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Breaking: Governor’s budget stays flat, pays full PFD, despite lower revenues

The State’s 2021 budget continues the vision of an administration that seeks to grow the private sector economy in Alaska, and wants to ensure government has a smaller, more sustainable footprint.

Gov. Mike Dunleavy appeared as a confident budget hawk during his press conference on Wednesday, where he was flanked by nearly his entire cabinet.

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He gave brief remarks, answered some questions, before he empowered his commissioners to answer questions that related to their specific budgets, while he left for other meetings. Last year, commissioners were less involved in the actual crafting of their departmental budgets.

Dunleavy said he wants the State’s budget to be truthful and transparent, and that he is expressing the fiscal discipline that he was elected to do, following the priorities of public safety, education, and economic development — commitments he made when he ran for office.

[Budget documents are at this link]

He also vowed to continue discussions with the public and listen to Alaskans this winter as the budget is being debated in Juneau by the Legislature.

The 2021 fiscal year’s budget relies on a large portion of the Constitutional Budget Reserve to balance, but the spending itself is flat.

That came as a surprise to some political reporters, who had been predicting in their advance stories this week that the governor would continue his larger proposed budget cuts from last year.

The budget provides more for more State Troopers, more funds for courts, prosecutors, and the Department of Corrections, and it fully funds Education, as well as the statutory Permanent Fund dividend at the amount to be determined later (but thought to be about $3,000).

Dunleavy said the formula for calculating the dividend has been in statute for decades, and that he intends to follow that statute, saying the PFD does more for Alaska families than any single line item.

Dunleavy has deviated from past governors by proposing the state’s operating budget, capital budget, Mental Health budget and supplemental budget all at once. Some of the highlights:

  • Capital budget: $1.3 billion with the State’s portion at $143 million.
  • Operating budget: $4.39 billion.
  • Supplemental budget: $270 million.
  • Fully funds Court system.
  • Funds three new prosecutors.
  • Funds 15 new Alaska State Trooper positions.
  • Increases funding for Corrections by 17.4 percent.
  • Increases Pioneer Home spending by 18.3 percent.
  • Provides $43 million for homelessness programs.
  • Draws on the Constitutional Budget Reserve: $1.5 billion, leaving $540 million in that account.
  • Draws from the Earnings Reserve Account according to SB 26 in the amount of $3.1 billion, $2.1 billion of which would pay for the full Permanent Fund dividend.

In order to accommodate the built-in growth drivers, such as set Medicaid formulas and union contracts, Dunleavy had to find cuts elsewhere. Commissioner of Administration Kelly Tshibaka said many of those will be found with travel reductions and efficiencies, with the end goal of looking for savings that also meet the mission of the departments.

If in Year One, Dunleavy showed Alaskans what a balanced budget looks like, with serious reductions in some program favorited by some Alaskans such as ferries, Pioneer Homes, and Senior Benefits, in Year Two, he is showing what a budget looks like when it’s holding steady.

His balanced budget was not accepted by the Legislature last year, which added back most of his cuts, but also didn’t override his vetoes for other spending.

This year, the Legislature will have to decide if it wants to take $1.5 billion from the Constitutional Budget Reserve, and then go into next year with not enough money to do a repeat of that. The result will likely be that the Democrat-led House and the Senate will once again take half of the statutory PFD and use it to pay for government services this year, and preserve more of the Constitutional Budget Reserve than is being proposed by the governor.

The budget is not sustainable at this point, which underscores the importance of the cuts he was able to make last year. Tough choices are clearly ahead.

Dunleavy also indicated he’ll be offering legislation to strengthen reading and algebra outcomes in the public schools, and will be looking at the 55 percent of the budget that is tied to formulas, giving budget writers little room to work with as they try to pay for everything that is mandated in statute.

Suzanne Downing
Suzanne Downing
Suzanne Downing had careers in business and journalism before serving as the Director of Faith and Community-based Initiatives for Florida Gov. Jeb Bush and returning to Alaska to serve as speechwriter for Gov. Sean Parnell. Born on the Oregon coast, she moved to Alaska in 1969.


  1. Gov. Mike Dunleavy is gutless and will never cut the budget. He cut the budget last time, then he caved to the libs and gave his cuts back. He is all talk!!

    • That’s what happens when that many people sign on to a “recall.” It’s even obvious to those without a clue (Dunleavy) and a lot of folks are dependent on those appointed jobs. And that’s called economics.

        • You can see some of those folks in the above picture surrounding Dunleavy. And the economics I’m referring to is that where a recession is when your neighbor loses his job and a depression is where you lose yours.
          Didn’t expect you to pick up on the joke there Four-Flusher.

  2. The governor learned a harsh lesson last year: the people of Alaska don’t want a budget balanced by making cuts.

    The people want all the goodies that the government hands out in the form of great government jobs, entitlement programs, subsidized healthcare, subsidized housing, subsidized food, subsidized everything for “the most vulnerable”, grants and aid to municipalities (to help fund their own great jobs and entitlements), and all the rest of the bloat you’ll find in every single state budget.

    Yes, some of the people lose more than they gain but we’ve obviously reached that tipping point where more gain more than they lose (or think they do) and those people are more than happy to have the government take from you to give to them.

    Your legislators know that each of us get only one vote and when the net takers outnumber the net losers it’s pretty easy to guess who will get the legislative nod.

    The governor is honest in his efforts to bring the budget under control but when reducing travel is touted as a major win on the road to a balanced budget you know that the battle has been lost.

    The governor wants to have discussions with average Alaskans to get ideas and direction on how the state should budget its money. That’s like asking your kids if they’d like spinach or ice cream for dinner…you don’t even have to ask.

    If the average Alaskan wanted to experience painful budget cuts for the good of the overall state, their children and future prosperity we’d have heard that during the last budget cycle. But what we actually heard was a massive outpouring of angry demands that they get their piece of the government pie. That hasn’t changed and won’t change.

    Since all American government abandoned, or found ways around, the limitations on government that were written into our various constitutions, aided by the compliant and mutually benefiting judiciary, there are now no checks on what the government can do in their quest to serve “the General Welfare” of the citizenry.

    The state budget will continue to grow over time, consuming more and more of the limited resources and wealth that are available.

    They’ve already squandered most of our state savings, taken big chunks of the PFD and are trying to convince us that taxing ourselves is the answer to all our budgetary woes.

    Government is insatiable, there’s never enough because as soon as there’s money in the pot somebody wants it and politicians are eager to buy votes with your money.

    The only way to stop the government is to cut the budget, drastically, but not even the governor wants to try that again if the proposed budget that was released today is any indication.

  3. This is a disaster.

    Nobody believes Emperor Giessel is going pay a full dividend much less repay a dime of the dividends absconded with previously. It is a non starter and everyone, including OMB and the Gov knows it.

    This budget is nothing more than a declaration that Dunleavy is done cutting. He is now a status quo administration.

    Extremely dissapointed in you Big Mike.

  4. What meeting was more important than the State’s fiscal affairs? Was there a death in the family? Wedding reception? Or he can’t answer the tough questions about where his “lack of vision” is taking the State, our future. Empowering his people to answer his questions, really Suzie, you can’t spin that fast enough as that dog don’t hunt. Try again. There is no plan, just confusion and ineptitude here. Wake up.

  5. This is called emptying the can, not kicking the can. Not impressed.

    The budget does make you wonder if the University Regents regrets signing that agreement now, being they agreed to be cut in 2020 and 2021, so what do you know they were cut.

  6. Big D threw in the towel, no more Arduin, gone is the breath of fresh air, lost is the sense that for once someone was going to wrest control of the Big Labor bloat.

    Allowing the government to continue down the path it is presently on, and increasing the pfd is not a plan towards sustainability. It is selling our financial future short, and hoping people remember their dividend at the ballot box.

    Mike this thinking didn’t get you elected, you have gone lukewarm, you are giving into the swamp

    At this point I am inclined to vote recall myself, as you seem to lack the backbone to do what needs to be done in spite of the dumpster-fire in the legislative branch protecting their financiers over the long term interests of the state.

    • I agree with everything you said right up to the part about recall.

      Although I wouldn’t mind if Dunleavy threw in the towel and quit I can’t support recall. Manufacturing charges to achieve removal is no better than what Schiff and Nadler are doing in the Congress today.

      I just can’t be part of that miscarriage of justice.

  7. Michael Dukes nailed it this morning – Alaska has a population that is addicted to state spending. They can’t help themselves, and they can’t be responsible or accountable for anything – they’re “addicts,” “victimized” by “the man.” Oppressed, held back by “the system.” And all the leftist blah blah blah-kalar. They just need another program to rehabilitate them, to wean them off their addiction.

    • My Pappa said son don’t let the man get you do what he done to me
      ‘Cause he’ll get you’ cause he’ll get you now now

      John Fogerty of Credence Clearwater Revival’s Born on a Bayou

      Michael Dukes has never nailed anything!

  8. Really Billy Boy Yankee? Now who be doin’ all da bad tings to ya poor poor boy? CCR is livin’ loser-past. Like where you’re at dude,

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