Big changes are coming in Alaska and — if Mike Dunleavy doesn’t resolve the many painful issues resulting from his vetoes — a new governor in 2022 might be one of them.
There are signs that Dunleavy is moderating his position on some of his $444 million in line-item vetoes, notably on funding for the University of Alaska. The university is facing a devastating loss of $135 million in state funding and, as a result, has already had its credit rating downgraded, an expensive problem. The university and other state agencies also stand to lose millions in matching grants from a variety of sources.
Dunleavy met with the UA Board of Regents last week and notified members that he wants the university to downsize to something more affordable for the state treasury. But he is willing to accept a compromise that spreads the cuts over several years to soften the blow of slashing its allocation all at once. The regents have responded with an indication they are willing to discuss some major changes in university operations, a long-overdue move.
The UA system has grown, as many say, into something like an empire. It has three separately accredited universities, 13 campuses (including community colleges), 30,000 students and offers 400 different degrees. Enrollment in some classes is small, reportedly in some cases just a handful of students. There should be a minimum class size to make the class viable.
Alaska needs a strong state university and should fill the educational hopes of as many young people as possible. But many feel, with good reason, that the UA can do those things and spend a lot less money in doing so.
There are many other Dunleavy budget vetoes that need to be moderated and hopefully approaches like those the regents are considering can be taken. In the end, perhaps, the many agencies impacted and the audiences they serve, especially agencies serving children, the needy and the elderly, will see improvements in their allocations. Also at stake is a well-respected research facility.
Much of the current problem comes from the fact that some agency budgets were established or grew rapidly during times when the price of oil was over $100 a barrel (today its under $55) and throughput in the trans-Alaska pipeline was three to four times its present volume of 527,000 barrels per day. We developed some very expensive habits when state government was rolling in dough.
We should also get moving on a constitutional amendment to change the formula for calculating Permanent Fund dividends. We just can’t afford the big checks mandated by the existing formula anymore. When we fork over $3,000 to every Alaskan, there just isn’t enough money left to fund government. Keeping the state’s many important commitments will likely require taking a big bite out of savings,
We need to keep in mind that the burden from cutting the dividend checks falls most heavily on lower-income families, since they need the money more, but so does the burden of the slashing budget cuts already being imposed on many of those same people.
And the pain of the cuts is being felt across the full range of income levels since many of our children are students at the University of Alaska or were planning to attend one of its many campuses. Historically a high percentage of youngsters who attend college in Alaska remain here after graduation. Conversely a high percentage of those who attend college outside the state ultimately take jobs and settle down elsewhere in the nation. By all means let’s keep our kids here if we can.
The dividends should not be eliminated altogether. But it would be foolish to keep them so high that only digging unacceptably deep into the state’s savings accounts or imposing income or sales taxes — perhaps both since a sales tax would shift some of the burden onto tourists. One or both of those things is almost certainly in Alaska’s future, but hopefully not soon.
Alaskans may be in for some tough times in the coming year or so, but downsizing government is long overdue and we will hopefully come out the other end stronger and wiser, if not richer.