Gov. Dunleavy signs budget with $3,200 cash check, $400 million in vetoes

ANCHORAGE, Alaska (KTUU) - Gov. Mike Dunleavy has signed the budget for the fiscal year that starts on Friday, announcing over $400 million in vetoes to a spending plan that is partly predicated on the continuation of high oil prices.

“We think this a great budget for the state of Alaska,” Dunleavy said during a press conference in which he was surrounded by dignitaries and leading Alaska figures.

The budget approved by the Alaska Legislature spends big on education, public safety and infrastructure. State savings accounts, which have been depleted by more than a decade of deficit spending, should top out at over $3.6 billion.

Over $1.2 billion has been set aside to fund K-12 education one year ahead of time and there is an increase to the school funding formula. But parts of this saving and spending plan are contingent on oil prices staying high.

If the price of oil averages below $103 a barrel over the next fiscal year, a $1.6-billion deposit into savings would not occur. If oil averages less than $90 a barrel over the same period, forward funding of education couldn’t happen, either, but the budget would remain balanced.

Legislative leaders have met with the governor over the past several weeks to debate and discuss which items the governor might veto, and which spending areas legislators considered to be sacrosanct.

“I felt like the process has been fair,” said Sen. Tom Begich, D-Anchorage. “I felt that we have really managed to build a dialogue.”

House Speaker Louise Stutes, R-Kodiak, said through a prepared statement that she was “disappointed” about some vetoes to grants and projects while also being pleased that education, public safety and other essential services continue to be funded. House Republicans from the minority caucus released a similar statement, applauding the governor for focusing on core services.

As part of the $400-million in vetoes, there were over $62 million in cuts made to funding for some school maintenance in rural Alaska, Dunleavy argued that there is sufficient funding in other parts of the budget for those kinds of projects.

There were vetoes made to smaller grants like $4.5 million to the Alaska Food Bank, and $1.5 million in extra funding for rural public radio stations. Budget documents state those vetoes were made to keep money in the state treasury to bolster savings accounts.

Some legislators were surprised at the size of the vetoes announced on Tuesday, thinking that Dunleavy would bring his veto pen down harder on the budget passed by the Legislature last month.

• Around $300 million will go out to municipal governments across Alaska to pay for old school construction costs
• Roughly $390 million is set to pay the remainder of a now-defunct oil and gas tax credit program
• Over $300 million will be used to repair the Port of Alaska and expand the Port of Nome

The $3,200 Permanent Fund dividend figure was approved by the Legislature after long and acrimonious debates. Two years ago, Dunleavy sent the dividend out in July to help Alaskans struggling economically with the COVID-19 pandemic. He said he would decide soon when this year’s dividend disbursement will occur.

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