Gov. Dunleavy unveils budget proposal with big spending on PFDs, public safety, education and transportation

JUNEAU, Alaska (KTUU) - Gov. Mike Dunleavy has unveiled his budget proposal for the next fiscal year. It calls on the Legislature to use revenue from higher oil prices and an influx of federal dollars to invest more in public safety, education and transportation.

“We do have some good news,” he said. “Our fiscals are looking good.”

The $4.6 billion operating budget, in state dollars, uses roughly $500 million in federal COVID-19 relief alongside funding from a recent infrastructure bill to spend big in what the governor calls “core aspects of government.” Dunleavy says the budget is balanced and doesn’t require overdrawing the Permanent Fund beyond sustainable levels or using state savings.

He is calling on the Legislature to approve a 50-50 Permanent Fund dividend next year at roughly $2,564 per person. He also wants the Legislature to pay a supplemental dividend, which would deliver another $1,200 per person, and pass his dividend constitutional amendment.

“Our fiscals have improved dramatically,” he said.

Some in the Legislature are skeptical, including Sen. Bert Stedman, R-Sitka, who manages the operating budget in the Senate. He said that the Senate Finance Committee will take a very close look at the governor’s plan.

“I think we need to look at holding back expenditures and try to build up our savings positions while paying a reasonable dividend,” he added.

Stedman was particularly critical of a bonding proposal, saying it’s unnecessary with the federal infrastructure funding, and how Dunleavy wants to spend more anticipated oil revenue and the one-time federal dollars flooding into Alaska.

“It looks like a bunch of drunken monkeys spending every dime they can get their hands on,” he said.

Dunleavy had recently previewed some of the big ticket items in his budget proposal. He unveiled a new public safety plan on Tuesday that seeks to recruit more state law enforcement officers and curb high rates of domestic violence and sexual assault.

Commissioner Jim Cockrell of the Alaska Department of Public Safety said there has been a “renewed optimism” at the department while he announced plans for body and vehicle cameras for all troopers and Village Public Safety Officers.

“This budget proposal will, and I believe this to the bottom of my heart, will save people’s lives in this state,” he said.

Rep. Cathy Tilton, R-Wasilla, was happy to see more funding earmarked for the court system to speed up trials for victims of crime. She noted that high oil prices could be temporary and this federal funding will only be available once.

“I would definitely like to see more reductions in our budget,” she said.

During Wednesday’s press conference, the governor said much of this spending is planned to help Alaskans recover from the economic impacts of the COVID-19 pandemic.

Earlier in the month, he traveled to Kodiak to announce plans to replace the M/V Tustumena using federal dollars. A new Napakiak School had also been announced as had funding for a new Alaska tourism campaign.

But, there were some other big spending items proposed on Wednesday.

Commissioner Ryan Anderson of the Alaska Department of Transportation and Public Facilities said money would be invested to improve the Seward Highway between Potter Marsh and Bird Creek to reduce high crash rates.

That comes alongside hundreds of millions of dollars coming to Alaska in federal infrastructure funding for roads, bridges and airports.

The governor wants to fully fund the per student formula for K-12 education and school construction costs after vetoing or agreeing to halve those payments in recent years. He also wants to fully fund a program that helps reduce power bills for rural Alaska residents.

In 2019, Dunleavy had signed an agreement to keep cutting the University of Alaska’s budget by $20 million next year, but that has been canceled. Now, he wants to invest more in drone programs and resource development research.

“After eight years of budget cuts totaling more than $100 million, I am encouraged by this support for the university system as we build financial stability and confidence among Alaskans, our partners and our state leaders,” said Pat Pitney, the university’s interim president.

Sen. Tom Begich, D-Anchorage, was happy to see some of those education spending announcements, but echoed some of the surprise from fellow legislators.

“One colleague asked me today, ‘Has the governor changed parties?’” he said.

A focus for Begich, and many other lawmakers, is on the longer term for the state’s finances, which could include discussions of a new dividend formula and new revenues.

“We’re still going to move forward on working toward a fiscal plan,” he said. “Because we have to have one.”

House Speaker Louise Stutes, R-Kodiak, said many legislators in the bipartisan House majority coalition support some of the governor’s priorities.

“However, we need to carefully review his budget proposal to ensure that it pencils out, uses federal funds wisely, and that the new revenue projections are realistic,” she added through a prepared statement.

Copyright 2021 KTUU. All rights reserved.