Major cuts in Governor Dunleavy proposed FY20 amended budget

Today Governor Dunleavy unveiled his proposed amended budget, SB 20. His goal as previously stated is to align state revenues with expenditures. The administration proposed no new taxes and the budget doesn’t propose a Constitutional Budget Reserve draw to close the budget deficit which has been done in past years. The Constitutional budget reserve has only about $2 billion left. The budget also calls for Alaskans to be paid a full dividend. So in order to align revenues and expenditures $1.6 billion must be cut from the FY 2020 budget.

A broad look at the proposed budget shows a 44 percent cut to the University of Alaska, which could force closure of branches of the University of Alaska system. The Health and Social Services Department was cut by 31 percent and the Pioneer Home system was cut by half with a proposal for future residents to be charged. Public broadcasting was eliminated and the state ferry system was drastically cut with the proposal to privatize parts of it. Education was reduced by 24.3 percent.

The only areas of the budget receiving increases are areas addressing public safety. Some functions like investigators, human resources and payroll will be consolidated in the Department of Administration for cost savings. One of the more contentious proposals is SB 57, which proposes to repeal the ability of municipalities to tax on oil and gas infrastructure with the revenue instead going to the state. The compromise is that the state will share alcohol tax revenue with the municipalities so that they can address substance abuse issues. Expect this to be a big battle. 

Public education received a proposed cut of over $330 million, or a little over 24% of the education budget. This equals about 3,100 teacher positions. Included in these cuts is a $269 million reduction in the foundation formula and the elimination of the $30 million in FY 20 one-time education funding that was agreed to last year. The proposed budget repeals the School Debt Reimbursement Program, Alaska State Council on the Arts, the WWAMI Medical Program, and the Alaska Commission on Postsecondary Education along with the Alaska Student Loan Corporation. The proposed budget also eliminates the following programs:

  • Live Homework Help,

  • Online with Libraries,

  • Early Childhood Grants,

  • Head Start Grants,

  • Best Beginnings,

  • Parents as Teachers and,

  • Pre-Kindergarten Grants.

 It is important to note that this is just a proposed budget and must be reviewed and passed by both bodies of the legislature. As an organization we will need to let our legislators know that education needs reliable and equitable funding, including Pre-kindergarten, reinstatement of bond-debt reimbursement, and continued investment in major maintenance.

On another note, the House of Representatives is still unorganized despite several attempts to elect a Republican Speaker of the House. Rumor has it that an organization will now be formed around an agreed upon budget and possibly some budget related bills. Considering the depth of the cuts it may take some time to reach an agreement.

A more detailed budget analysis will be provided as more details become available.

Chris and Reggie

J and H Consulting