FERRY SYSTEM TOO COSTLY TO RUN AS CURRENTLY OPERATED
The top takeaway from the 2020 budget proposal by the Dunleavy Administration, which was rolled out today, include consolidations and efficiencies, and also the elimination of major programs:
Overall, state spending would be $4.6 billion, which is $1.6 billion less than the budget presented in December by former Gov. Bill Walker.
Education: $280 million reduction to the base student allocation. The BSA would be reduced by $1,100 per student, going from $5,900 to $4,880. Only 50 percent of state dollars goes into classrooms now, and the other 50 percent is used for school administration.
Medicaid: $270 million in cuts. The Department of Health and Social Services is in the process of negotiating with the Centers for Medicaid and Medicare Services for greater percent federal reimbursement for many services. CMS has visited Alaska and met with DHSS Commissioner Adam Crum about restructuring. Some of the reductions will come with reduced reimbursement rates. Alaska reimburses at a higher rate than any other state in the country. There is no proposal to eliminate coverage for any population.
Ferries: $98 million. Alaska Marine Highway System takes a 65 percent cut. Service would remain through October of this year, and a marine consultant would be contracted to come up with a divestiture plan. Currently, the state subsidizes each passenger’s ferry mile with $4.58 of public money, whereas road miles only require 2 cents per mile subsidy. 2018 passenger capacity was 42.6 percent and 51.6 percent for vehicle capacity.
University: $155 million reduction in general funds. The Board of Regents will be asked to restructure, possibly focusing on research at the Fairbanks campus, and teaching at the Anchorage campus. University of Alaska Southeast would be a hub for the community college level, and $20 million will be added in for community campuses, such as Ketchikan and Kenai. The idea is to return them to the community college model.
Corrections: $32 million reduction. Save $12.8 million by moving some long-sentenced prisoners out of state. Save another $6 million by closing a wing at Wildwood. Inmate cost in Alaska is $168 per day. 500 sentenced inmates would be sent out of state.
North Slope Borough Special Tax: The Dunleavy Administration seeks to repeal a law that gives over $400 million in property taxes from the Trans Alaska Pipeline to the North Slope Borough. That money would go into the General Fund. The North Slope Borough is awash in money and has five years of reserves, enough time for new oil to come from the Willow and Greater Moose’s Tooth fields, as well as the National Petroleum Reserve Alaska. The borough has about 9,000 residents.
Alcohol and Marijuana Control Board: Repeal board and have the Department of Commerce manage the issues.
State Council on Arts and Humanities: Repeal.
Public Broadcasting: Zero out the $3.4 million funds.
Revolving loan funds: Eliminate all but commercial fisheries.
Student loans: Eliminate program.
WAMI program: Eliminate program.
Live Homework Help: Eliminate.
Best Beginning Program: Eliminate.
Early Childhood and Pre-K: Eliminate.
Curriculum Fund: Repeal.
Power Cost Equalization: Eliminate special fund and roll into General Fund, then give out to communities. The program is not reduced, but the special fund is eliminated. This will be a multi-year effort to look at every designated fund established by statute and determine if that dedication should be repealed. Intended to increase the flexibility of state budgeting and decrease stakeholders having their own fund.
Pioneer Homes: Raise rates to cover cost of service. New customers will pay actual costs. Current residents will be grandfathered in. Payment assistance program will be put in place for current residents, based on need. Intent is no one removed from homes.
State Human Resources and Procurement: Consolidate all departments’ HR and procurement . Put under Department of Administration.
Investigators: State’s over 100 investigators — for everything from fraud, crime, to environment, moved to Department of Law as part of a new statewide investigative unit.
Travel: Reduce state travel budget by 50 percent across departments.
Public Safety: No increases to troopers at this time, since the unit has 40 unfilled positions. The reduction to Walker’s proposed increase is due to no additional trooper positions until Public Safety fills its existing vacancies.
Actual Personnel Reduction: Over 620 State positions eliminated, plus 320 in the ferry system.
Alaska Oil and Gas Conservation Commission: Moves to Department of of Commerce from Department of Administration.
Rural Airports: Reduce number of public airports owned or funded by the State, especially air strips where there is 0 population.
Property Disposal: Possible sale of some of the 1,800 structures it owns.
Exempt positions: Some fully exempt employees would be placed into partially exempt services and placed on salary schedules. This will be done through an “Exempt Position Reform Bill,” capping exempt job salaries at $300,000. Creation of exempt positions would be subject to approval of the Office of Management and Budget.
Permanent Fund Dividend: The funds for paying the Permanent Fund dividend is a separate appropriation bill. The governor does not see this as an appropriation, so it is not part of the proposed operating budget.
This story will be updated. Check back.
Conceptually very sensible. Finally an adult is in charge – of course with the exception of the PFD (which AOC would enthusiastically support) which unfortunately has been baked into the political equation long before Dunleavy.
Good Point. The Dividend is the most Socialist program in the United States. All the arguments about sub-surface rights and the “peoples share” are total BS. The Alaska Supreme Court just proved me correct!
The Governor’s approch is refreshing and wonderful to see…..for a long time the State has not had an income problem — it has had a spending problem…and has gotten so bloated….cutting departments back and refocusing each department once again on their basic functions is long overdue…
Yes we sure do have a spending problem!
Starting with $4 billion for a $6700 Dividend!
Robbing our savings account of $14 Billion to pay Dividends the past 5 years!
Brilliant!!!! And this is a governor who keeps his promise. He HAS the support of majority of Alaskans. The UA system won’t like this budget. Who cares. UA administrators make huge salaries, as do the tenured professors, and all we hear about from them is “manmade global warming,” the biggest hoax of the 20th and 21st centuries.
Wow. A nice start, although it probably should have been more to offset the expected pushback.
I would cut all funds to the University system until we start to see a shortage of graduates. Why keep subsidizing that which we don’t need, and maybe they would cut some useless stuff like office of diversity and ethnic studies programs that don’t help anyone. Instaed they cut good programs like dental hygiene at UAF; now we have an ongoing shortage of hygienists who make $50/hr or more to start, if we could get them.
A good start, governor; nice to see someone keep their word and make real cuts.
Exempt positions have long been one of my pet peeves. I’m not too troubled by the enumerated list at AS 39.25.110 though I think some classifications are exempt just because some group or another had a friend in high places that could loose them from the surly bonds of the State Pay Plan. The “temporary exempt” at 110(9) has been the refuge of rogues and bedwarmers for the last couple of decades, and, yes, I considered taking a 110(9) appointment, but I was waiving benefits; the benefits are the issue. Most of these jobs should either be eliminated or turned into classified jobs, not partially exempt jobs; these are mostly just people with a friend who could get the Governor’s Office to sign off on their sinecure. They can either do the job as a classified employee or work at WalMart.
I have misgivings about the $300K cap on exempt salaries. If $300K is the cap, $300K will be the standard. I think that any program that doesn’t have program receipts shouldn’t be allowed to pay a salary that isn’t on the State pay plan. It has long been a game with the quasi-governments; if you gave your board enough travel and networking opportunity, they’d pay you what you wanted. Only if the program brings in its own money should exempt employees be paid more than the standard State Pay Plan wages.
It’s no big deal that these salaries would have to be signed off by OMB; I think they always have anyway, and the Governor’s Office has to sign off on exempt appointments.
Everyone has a sacred cow, so now is the time they will be coming out of the woodwork. If you are looking for additional cuts, ask a state employee what they think should be eliminated. I am sure you will have many suggestions. It may be $100 here and $1000 there, but they soon add up to real savings.
Yes! This needs to happen. The Governor has my full support.
This needed to happen long ago. Let’s proceed forward. Next on the agenda, how do we get rid of ledoux, stutes and knopp.
So why cut the AMCO board? None of them are paid. I can’t imagine they cost more then a couple thousand dollars in travel pay. That’s just an attempt to bring them under a cloaked system where he can do with it what he pleases.
Here’s the bottom-line skinny on the entire debacle with the Alaska State House of Representatives:
The Democratic Party is still furious over the Bart LeBon win in Fairbanks. If Bart would have lost to Kathy Dodge (one vote victory margin), the Democrats would have been in charge of the House by 21 votes to 19 (including the three Republican traitors). So we are now stuck with 20-20 and no leadership. The Democrats ONLY game plan for this session is to tie-up everything in the House and let nothing advance forward as long as the game is 20-20. It’s a revenge strategy and will proceed all the way into May. Just watch! This will be the Democrats rallying cry to try and block the governor’s budget. Pretty good strategy if you are outraged, as the Democrats are. This is a swarm in the beehive, and until Republicans show some inner-party discipline, as the Democrats always employ, the stalemate will not be resolved.
Good analysis, Ear. Sound like you have exclusive inside sources to the Democrat’s strategy. I wouldn’t be a bit surprised that Beltrami, Walker, and Begich are working behind the scenes to derail Dunleavy. Spite and Envy are usually the big drivers for losers. They have nothing else. Hope Bart LeBon stays loyal and quits trying to make friends with the losers.
Moving sentenced inmates out of state is a good money savings plan. Unfortunately the ACLU will contest this saying it creates a hardship on the inmates and families of those being sent to the lower 48. Too bad.
One thing to keep in mind is that the Governor holds the high card here: There may be many in the Legislature that oppose the proposed cuts and will vote to restore the deleted money. Following that, the Governor may use the line-item veto to again reduce the restored funding. After that, the Legislature may try to override the Governor’s vetos BUT under the Alaska Constitution it takes a three-quarters vote of the Legislature to override a veto of an appropriation. Governor Dunleavy has sixteen friends in the Legislature, I am certain.
These cuts are coming, folks. Make plans accordingly.
The one element that will alter this assessment is that the Governor will be willing to make some deals with the Legislature to obtain his PFD restoration.
If the University of AK needs funds, then they should sell some of the acreage they own to raise money from the highest bidder (isn’t that what land grant colleges are supposed to do?). UA Land
Management Mission-“The primary role of UA Land Management is to convert the University’s grant land assets to investible income to support the University’s educational mission and to prudently manage land dedicated for educational purposes consistent with campus goals and objectives. In addition, UA Land Management is responsible for managing non-trust land assets, which include purchased and donated properties. University trust land designated for investment purposes includes approximately 125,000 acres owned in fee simple, 12,000 acres of surface rights, 14,000 acres of subsurface rights, and 62,000 acres of timber harvesting rights. An additional 2,000 acres of land donations and purchases are also managed as investment lands. Source: http://www.ualand.com/index.cfm?fuseaction=Stewardship.Home
Wow! How in the world do they own that much land? Yes, the university system could sell some land, along with the federal government! The largest category in the budget is education.
The Univ. system is actually land poor. It is the second smallest land grant university in the nation. They have less than 100,000 acres that could be developed. They just had a hard time getting to harvest timber outside of Haines. Some of the Board of Trustees view their holdings as a conservation holding group. They take the money from all sales and immediately place it in their scholarship fund instead of retaining any earnings to buy investment properties produce more income. This is an area that the University can remodel to actually help generate income.
I would be curious to see your source of the information that says the Alaska University System is land poor and the second smallest land grant university in the Nation, I’ve only been able to find information that shows it has more land than all of the land grant universities I’ve read about so far. But I haven’t found a definitive list, just digging through each universities land grant.
Steve-O, This information/description was given to me by the past Director, UA Lands. She left last November. I was part of a 3 person working group assigned by President Jim Johnson to meet with her, review business operations and provide to her recommendations. Our two recommendations were to save 50% of all income from sales and use it as retained earnings to buy income producing properties to build their income base. Our second recommendation was to do land swaps with the DNR to get some oil, coal or gas developable properties into the UA Lands portfolio for future development. We had the concepts agreed to by the past Commissioner of DNR. So basically, everyone we were working with is gone so we start afresh. 🙂
Thanks for the response David, seems like it would be fair to say that the University has a lot of poor land instead of being land poor. I haven’t been able to locate another land grant university with as much land holding acreage wise as UA.
The Mental Health Trust has the same issue; they seem to think their mission is snapping up land to prevent development. They don’t generate any revenue with their lands, so such mental health services as the State provides come from the General Fund.
Save WAMI. Other than that, I’m totally in favor. When times get tight at home, we fund our core necessities and live without the rest. Lets see if Alaska will try that for a few years. I support this with or without WAMI being spared.
I hope this budget is just the start of overpaid people on the way out to the real world. The education cuts need to be directed at the administration mainly. What business has a 50% split on costs? Get back to basics and see if our schools produce better results like they use to. Way to many cling on administration staff crying about how it will hurt the children. Well hurt the administration for a change. You need a classroom and a teacher to teach someone. Look online at the principles salary way over 100,00 per year.
I hope the education cuts go to the administration staff and not the teachers. It is always about the children with the school districts then make it about them and the administration staff needs to take the hit this time and not the public. Look on line at the principles salary well over 100,000 per year with benefits. 50% of the budget to run the schools is crazy. All you need is a classroom and a teacher for someone to learn. Let the bloated school district whine about the children and push to eliminate some management for a change.
Mark, this figure is completely false. At most, 10% goes toward school and district administration. I have no clue where this figure comes from.
Bs. There are thousands more employees at yaf than there are teachers. I think 3000 to 500 last time i looked.
Its about time we finally have a leader with balls and why should a principal get 100000 dollars a year ?? or a official getting 300000 a year are you kidding or municipal employees making 120000 a year or police officers making 120000 plus for not responding I have called them countless times and 1 out of 6 times called they show up ??????????????????????????????????? and Teachers needing more money when the parents have to teach the kids with their homework every night because the Teacher were to busy brain washing our kids to be liberals .Let these people live on a 300000 a year job like the rest of us and actually work for their money instead of sitting on there fat asses wanting more money.
Although I agree the state’s budget needs a “belt tightening” there are several items missing…
“This budget is going to impact all Alaskans. It’s too massive not to,” the governor said.
But one group of “Alaskans” that are unaffected is the Oil industry.
Why are no reductions in tax credits listed?
“I think we’ve got be careful,” Wielechowski said. “The oil industry is important to this state. But at the same time when you’re in a situation where you’re earning $400 to $800 million in a year and you have tax credits that you’re allowing of $1.2 billion in a year, you just have to look at the sustainability of this program. We just can’t afford it.”
Ending the program would save the state $1.2 billion this year and then $1 billion annually, according to Wielechowski, although he does have some concerns about going up against business interests.”
Also, cutting school budgets may result in larger property taxes down the road for home owners in AK as boroughs struggle to fund their schools.
Lastly, for all the money paid to Arduin for her economic expertise, you think we could have an offer of some new revenue for our state?
I suggest shipping LNG directly from the Beaufort Sea in the summer months when sea ice is minimal.
Having an Icebreaker would help accomplish this goal and revenue earned would help maintain the services needed for our state.
Can we have the lights turned off at Sutton Correctional? That thing is light like an airport and has been empty for about 3 years.
Reality. When my Alaska Express card hit it’s $4.6 Billion limit, they didn’t think it was okay to extend me another $1.6 Billion in additional credit to keep partying.
When I called to complain, they kept mentioning something about fiscal responsibility and to pay it off on time, or my credit score would get severely damaged.
Nice beginning! The budget proposal is certainly on target with watching the balance in the checkbook. If you don’t have it at the end of the day you surely can’t spend it and be responsible.
getting to equilibrium in most markets is usually a brutal process. The greater the disequilibrium, the more severe the transition. We made it harder than needed. But at some point gravity applies. Even in Venezuela.
Curious about where Suzanne gets her information on the education numbers. Only 50% goes to the classrooms? How is that even possible?
It’s like a humpback whale. You know how the first 18″ under it’s skin is all fat and blubber?
That is an good analogy of our current educational system.
It looks like the numbers came from the Census Bureau Website:
Instruction is defined pretty narrowly in these comparisons, and you’ll see that Alaska is actually at 53.8%, and the national average is only 60.5%. However, on that same spreadsheet, if you include the Support Services (this would include librarians, counselors, etc. – what most people include in their definition of “instruction”) that Alaska’s number is 71.6%, and the national average is 76.5% – so Alaska is impressively close to the national average for what we (in Alaska) usually define as “instructional.” Also note that the other 28.4% is for maintenance and utilities, as well as insurance (property, liability, auto, etc.) and admin. So administrative costs (or what I think people are defining as administrative costs here – people in the offices) are really a pretty small percentage – especially when you consider Alaska’s energy costs.
The State-wide University system has been on bloated budgets for over 40 years. The small campuses out in the villages drain resources at an exponential rate. The UAF Chancellor is talking about the University as an economic driver to generate revenue for the state. How is that even possible when the University’s new primary mission is to perpetually study man-made climate change at all levels of scientific disciplines. This is terrible to produce such a mission statement on the largest hoax ever invented. Millions are also wasted on cultural studies, music, hockey and Native linguistics. These are not revenue generators. They are revenue depleters. If you want to grow the economy through the University, you do it by placing an emphasis on the disciplines that ACTUALLY produce growth in the economy. But the University administrators are too dumb to see or acknowledge that. Thus you have a system that is vontinually in need of money to pay high wages and crank out students who have little wherewithal to gain meaningful employment because all they have learned in college is about the man-made climate change hoax. Cut away, Dunleavy. They can study the monster climate change hoax from some other institution.
There will be cuts! The rebel yell of the new Administration. But every Alaskan has to take the hit. I do not want the governor to slash into the Alaska Pioneer Homes. Older Alaskans are choosing not to leave the state. The oldest and most feeble need elder housing and nursing care. Shouldn’t we be building more Pioneer Homes or adding wings to the existing facilities? Yes. Ok, this is my two cents worth. There is something for everyone to dislike in the Dunleavy butcher shop. But isn’t that why we elected him? There is no Santa Claus.
Wow, obviously this Gov does not care about the mental health Consumer in Alaska because he is cutting thier budget and this is unacceptable. I mean what is he saying here let them eat cake? The problem is this he has been bought off by the oil companies and other corporations that own Alaska and this is obvious, not to mention he is totally out of touch too.
There is nothing in this budget about taxing the oil corporations. In 2018, ExxonMobil made $21 billion.
All told this looks like $100,000,000 to $200,000,000 in cuts. Sure there are a couple of big items that were slashed, that should have been handled years ago, but now a discussion can begin. With the typical response from the big government folks filled with hysteria, wailing, and gnashing of teeth I don’t expect many of them to have anything remotely resembling a rational discussion. Hopefully there are enough people who understand we can’t just keep spending money we do not have.
It is all bipartisan and everyone agrees until your party loses and the opposition is implementing the changes, and one of those cuts hits close to home: your community; your kid; your job. Sorry folks. Everyone needs to take a hit. It sounds cold and heartless, but let’s get back to basics. Get off the teet, tighten up. Help out your neighbor if you can. I probably sound ridiculous, but if the sky is truly falling in on someone, that’s what we used to do…neighbor helping neighbor….not the government.
Refreshing to see that a Government is going to only spend what it takes in for Revenue. Hard to believe that nobody would support that. Try spending more than you take in for salary and you will find your butt in jail for Fraud.
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