330 state positions amid crash in oil prices

JUNEAU, Alaska - Alaska Gov. Bill Walker has proposed eliminating 329 state positions as part of a budget package that is still expected to require lawmakers to draw billions of dollars from savings amid the plunge in oil prices.

Walker proposed cutting about $550 million in total unrestricted general funds to help balance the budget, according to information provided by his budget office. That is money that isn't restricted in its use. The total proposed budget authorization is about $12.8 billion.

The proposal is a starting point for talks, one that lawmakers have been eagerly anticipating from the new governor. Some lawmakers have suggested the overall cuts might not be deep enough, while some proposed cuts have already caused a stir, such as Walker's proposal to cut $52 million in additional school money for next year and 2017 — money that was included in a hotly debated education bill last session.

Falling oil prices have exacerbated the state's budget deficit, projected at about $6.9 billion between this year and next. While Alaska has billions of dollars to dip into in the constitutional budget reserve fund, spending levels and oil prices will help dictate how long those savings last.

Walker and lawmakers have been bracing the public for cuts and plans to slim down the size of government. Walker has said he asked his commissioners to look at the potential impact of 25 per cent cuts to their departments over four years.

"There's no painless reduction. You either do something completely different or you do less because you have fewer people to do the job," Walker's budget director, Pat Pitney, told reporters Thursday.

Part of the discussion is finding efficiencies and ways agencies can work together or services can be delivered differently.

Of the positions proposed for elimination, it's anticipated that more than half are vacant or are expected to become vacant due to retirements or attrition, Pitney said. Most are permanent full-time positions.

The list of reduced positions includes 85 within the University of Alaska system.

Republican Rep. Mark Neuman, co-chair of the House Finance Committee, said the state is going to have to face government job cuts.

"I think we're going to have to come back next year with a totally restructured government as we know it today. We're going to have to have a government that fits the size of the amount of income that we have," Neuman said during a House majority news conference Thursday.

Walker — who has called the fiscal situation an opportunity for constructive change rather than a crisis — said the state must be smart about cuts it makes to avoid throwing itself into an economic tailspin. There's no need to do that, he said, adding that the state can manage its way out.

Walker plans to continue to push Medicaid expansion, which he said could lead to cost savings. That issue is expected to get scrutiny as budget talks progress.