Dunleavy announces budget vetoes, keeps $175M in extra school funding

Alaska Gov. Mike Dunleavy said Friday that he signed the operating budget for the fiscal year that begins Monday, and vetoed more than $230 million total from the operating and capital budgets passed by state lawmakers.

The spending plan includes a roughly $1,700 Permanent Fund dividend per eligible Alaskan, and nearly $175 million in a one-time education funding boost on top of the roughly $1.2 billion included in the state’s annual education budget. More than $60 million was included for school maintenance projects.

Dunleavy vetoed more than $105 million in budget items from the $12 billion operating budget and more than $126 million from the $3.5 billion capital budget approved by the Legislature. The vetoes affect state services that lawmakers sought to bolster, including early education spending and disaster relief expenses. In budget documents, Dunleavy said most vetoes were meant to “preserve general funds for savings and fiscal stability.”

Vetoes included nearly $12 million in education funding that the federal government said was needed to satisfy grant requirements, and $5.2 million approved by the Legislature to support reading improvement for students in kindergarten through third grade.

The $12 million appropriation was approved by lawmakers to address what the federal government had said was the state’s failure to adhere to distribution guidelines for pandemic-era assistance. But the Dunleavy administration asserts the federal government’s interpretation of the guidelines is incorrect, although officials have warned this could cause the state to lose out on future federal education funding. Dunleavy’s budget document states only that the “need for funding (is) indeterminate at this time as underlying funding request remains unresolved.”

Dunleavy signed the budget Thursday, but the governor didn’t release any information about his funding vetoes until 4 p.m. Friday. The bill was signed in the company of seven Republican House majority members, and no members of the Senate were present. Members of the press and the public were not informed about the budget signing until a day after it had taken place.

House Speaker Cathy Tilton, R-Wasilla, said in a prepared statement that the Republican-led House majority appreciated the governor’s “careful consideration of the budget.” She said the House majority’s priorities aligned with Dunleavy on the need for extra one-time school funding.

“Additionally, it is great to see funding remained for critical departments like Public Safety, Corrections, and Health,” she said.

The Legislature had appropriated $4 million for an Anchorage homeless shelter to keep it operating year-round, and $7.5 million in grants for child care operators. Both appropriations survived Dunleavy’s veto pen.

Some of the budget vetoes were less well received by Democrats.

Rep. Andy Josephson, an Anchorage Democrat, said Friday afternoon that he was “livid” about Dunleavy’s budget vetoes. Josephson said he thought the governor’s practice of slashing budget items each year had slowed the state’s economic recovery.

“The cuts he makes I think are devastating to the morale of Alaskans who have relied on those services,” he said.

The Legislature chose to fund a $20 million request from the University of Alaska Fairbanks to try to become a top-tier research school. Dunleavy vetoed $5.4 million of that funding.

“Why is that? That is bad economic policy,” Josephson said.

After two winters of record snowfall in Anchorage and complaints of long delays in snowplowing, the Legislature approved $1.3 million to recruit more snowplow drivers in Southcentral Alaska and $250,000 for a new snow storage site. Dunleavy vetoed both appropriations.

”That was obviously disappointing,” said Sen. Bill Wielechowski, D-Anchorage.

Wielechowski said it was a good budget overall, but the vetoes would fall disproportionately on poor and working Alaskans. Josephson pointed to a $200,000 increase approved by the Legislature, and vetoed by Dunleavy, for the Alaska Legal Services Corp., which provides free civil legal help to lower-income Alaskans.

“Who would have benefited from that? Oh, just victims of domestic violence. No big deal,” Josephson said sarcastically about the governor’s veto.

In a prepared statement, Dunleavy said the budget reflects the Alaska Constitution framers’ intention to create “a strong chief executive to ensure responsible budgeting.”

“By maintaining focus and fiscal discipline, this budget increases funding where it is needed most while at the same time reducing total Unrestricted General Fund spending,” Dunleavy said in the statement, referring to the fund that accounts for most state spending.

Dunleavy said the one-time education funding in the budget is meant “to address the cost of inflation.” The one-time funding approved by lawmakers this year is equal to an amount approved last year, which Dunleavy then halved with his veto pen.

The Anchorage School District on Friday celebrated that Dunleavy had not again vetoed the one-time funding boost, but reiterated calls for a permanent increase to the education budget. Dunleavy vetoed a bill earlier this year that would have achieved that, saying it did not include his plan of allowing a board he appoints to approve new charter schools.

Operating budget vetoes also include:

• $11 million in grant funding to improve internet connectivity for schools.

• $1.2 million for public radio emergency communications.

• $10 million for the Alaska Seafood Marketing Institute.

• $720,000 for vocational programs in the Department of Corrections.

• $2.6 million in early education Head Start funding.

• $1.5 million for community based grants at the Department of Health.

• $1.5 million in adult day service funding.

The capital budget signed by Dunleavy totals more than $3.5 billion, the vast majority of which — more than $2.9 billion — comes from the federal government. The Legislature approved a capital budget this year focused on public school maintenance and housing.

After reports of crumbling school facilities, particularly in Western Alaska, legislators funded the state education department’s top 26 school maintenance projects at a cost of $62.7 million. Lawmakers said that represented the largest number of school maintenance projects funded in more than a decade.

Dunleavy touted that the Alaska Housing Finance Corp. would receive more than $53 million for housing projects, helping “owners, and renters to provide safe, quality, affordable housing.”

But several other housing programs were vetoed, including $5.5 million for the Denali Commission and $6 million for a housing project administered by the Alaska Community Foundation.

Some of Dunleavy’s biggest capital budget reductions include $15 million for a short-term skilled nursing facility at the Alaska Native Tribal Health Consortium, and $4 million for a drones program at the University of Alaska Fairbanks.

Other vetoes in the capital budget include:

• Nearly $3.8 million in renewable energy grant funding.

• $1 million for work on the Alaska Long Trail in sections of the trail near Anchorage.

• $2.5 million for a Southcentral Foundation crisis center.

• $1 million for an Eagle River cemetery.

• $2.5 million for fisheries projects in the Matanuska-Susitna Borough.

• $1.25 million to the Alaska Municipal League for grant writing assistance.

• More than $2.5 million in funding for the Anchorage Park Foundation for various public park and facility improvements.

• $300,000 for a dental clinic expansion in Bethel.

• $6 million in several road, park and facility improvement projects in Anchorage.

• $13 million for several maintenance projects for University of Alaska facilities in Anchorage, Kodiak, Fairbanks and Juneau. The funding for six university projects was cut in half.