Dunleavy prepares to release 2025 state budget, with focus on affordability, public safety, education

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The price of oil is down, and while OPEC is throttling back production on its members, other nations are pumping fossil fuels in greater amounts to fill the gap. Russia, although under sanctions, is selling as much as it can — at a discount — to fund its war with Ukraine. All that may mean a lower price for Alaska North Slope crude in coming months and years.

Price of oil is just one factor that will inform the 2025 budget for the State of Alaska, which may be rolled out by Gov. Mike Dunleavy as early as Thursday. Other factors include things like inflationary pressures on state government, with everything costing more, from food for prisoners to ammunition for officers, and paper for the copy machines.

On June 19, Dunleavy signed the state’s 2024 budget into law; he made made $200 million in vetoes to the additions from the Legislature.

That current budget has total expenditures (including capital budget) of $12.3 billion in fiscal 2024, a 10.8% decline from fiscal 2023. It’s an active budget and numbers will change due to supplemental budget additions and other factors.

The 2025 budget, which by statute is due Dec. 15, has been in the works since late summer.

Read the details of the final 2024 budget, as signed and currently in effect, at this link.

Key topics for the 2025 budget:

Oil price trends: Alaska North Slope crude oil was forecasted to average $85.25 per barrel for Fiscal Year 2023, which ended in July, and $73.00 per barrel for FY 2024, which ends June 30, 2024.

Then, price of oil is expected to decline further, settling at $70 a barrel by FY 2032, according to a forecast from the Office of Management and Budget in March. There is also a more immediate risk of a price collapse, according to the Rapidan Energy Group.

Permanent Fund reserves: If soaring inflation and lower oil revenue are two of Dunleavy’s biggest budget challenges, there is some relief for the State of Alaska, in that the way the Permanent Fund is structured, earnings from it now pay for as much as 60% of the state operations. There may be as much as $3.6 billion available from the Alaska Permanent Fund Earnings Reserve Account, according to numbers released earlier this year.

Surplus from FY 24? The state’s Updated Revenue Source Book may show a $440 million surplus, but that may be cut in half by the supplemental budget. 

PFD: Gov. Dunleavy has always started out the Permanent Fund dividend discussion by proposing a full PFD for all qualifying Alaskans; the Legislature has cut it down every year. If his pattern holds, he will once again ask the Legislature to follow the law and fund the full dividend. This year’s dividend was $1,312. There was language in the final budget that said if there is a large budget surplus due to high oil prices, there may be an additional PFD issued, but that looks doubtful.

Overall budget: Because of inflation and lower oil revenues, it’s likely the governor will propose a budget that is down as much as $100 million from FY 24, a small trim from last year’s proposal.

Education: Gov. Dunleavy has not supported changing the per-student funding formula called the BSA, but instead has opted for one-time funding infusions for education. It’s likely that he won’t bend to pressure from the National Education Association to propose permanent per-student increases. He hasn’t yielded to the union yet, and so he’s not likely to this year.

Public Safety: The governor started out five years ago needing a lot more troopers, and inheriting a crime wave prompted by SB 91, which he promptly repealed with the help of the Legislature. He filled up the Trooper Academies, and gave $25,000 signing bonuses, and then renegotiated with the public safety union to keep new recruits from just leaving the state after serving a year.

Now, Dunleavy is looking at giving Public Safety more resources to do the job. Sources say that may include an enforcement vessel for Southeast Alaska and a Pilatus aircraft for Troopers, which would allow officers to get into 90% of the runways in Alaska, much more than the current DPS King Air can manage. He may also increase the number of Village Public Safety Officers, and has already appointed a VPSO director, making the VPSOs essentially a new division in the Department of Public Safety.

High cost of living: Dunleavy has said he is concerned about general affordability in Alaska. He may have initiatives he will announce this week that address overall cost of living and ideas that his administration has to make life more affordable for Alaskans.

A budget is an expression of several things. The old saying, “show me your budget and I’ll show you your priorities,” is relevant, but budgets are also expressions of limits — there are never enough funds to meet all the wants, needs, and desires of citizens.

Therefore, the tug-of-war will begin as soon as the budget hits the inboxes of legislators, lobbyists, municipal governments, and nonprofit boards around the state, as each entity vies for a bigger piece of what is always a limited pie.

The 2025 Dunleavy budget will probably come out at about the same time the House Majority Caucus meets this week.

28 COMMENTS

  1. Throwing money on the educational institution is like pouring expensive wine down a sewer; all you get is sewer gas in return. Until public schools start producing graduates who can read, write, do functional mathematics, and understand constitutional government, districts should be begging for what scraps they can get, not choice morsels. Alaskans are voting with their feet and pulling their kids out of public schools in order to get a decent education. Average Alaskans are already taxed at the borough level to fund failing schools, and many are just barely getting by anyway due to bad economic policy of Democrats.

  2. Glad that the budget is smaller. I do wish whomever does vital statistics could see if there is a better, cheaper, quicker way of meeting needs of providing documents to the few people who still trust the state and remain or do business in Alaska. The expectation of turn around times is an insult to the residents and proof of the deep disregard state employees have for fellow Alaskans. There is no good excuse for such slowness except basic lack of productivity. For the price the turn around time should be a fraction of what it is.

  3. Public safety… yeah, we all carry guns for that, those that don’t, that’s their problem.

    Education?? U mean indoctrination, theirs is no education anymore unless you become a mentally ill tranny that mutilates your body.

    Civil war is the only solution, but it will never happen as all u sheep are too afraid to actually do anything besides cry wolf. America is weak and frail like all liberals

    • Ooo Brandon. Guess who you are? You’re the cultist believer in Trump’s lies and all that anti woke bullshit. You think the other side is so bad that you are willing to kill them. You are willing to kill some protester who supports gay marriage or contraception. Is that right? Just how weak are you? Have you ever presented your opposition peacefully, with words and emotion instead of squeaky bravado?

      • An interesting comment considering your side is the one rioting whenever it doesn’t get its way.

        Not to mention threatening Jewish students in Ivy League schools (with administration approval).

        How about attacking speakers who scare you?

        Your logic is a mix of Swiss cheese and bad peanut brittle. Full of hole and overloaded with nuts.

      • Probably Scarecrow. I mean Sarah. I heard schemes are abound now that the Reason she Resigned is heading to the UN. Money money money…MO ney…

    • Who needs snowplows when we can just be Alaskans and dig ourselves out? And police? – like the guy above says, I can protect myself. Most are corrupt anyway. And schools? – that’s why we home school, right? And Fish & Game? – go fish, go hunt. The lazy ones who don’t try hard enough to harvest will leave enough for everyone else. Food stamps? – let them go hunt and fish. High protein. Libraries? We have books online. Courts? Stay out of trouble jerks, and if you’re looking for it know that I don’t call 911.

      What is first priority is a real dividend. Not some chopped down Dunleavy dividend (he signed off on it every year) but a real one. 5-6 grand apiece sounds about right. Plus some covid money that we earned for wearing masks for darn near 3 years.

  4. Any chance the public safety could include plowing of our roads? I’ve been in this state for a very long time and I have never gone 4 and more days without seeing a single plow.

    • Lori, those responsible for snow plowing and road maintenance with both the Municipality and the state DOT can give all the excuses and rationalizations they want — and they do give them, in spades! — but it is an undeniable fact that road maintenance in southcentral Alaska is NOT what it was 20 or 30 years ago. Back then, I virtually NEVER worried about driving into or out of Anchorage along the Glenn Highway, or (more shamefully, for them) within Anchorage itself, but now I DO routinely have to worry about it, and take the (bad) road conditions into account in my daily and weekly plans.

      Why is almost EVERYTHING regressing and degenerating in our society lately?

  5. I wished I could had become a mother at 19 instead of ten years later. Motherhood or fatherhood can make adults see states differently. I now know why 20 years ago older Alaskans were worried when they saw 20 year old millennials were leaving Alaska in droves. I should had followed them too. Alaska isn’t a good place for a future nor for raising a family cause a state dependent on federal and tax money eventually runs out of work and money. Alaska’s leadership aren’t the best and here Alaskan people are hopelessly tolerant to corruption and abuse. Alaska doesn’t look good, it looks worse than it did in 2000. I do appreciate Dunleavy’s last eight years trying to make Alaska livable and safer despite his critics and his shortcomings. I’m here so must make the best of my time here until the good Lord chooses to shake things up here or he moves me out, until then Bloom where one’s planted even if the ground is rocky, shady, dry, and weedy.

  6. Funny. Nothing about cutting the bloated state government.

    I wonder if, upon completion of his term, Giessel will give him his balls back.

  7. MA. I love your last sentence; very clever.

    Let’s see, rioting. I suppose you are referring to the upheaval and damage caused by protestors in early 2020. According to Wiki, “The George Floyd protests were a series of police brutality protests that began in Minneapolis in the United States on May 26, 2020.” They were pissed off that yet another unjustified, violent and deadly attack on Black people by White cops had occurred. That’s a legitimate issue.

    What’s not a legitimate issue is defendant Trump’s claim of a stolen election in 2020. This lie produced a violent, deadly attack on our democracy, a “riot” it could be called, a cancer that remains and will continue.

    But Smith and Wesson Brandon, above, wants to kill the opposition “yeah, we all carry guns for that”. Kill the opposition for what exactly? Gay, trans, National Parks; what? And you, MA, defend the dim domestic terrorist. I wonder why?

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