Gov. Mike Dunleavy announced a $10.5 billion budget for the upcoming budget on Wednesday. The budget includes an impressive dividend to the fund’s permanent account however it relies on savings to cover the gap that is expected to hit more than $1 billion.
The budget is for Fiscal the year 2025 which spans from July 2024 until next June. The Republican governor’s proposal is the basis for discussions with lawmakers while they create the final budget of the state during the legislative session next year.
The largest single expense could be $2.3 billion in dividends from the permanent fund. Dunleavy stated that the amount was in line with an 1980s law that outlined an algorithm to calculate the PFD.
“The reason is because it’s in a statute. I swear to abide by the Constitution as well as the statutes of Alaska. Alaska. We are aware that the courts decided several years before that Legislature might change this,” Dunleavy said. “We are looking forward to the discussion.”
Dunleavy presented the huge PFDs as a means to aid Alaskans keep pace with inflation.
The budget doesn’t include an increase in the per-student amount of funding for school districts neither does it contain the extension of one-time education funds lawmakers included in the budget last year.
However, Dunleavy declared he would be willing to talk with lawmakers about education funding.
“As an educator from the past I am aware that schools are expensive and education is expensive. It’s a fact,” Dunleavy said. “The problem has been always about whether we invest money in BSA which is the basic allocation for students as part of the formula used for funding – or if we invest money in the world of education, in various forms and different purpose.”
For an example, Dunleavy mentioned a plan that he proposed last year to provide annual retention incentives of as high as $15,000 for teachers.
Anchorage School District Superintendent Jharett Bryant said in a statement that he was “disappointed with the insufficient emphasis put on funding for education.”
However, don’t worry about it as said by Sen. Bert Stedman, the co-chair of the mighty Senate Finance Committee focused on the state’s operating budget. Stedman is being a Republican from Sitka and Sitka, stated in an interview on the phone that he anticipates the governor to include more in his budget amendment due the middle of February.
“The budget for schools is I believe artificially low in this budget,”” Stedman said. “I recommend that the superintendents utilize the funding figures, and we’ll be able to work on that after the governor has completed his changes during February.”
With the price of oil expected to rise over the earlier estimates and production expected to decrease slightly, Stedman said he expects the budget approved by the Legislature to be similar to the one that was signed into law following the session of last year.
Senate Chairman Gary Stevens said he was worried that the governor’s plan to pay around $3300 per person for permanent fund dividends could be too dependent on savings.
Although the governor claims that his plan would take $987 million out of the State’s Constitutional and Statutory Budget Reserve accounts however, the Kodiak Republican predicted the deficit to rise close to $1.5 billion when it’s done and dusted.
“That is simply too much to draw from the sand,” Stevens said. “You are aware that we need to have some money in case things end up in a handbasket like in the oil industry and we need to have enough funds to run the government. That’s a lot to take from the Constitutional Budget Reserve.”
An official for Republican House Speaker Cathy Tilton of Wasilla was not able to accept an interview request the reason being that her caucus was currently working on the budget.
Dunleavy’s budget includes enough money to operate seven Alaska Marine Highway ferries, according to his transportation director, Ryan Anderson. Four of them are currently operating. Anderson says that the shortage of staff makes it challenging to get all the ships available to service.
The budget also provides $23 million of state funding to help replace the State Ferry Tustumena. This money will allow for the release of another $92 million in federal grant funds.
The governor’s budget is an announcement of his the governor’s political priorities. It’s an opportunity for the governor inform legislators and the public what he believes that the state should invest its funds for. However, it’s up to legislators to create the budget that will pass through a tensely divided Republican-controlled House and a bipartisan majority Senate. The legislative session begins January. 16.
