Gov. Mike Dunleavy signs the Fiscal Year 2021 budget into law in Anchorage on Monday, April 6, 2020. (Courtesy photo | Office of Gov. Mike Dunleavy)

Gov. Mike Dunleavy signs the Fiscal Year 2021 budget into law in Anchorage on Monday, April 6, 2020. (Courtesy photo | Office of Gov. Mike Dunleavy)

City officials wary of promise of federal funds

Gov wants to use fed money to cover state costs, but can he do that?

With poor revenue forecasts and an uncertain environment, the City and Borough of Juneau is going to have to make some hard decisions about spending, said City Manager Rorie Watt.

That’s in part because of expenses that could be coming after Gov. Mike Dunleavy on Tuesday announced items vetoed from next fiscal year’s budget, including more than $100 million for school bond debt reimbursement.

“Some very radical things are going to have to happen to get us back to a balanced budget,” Watt said in a phone interview, adding that an increase in property taxes and a reduction in city services were likely to come.

[Bill would delay school construction for another five years]

Per the terms under which the bonds were initially sold, the state had agreed to pay up to 70% of the cost of school maintenance and construction.

Dunleavy said the bulk of the money vetoed from the Legislature-approved budget will be paid for by federal stimulus money, but some aren’t convinced language in the CARES Act allows for that.

“From our initial understanding, federal funds can only be used for expenditures incurred due to COVID-19, not expenditures unrelated to the COVID-19 response,” House Speaker Bryce Edgmon, I-Dillingham, said in a statement.

Now, municipalities are looking at shouldering those costs and additional costs tied to the COVID-19 pandemic without much clarification on what the federal money will actually cover.

[Proposed budget would cost the city millions, and its schools even more]

“I think that members are certainly concerned about those vetoes,” said Nils Andreassen, executive director of the Alaska Municipal League. AML is working with the governor’s office to shape how CARES Act funds will be spent.

“The governor said he wants to use the CARES Act funding in support of this,” Andreassen said. “We really hope he’s right.”

Watt said the city, which began its budget-making process April 1, would be releasing data about Juneau’s financial outlook next week.

“There are so many big financial issues, there is so much in flux on the budget,” Watt said, adding that information would be compiled in a spreadsheet to make it more accessible to the public.

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