State budget stays flat: Spending down 4% since 2019

By
Suzanne Downing
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21
1091

Gov. Mike Dunleavy rolled out his state budget for fiscal year 2024 today, a budget year that starts July 1. The proposed budget reflects a flat spending strategy, with fully funded essential state services during a time when oil revenues are down by $1.8 billion year over year.

Dunleavy is again funding a “statutory Permanent Fund dividend” of about $4,000 per eligible Alaskan, and the overall budget has a deficit of about $265 million, which, after tapping the Constitutional Budget Reserve, will leave about $2 billion in that reserve fund.

The numbers underscore a commitment to fiscal discipline, which is what the governor ran on. This in the face of inflation running at over 7%, the overall budget reduction year over year is 15%.

The Capital Budget is pegged at $200 million to leverage $1 billion in federal dollars. Capital spending is seeing a $457 million in reduction, and the operating budget will have about $378 million in reductions, for an overall spending reduction of $836 million year over year.

Over the course of his administration, Dunleavy has retired millions of dollars in debt, which frees up some financial flexibility for the state. By using the bigger revenues in past years to pay off debt and liabilities, the state is no longer making the same kind of debt payments. It’s like the state doesn’t have credit card debt, so has more liquidity.

He’s asking state agencies to use their existing unfilled positions, or PCNs, to help keep operational costs flat.

Other highlights include: Fully funded Power Cost Equalization programs for rural areas, fully funded education, but no increases and no forward-funding, due to revenue shortfalls.

Budget highlights:

  • FY23 revenue estimate is down $1.8 billion from when the govenor signed the current budget in June.
  • The statutory PFD should be almost $4,000 per eligible Alaskan
  • FY 2024 projected deficit is $265 million
  • The Constitutional Budget Reserve will have a $2 billion balance
  • $25 million – Energy projects for Alaska Energy Authority, including rural power system upgrades, bulk fuel upgrades, hydro development and renewable energy/efficiency projects, and grid resiliency
  • $5 million for marketing of Alaska through Department of Commerce Community and Economic Development
  • $14.2 million for Public Safety capital investments, including post remodel and expansion, patrol vessel replacement, investigative and forensic electronic equipment
  • $3.3 million – 30 DPS Trooper support and administrative positions, to help get troopers out doing their jobs
  • $5 million – Rural professional housing (expanded scope and funding)
  • $10 million – University of Alaska drone program, with the idea that Alaska can become drone technology research capital
  • $2 million – Expand the WWAMI program to add 10 more physician training slots
  • $11 million – Statehood defense investment, including funding for research, science, and legal, to be prepared to fight the federal government if it tries to cut off the ability of the state to access resources
  • $4 million – New cabins and park sanitation stations, to make them more accessible to those with disabilities
  • $9.5 million – Healthy Families Initiatives to address things like congenital syphilis and tuberculosis, recruitment and retention of health professionals to Alaska, and expand postpartum Medicaid coverage
  • $6.4 million – Year 2 of the Department of Education reading program approved last year
  • $4.6 million – DGF capital projects for food security programs, including animal bank, Alaska marine salmon program, Arctic fisheries, and Central Region fisheries management sonar replacement
  • $3 million – Three-phase power extensions and upgrades to Delta Farm Region and Co-op
  • $4.1 million – Department of Corrections capital projects, including Point Mac Correctional Farm produce processing plant and statewide security doors and windows
  • $2.5 million – DMVA State Defense Force
  • $2 million – Labor Business Enterprise program, including a political program for a new day care in Mat-Su
  • $1.5 million – Department of Health community-based senior grants cost of living
  • $1 million – Alaska Native Science Engineering partnership

The budget was due today to the Legislature, whose main job is to debate and vote on the budget and return some version of it back to the governor before the fiscal year begins. From the way it’s shaping up in the Legislature, it appears that both the House and Senate will be controlled by Democrats, who are planning to increase spending and offer an income tax to pay for the increases. The Legislature convenes Jan. 17 for a 90-day session that usually stretches past 120 days. The makeup of the Legislature is primarily Republican but it appears many of the Republicans are going to give control to the Democrats, as they have already done so in the Senate.

Sen. Gary Stevens posted an immediate response to the governor’s budget proposal. Stevens, long an advocate for an income tax, said in 2018 that the state could not rely on oil taxes to fund the state budget, and would need additional revenue. Today he expressed concern that the budget is not big enough, and that he wants to see more spending on education. As the incoming Senate president, he is telegraphing to the public that it will be a difficult negotiation season with the governor to get to an agreed-upon spending plan.

21 COMMENTS

  1. I give him credit for retiring debt.
    I’m still critical of his folding his tent regarding bring us back to fiscal responsibility.

    Regarding a statutory PFD. I get why he asks for it, but with this legislature after losing money bin the crypto scam…

    Not a chance. We’ll be lucky to get gas money.

    • Only help if he opens his desk drawer and uses the one weapon not many governors have!! HIS RED PEN!! He will need to really fight hard this session and every one of this his last term. Show us Gov. How hard can you fight for us out here

  3. State income tax hmmmm Senator Stevens is not very bright along with the rest of bipartisan caucus. A state income tax will divide this state like no other. Why should we on the road system pay a state income tax to fund schools in western Alaska? Where majority of folks work for cash??

    • I’m afraid you are exactly right but no one seems to want to think about equality and equity going that direction! Communities like Barrow, Klawock, Tenakee, Tok, Bethel, Gustavus, etc. etc. have no property tax. At least one of the communities I listed once had a property tax but did away with it; after all, why not when the state will pay for all roads, law enforcement, emergency services, schools, etc. if a community so chooses? There are important details that make the situation even much less fair than that but giving details gets into the weeds. The bottom line is that talking about an income tax when these gross inequities in property taxation exist is stupid. Selling carbon credits is much more fair and therefore a much more useful discussion for the state to have.

  4. The Alaska State Defense Force is a huge joke and should be abolished not given 2.5 million. There is ZERO reason for them, their “mission” is accomplished with other means (Alaska NG or existing other elements of State or Local Government). They don’t properly vet their members (Joe Gerace is ONE example), they have little to no PT standards and little operational use aside from working security and parking at the state fair or other venues. Their “response” after the earthquake was manning the phones for the Individual Assistance hotline, a job accomplished also could have been accomplished by state or federal resources.

    They aren’t allowed to be armed or to carry anything more than a radio so why not just use security staff via a retainer systems under contract with the Department of Admin Services like any other vendor contract ?. To my knowledge they can’t even be used as a public health element other than handing out supplies, again a mission done by other more qualified people already on state or National Guard orders.

    In the whole time the ASDF has existed my dealings with them have been it’s headed by someone (usually a Colonel) that recently retired and is just hanging around, collecting yet another check. In short, they have a poor vetting process, no PT standards, no authority and no mission that isn’t already done somewhere else better and faster… cut the pet projects out and get rid of the ASDF

      • There are two appropriations; $11 Million for defense of Statehood related issues and $2.5 Million in funding for the Alaska State Defense Force, the State’s organized militia.

      • Suzanne, although Rick clearly misunderstood what the budget item was destined for, he does have a valid concern regarding the Alaska State Defense Force.

  5. Everybody take note the democrats want to tax us and spend more just like other liberal states. We need to stop this before it starts.

    • Unfortunately it is too late.. They got the people they needed in office Geissel, Merrick, Bjorkman, turned a couple seats from solid R to democrat. Its all but over, sure people will say oh is not the time to quit they will quote Vince Lombardi.. Us folks out here in the Valley are even starting to lose look at turn coat Dave Wilson. Anchorage keeps electing idiots, we will have a state income tax. Their will be a exodus of people, this state is already expensive now tax their income? heck while they are at throw in a sales tax too.

  6. “Living within Our Means” should be the Governor’s motto for FY 23. I give Dunleavy 10 stars for this budget. But wait until about March 1, 2023 when the Old Witch Giessel seeks her revenge and insists on a PFD of $500. Sadly, it’s going to be a noisy year in the legislature and the same old bitchers and whiners will be at it again…….largely over the Governor’s proposed $4000 statutory PFD. This last election taught the Democrats and ugly RINOs……..nothing.

  7. So here we go again. Senator Stevens sounds like he does not see the declining attendance and wants to keep throwing money at the problem. Why not save money for education by cutting out the RCV and transgender-making programs instead. It would be better to teach reading, writing, math, history, geography and those courses that would actually equip students to make a living in this society. Critical thinking would also be a must.

  8. This being his second and final term might cause him to use the Spine he was born with, and the Red Ink in his Governor’s Veto Pen to offset the cowardly Republican Neutered Majority, who will blindly follow the Democrat lead. The Democrat Lead is calling for more money for UN – Education. Alaska, one of the top States in student spending, one of the lowest states in student achievement scores. Maybe spending more money for schools causes children to be MORE Stupid, or Stupider..

  9. Think we have already seen this show. Who wants to see a repeat of a movie that had poor ratings? The build up, the drama, the letdown. The patrons tossing their popcorn. Commercials for the “Alaskans for common sense “ playing during intermission. I will bet my 4,000 that this will never happen. Any takers?

  10. More funding for education? Gary Stevens is in bed with the Teachers’ Union. With dismal results and homeschooling on the rise, funding should be taken away from education. Murkowski keeps getting billions from her Uncle Joe so a reduced budget shouldn’t be a problem.

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