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Governor's Budget Proposes Economic Recovery Payment to Alaskans, Job Creation & Infrastructure Development

Overall Budget Cut $290 Million

Posted & Edited By MARY KAUFFMAN


December 15, 2020
Tuesday PM

(SitNews) Anchorage, Alaska - Alaska Governor Mike Dunleavy announced his Fiscal Year 2022 (FY22) budget package Friday, A Path Forward, with the goal of stabilizing the state’s economy in the wake of a devastating global pandemic which he says honors his commitment to Alaskans. According to the governor, the FY22 budget creates efficiencies within government, implements the basis for a stable fiscal future, puts money into Alaskans’ hands, and prioritizes job creation and infrastructure development.

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Governor Dunleavy said, “This year has presented Alaskans with challenges unlike any we’ve experienced in this lifetime. The widespread global pandemic led to economic devastation for every sector of Alaska’s economy. In the face of this, Alaskans adapted and overcame many hurdles, successfully completing a construction season and a safe fishing season. The state and federal government partnered to distribute $2.3 billion of Federal CARES Act funds to Alaska businesses, $1.3 billion to Alaskan workers, and $568.6 million in community assistance.”

“A key piece of my proposal is the economic recovery payment – the remaining portion of the 2020 PFD. This would provide Alaskans with $1900, driving $1.2 billion into the economy. Alaskans and the private sector need assistance now. Businesses that have been devastated, and Alaskans that are suffering, will benefit from immediate action by the legislature placing money into the people’s hands by March,” said Dunleavy.

 “To put Alaskans to work, I am proposing the first statewide bond proposal in nearly 10 years. This $300-350 million package would fund roads to resources, renewable energy projects, ports, harbors, runways, bridges and other essential projects. I will work with the Legislature and take this to a vote of the people this spring. Projects mean jobs now, and critical infrastructure for all Alaskans.” 

Dunleavy said, “For years, the PFD has been used as a political football supporting an unstable budget. Now is the time to act, to eliminate this instability and provide fiscal certainty for Alaskans.”

 “This budget is a call to action for all of us. Everyone in this room and across Alaska. It will be tough, but I have no doubt that together, we can do it. Even when we disagree, and we will, the goal remains the same: a stable and prosperous Alaska. Let’s dream big – let’s move forward together”

Senator Democratic Leader Tom Begich (D-Anchorage) released a statement in response to the Governor's proposed budget.

Begich said, “Today, I am cautiously optimistic about the direction of Governor Dunleavy’s budget. But, as with all legislation, we will have to dig into the details to ensure we do what is best for Alaskans. As Alaska begins to come out of this pandemic, an overall budget cut of $290 million, and significantly overspending the earnings reserve, could damage our economy. We will continue to reach out to all members of the Senate to identify consensus with the budget proposal and where we have disagreements."

Begich said, “This year’s historical level of earnings from the Permanent Fund could very well represent Alaska’s last opportunity to build a sustainable Alaska future. Reinvesting some of these earnings directly into the constitutionally protected Permanent Fund must be a critical component of any budget plan. During the budget process, our caucus will stand firm in protecting a quality public education, health care, and building a vibrant economy that Alaskans will be proud of.”

In response to the Governor's proposed budget announcement last week, House Speaker Bryce Edgmon (I-Dillingham) said Gov. Dunleavy has unveiled a budget proposal that features cuts to essential services and overdraws the earnings of the Permanent Fund.

Edgmon said, "Each individual line of the budget will be vetted by state lawmakers during the upcoming session. Until a thorough legislative review is completed, because the governor did not engage with lawmakers and other stakeholders in advance of releasing his proposal, the exact target of his roughly $300 million in cuts remains unclear." 

"However, it is apparent that K-12 public schools and the Department of Health and Social Services – both grappling with the ongoing pandemic – are slated for reductions, even as the governor suggests spending a large portion of the Permanent Fund earnings reserve account," said Edgmon.

“The governor’s proposal calls for spending $3 billion more than what the Alaska Permanent Fund Corporation considers sustainable, and there is no plan for how we will make ends meet beyond next year. However, the inclusion of a general obligation bond package is promising," said Edgmon.

"We hear loud and clear that parents expect the State of Alaska to operate schools at pre-pandemic levels as soon as it is safe, not make it more difficult to re-open because of budget cuts. We are also committed to making the most of our limited resources to help those who need it the most, and we will continue to promote accessible healthcare and preserve critical infrastructure. Finally, we flatly reject the idea of spending down Alaska’s investment fund to avoid tough decisions," said Edgmon. "These are our long-standing values and will be reflected in our effort to create a budget that helps rebuild Alaska.”

A Path Forward: Governor Dunleavy’s FY22 Budget

The FY22 operating, mental health, and capital budget totals $4.3 billion Unrestricted General Funds (UGF), $950 million Designated General Funds (DGF), $948 million Other State Funds, and $4.1 billion Federal Funding. The FY22 budget was developed in cooperation with all state agencies and reflects a total reduction of $294.6 million (UGF), achieved by efficiencies, modernizations, and better delivery of government services. While the proposed budget does not currently reflect allocated cuts, discussions must begin to address underlying cost driving statutes and policies that increase spending year after year.

Key items of interest in Governor Dunleavy’s FY22 budget:

  • Funds K-12 education with no current changes to the formula
  • Prioritizes Alaskans by increasing funding for public safety by $13.5 million
  • Funds the Alaska Psychiatric Institute to operate at full capacity
  • Restores school construction financing to FY20 level
  • Represents an overall reduction during the Dunleavy administration of 10%

Stabilizing Alaska’s Economy

Governor Dunleavy’s Path Forward includes key legislation as part of a concentrated effort to stabilize Alaska’s economy. In addition to the Operating, Capital, and Mental Health budget, the package includes:

Express Capital Budget – Help to Alaskans Now

  • Funding the rest of the 2020 PFD - $1,916 per eligible Alaskan
  • $4 million to address the sexual assault case backlog
  • $26 million to fisheries, wildlife, and resource projects
  • $24 million in construction and maintenance projects
  • $4 million for statehood defense

Infrastructure Bond

  • A $300-350 million infrastructure proposal to put Alaskans to work
  • Building bridges, ports/harbors, and roads all across the state

Fiscal Certainty for Alaskans

  • Honor the law: Proposing a full PFD for FY22, according to state law
  • Change the law: Proposing a new dividend formula going forward: if any money comes out of the Permanent Fund at least 50% needs to go to dividends.  Proposes an advisory vote of the people to affirm this.
  • Protect the law: Provide fiscal certainty by Proposing Constitutional Amendments to
  1. Cap government spending
  2. Require a vote of the people to pass new taxes
  3. Protect the Permanent Fund

Alaska Department of Transportation & Public Facilities:

DOT&PF’s proposed budget takes into consideration the transportation needs of Alaskans while acknowledging the current fiscal climate. 

“The Governor’s budget exercises restraint, yet still supports those core state services and initiatives to Keep Alaska Moving,” stated Commissioner John MacKinnon. 

Highlights of the DOT/PF's Budget:

  • One-time Unrestricted General Fund (UGF) reduction utilizing Federal Aviation Administration (FAA) CARES Act funds
    DOT&PF is proposing to use $14.6M of eligible FAA CARES Act funds in place of UGF, in light of the current statewide fiscal environment. This federal aid will be applied to eligible expenses within the department and will allow for the one-time UGF reduction.
  • Alaska Marine Highway System (AMHS) - $50 million UGF Operating Budget
    The AMHS operating budget is proposed at the same level as presented by the Governor in FY2021. UGF of $50 million continues service to current port communities while limiting service gaps.  DOT&PF and AMHS continue to evaluate the Alaska Marine Highway Reshaping Working Group recommendations for implementation.
  • Consolidation of the Department of Administration (DOA) leasing functions with the Division of Facility Services (DFS)
    To date, DFS has onboarded more than 75% of state facilities. Progress will continue in FY2022 with the goal of completely centralizing the bulk of state facility services, absorbing leasing, and space management functions, as well as public building fund management from DOA. The aim is to find maximum efficiency and cost effectiveness while bringing the specialized talent for this task into one state agency.
  • Surface Transportation Program (STP) and Airport Improvement Program (AIP) Capital Budget
    Over $10M of increased state matching funds is proposed to leverage additional federal dollars for the STP and AIP capital programs.  This translates into additional projects which, in turn, provide additional jobs to urban and rural Alaska.
  • Statewide Equipment Fleet (SEF) modernization
    The department proposed additional capital authority for SEF modernization, which will result in reduced operating costs. The results of an ongoing fleet analysis study by Mercury Associates are forthcoming. That analysis, soon to be completed, is anticipated to provide direction on improved management and long-term planning for DOT&PF’s statewide equipment fleet when procuring, maintaining, and disposing of maintenance & operations (M&O) assets.

On the Web:

A Fiscal Year 2022 fact sheet pdf


Source of News:

Office of Governor Michael Dunleavy

Office of Senator Democratic Leader Tom Begich

Office of House Speaker Bryce Edgmon


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