Dunleavy signs budget, adding certainty for state programs, projects

Gov. Mike Dunleavy signed the revised FY 2023 state operating and capital budgets into law June 28 along with revisions in the current year, FY 2022, a few days before the July 1 start of the new fiscal year.

Having the budget signed and made official adds certainty for state agencies and programs as well as schools and the University of Alaska. However, some programs suffered vetoes.

This is Dunleavy’s fourth budget approval and his final one before standing for election later this year.

Not surprisingly, he put a positive spin on things. “The spending plan moves Alaska into a new direction with prudent and fiscally responsible investments in public safety, public education, the University of Alaska, and infrastructure projects that create jobs and economic development. It accomplishes all that while saving $1.6 billion dollars of the budget surplus to shield the economy when oil prices eventually decline,” Dunleavy said in a statement.

“In addition, the budget includes a historical (high) 2022 Permanent Fund Dividend for every eligible Alaskan,” the governor said.

With additional money put into savings, the Constitutional Budget Reserve, the state’s main savings account, is expected to have a balance of $2.33 billion as of June 30, the end of FY 2022, and $2.978 billlion at the end of FY 2023, on June 30, 2023.

“This budget is more than a spending plan; it’s a blueprint,” Dunleavy said.

“Budgets should reflect the values and ambitions of the people they are designed for, and I believe this legislation accomplishes that,” he said.

There were vetoes in Dunleavy’s budget action, about $400 million in total, and that brought criticism from former Gov. Bill Walker, who is running against Dunleavy in the governor’s race.

Walker said Dunleavy had promised a much bigger PFD, but was unable to deliver it. His vetoes announced Tuesday, June 28, were made across a range of programs including rural radio stations, public defenders, a strategic network of recreational trails, needed maintenance at the state’s Mt. Edgecumbe boarding school in Sitka, and funds for deferred maintenance on state buildings and at the university that had been approved by the Legislature.

Walker asked why these cuts were made with the state awash in money: “While the State of Alaska is experiencing a boom in revenue associated with high oil prices and an influx of federal infrastructure money, cuts were made to K-12 schools, the University of Alaska, the court system, funding that would support seniors and people with disabilities, and overdue maintenance for infrastructure around the state that would create good jobs,” Walker said in a statement.

Walker also noted that Dunleavy left the budget for his own office unscathed. “Dunleavy could not find a single cut in his own office’s budget while he was swinging a hatchet everywhere else,” Walker said.

“Over the past four years, the Office of the Governor’s spending has grown from $28.3 million to $36.3 million: an astounding 28 percent increase,” the former governor said.

The budget approved by Dunleavy spends $5.36 billion in state Undesignated General Funds and $14.1 billion in total funds in FY 2022, the budget year ending June 30.

For FY 2023, the fiscal yar beginning July 1, the governor approved $5.9 billion in Undesignated General Fund spending and $12.3 billion in total spending.

Dunleavy projects a $1.891 billion surplus for FY 2022 and a $1.883 billion surplus for FY 2023. The combined surplus will give the state a cushion in case revenues turn down, the governor said.

Despite the criticism, the FY 2023 budget proposes a robust expansion of capital projects and service, paid for by higher oil revenues and new federal funds.

In public safety, the new budget funds 10 new state and wildlife troopers and 10 Village Public Safety Officer, or VPSO, positions; salary increases for troopers and village public safety officers, and new housing for public safety officers in rural communities and additional funds to hire more criminal prosecutors and support staff.

In education, the budget provides $1.2 billion in “forward funding” for school districts and $117 million in new money to pay for the new Alaska Reads Act with its intensive reading instruction and expanded early childhood learning programs.

The budget also provides a start for reconstruction of the Port of Alaska and construction of a new deep-water port at Nome as well as repairs to roads and bridges statewide.

About $117 million will be invested in the Village Safe Water Program, which funds drinking water and sanitation projects in small rural communities and provides new funds for operation and maintenance of state ferries including construction of a new ferry vessel.