MOST LEGISLATIVE ADD-ONS VETOED
Gov. Mike Dunleavy today announced he is signing a budget that is about the same size as the one he proposed in mid-December.
He trimmed back two-thirds of the $314 million in additions that the bipartisan Senate and Democrat-led House put in for things like school bond debt reimbursement, community assistance, the university system, and public broadcasting.
With these vetoes, the FY 2021 operating, mental health, and capital budget, including previously enacted legislation, is $4.5 billion, which will be paid, in part, with $3.85 billion in federal funds.
Most of entities will qualify for federal funds through money that is coming in through the CARES Act, which is the major stimulus package requested of Congress by President Donald Trump to address the COVID-19 crisis. School bond debt reimbursement, for example, had $30 million added by the Legislature, but was cut in the final budget. However, the state can use the anticipated CARES Act money to shore up that line item.
The governor also vetoed the $1.5 billion that the Legislature had moved from the Permanent Fund’s Earnings Reserve Account to the corpus of the fund, where it would not be able to be tapped for spending this year. Dunleavy said that with so much uncertainty due to the COVID-19 crisis, it was more prudent to keep that money available to meet the needs of the state operations.
Gov. Dunleavy also called on the Legislature to come back out of recess and pass an additional PFD or stimulus check for Alaskans, who he said are reeling from the effects of a government-imposed economic crisis due to the COVID-19 virus response.
The current budget is predicated on oil prices that could remain in the mid $30s per barrel, far from what is needed to run state government. This, most analysts agree, will force a very difficult budget conversation next year.
The Permanent Fund is expected to transfer $2.9 billion to the general fund in FY 2020 and $3.1 billion in FY 2021, according to the Department of Revenue. These amounts include funds for both payment of dividends and general government spending.
Key programs and services funded in the operating budget, HB 205:
- $99M to COVID-19 response and relief
- $135.6M to Alaska State Troopers
- $14M to Village Public Safety Officer Program
- $5M to Disaster Relief Fund
- $5M to Fire Risk Reduction Funding
- $34.8M to Pioneer Homes
- $54M to the Alaska Marine Highway System
- $1.26B to fully fund Education Foundation Formula
- $28.5M to Behavioral Health Programs
- $7.2M to Homeless Assistance Program
- $65M for Capital Federal Match Program to Highways and Aviation
Line-item vetoes include:
- The reduction of debt payments on behalf of other entities, which are not a core function of the State while facing fiscal uncertainty;
- A reduction in funding to the University of Alaska to the level agreed to in the 2019 compact between the University of Alaska Board of Regents and the Office of the Governor; and
- The elimination of one-time State general funds for programs that may qualify for funding under the Federal CARES Act.
- Elimination of the Alaska Marine Highway funding to install crew quarters on two of the ferries day boats.
- Public broadcasting: Radio $2,036,600, TV $633,300.
Click here for FY 2021 budget items of interest.
Click here for additional information on the enacted House Bill 205.