Gov. Mike Dunleavy and his administration released a proposed budget Friday, Dec. 11. (Courtesy Photo / Office of Gov. Mike Dunleavy)

Dunleavy proposes budget for ‘unprecedented’ times

Budget, bonds and amendments proposed to kickstart economy

Gov. Mike Dunleavy and members of his administration Friday released a proposed budget for Fiscal Year 2022 meant to reinvigorate Alaska’s economy after being “hammered” by the coronavirus pandemic. The governor proposed a reduced budget, roughly $5,000 in permanent fund dividends and $300 million or more in infrastructure bonds.

“Our economy is in trouble, folks are out of work, businesses are desperate,” Dunleavy said Friday at an Anchorage news conference. “We have to get our economy off its knees and on its feet.”

[Dunleavy: PFD checks are going out early]

Dunleavy said getting money into the hands of Alaska is essential to kick-starting the economy and proposed a supplemental Permanent Fund Dividend of $1,916 for Fiscal Year 2021 and a dividend of $3,056 for the next fiscal year.

The governor’s plan relies on a $3.1 billion transfer from the Earnings Reserve Account of the Permanent Fund for both 2021 and 2022. Between continued growth of the fund and continued low oil prices, the Permanent Fund transfer is now the state’s largest source of revenue, contributing 65% of unrestricted general fund revenue in the past fiscal year and projected to contribute at least 67% for each of the next 10 years, according to a Department of Revenue news release.

Such a large draw from the ERA is not something he expects to become normal for his administration, Dunleavy said, but said the pandemic had created extraordinary circumstances both for the state and globally.

In addition to the budget, Dunleavy said he intends to introduce legislation for $300-350 million in general obligation bonds for yet-to-be-determined infrastructure projects to be put to a vote in a special election. The governor said he also wants to put three constitutional amendments to a vote of the people — a government spending cap, a vote of the people for all new taxes and an established formula for the PFD.

[Dunleavy backs off cuts, looks to Legislature to rework state spending]

The budget proposes $4.3 billion in unrestricted general fund spending, a roughly 5% decrease from last year.

The $294 million in reductions to state departments were all carefully made in consultation with staff and commissioners, said Neil Steininger, director of the Office of Management and Budget.

“We worked with every commission in every department to determine where those efficiencies could be made,” Steininger said.

The governor’s proposals did not decrease spending for many state programs, but also didn’t add any additional requested funds to entities affected by the pandemic which requested them. University of Alaska President Pat Pitney said in a statement she would advocate to the Legislature for additional funding for deferred maintenance in the capital budget.

Dunleavy said he wants to have a conversation with lawmakers and Alaskans about how the state should be managed, and the three constitutional amendments are a way to bring a permanent solution to intractable political issues like the size of the PFD.

“Legislators don’t have to go to the people for taxes, and they don’t have to. But I think they should,” Dunleavy said. “Because we’re governing on the people’s behalf. We shouldn’t take a position that you can do things to people.”

House Speaker Bryce Edgmon, I-Dillingham, in a statement criticized the governor for reductions to public schools and for taking such a large transfer from the Permanent Fund.

“The governor’s proposal calls for spending $3 billion more than what the Alaska Permanent Fund Corporation considers sustainable, and there is no plan for how we will make ends meet beyond next year,” Edgmon said. “However, the inclusion of a general obligation bond package is promising.”

Presented to the public correctly, the governor said he believed the people of Alaska would approve bonding for infrastructure projects. If rejected, that would be the will of the people, Dunleavy said. The governor said he hoped his budget would be a tool to help turn Alaska’s economy around.

“We’re all in this together,” he said. “It’s an extraordinary time, it’s going to take us all working together.”

The proposed budget and additional information can be found at OMB’s website, www.omb.alaska.gov.

• Contact reporter Peter Segall at psegall@juneauempire.com. Follow him on Twitter at @SegallJnuEmpire.

More in News

The Aurora Borealis glows over the Mendenhall Glacier in 2014. (Michael Penn / Juneau Empire File)
Aurora forecast

Forecasts from the University of Alaska Fairbanks’ Geophysical Institute for the week of Nov. 27

Molly Yazwinski holds a 3,000-year-old moose skull with antlers still attached, found in a river on Alaska’s North Slope. Her aunt, Pam Groves, steadies an inflatable canoe. (Courtesy Photo /Dan Mann)

 

2. A 14,000-year-old fragment of a moose antler, top left, rests on a sand bar of a northern river next to the bones of ice-age horses, caribou and muskoxen, as well as the horns of a steppe bison. Photo by Pam Groves.

 

3. Moose such as this one, photographed this year near Whitehorse in the Yukon, may have been present in Alaska as long as people have. Photo by Ned Rozell.
Alaska Science Forum: Ancient moose antlers hint of early arrival

When a great deal of Earth’s water was locked up within mountains… Continue reading

FILE - Freight train cars sit in a Norfolk Southern rail yard on Sept. 14, 2022, in Atlanta. The Biden administration is saying the U.S. economy would face a severe economic shock if senators don't pass legislation this week to avert a rail worker strike. The administration is delivering that message personally to Democratic senators in a closed-door session Thursday, Dec. 1.  (AP Photo / Danny Karnik)
Congress votes to avert rail strike amid dire warnings

President vows to quickly sign the bill.

Mark Sabbatini / Juneau Empire
Juneau state Sen. Jesse Kiehl, left, gives a legislative proclamation to former longtime Juneau Assembly member Loren Jones, following Kiehl’s speech at the Juneau Chamber of Commerce’s weekly luncheon Thursday at the Juneau Moose Family Center.
Cloudy economy, but sunnier political outlook lie ahead for lawmakers, Kiehl says

Juneau’s state senator tells Chamber of Commerce bipartisan majority a key to meaningful action

(Michael Penn / Juneau Empire File)
Police calls for Friday, Dec. 2

This report contains information from law enforcement and public safety agencies.

Alaska State Troopers logo.
Hunter credits community members for Thanksgiving rescue

KENAI — On Thanksgiving, Alaska Wildlife Troopers released a dispatch about a… Continue reading

The snowy steps of the Alaska State Capitol are scheduled to see a Nativity scene during an hour-long gathering starting at 4 p.m. Friday which, in the words of a local organizer, is “for families to start their Gallery Walk in a prayerful manner.” But two Outside groups dedicated to placing Nativity scenes at as many state capitol buildings as possible are proclaiming it a victory against the so-called “war on Christmas.” The head of Alaska’s Legislative Affairs Agency, which has administrative oversight of the building, said the gathering is legal since a wide variety of events occur all the time, often with religious overtones, but the placement of a fixed or unattended display is illegal. (Jonson Kuhn / Juneau Empire)
Scene and heard: Religious freedom groups say Nativity event makes statement

State officials say happening planned for Capitol relatively common and legal.

(Michael Penn / Juneau Empire File)
Police calls for Thursday, Dec. 1

This report contains information from law enforcement and public safety agencies.

Steve Lewis, foreground, and Stephen Sorensen from the Alaska State Review Board scan ballots from precincts where they were hand counted at the Division of Elections office Nov. 15. Board officials spent the period between the Nov. 8 election and its certification Wednesday performing about 20 different to verify the results. (Mark Sabbatini / Juneau Empire)
Election certified, but challenges pending

Outcome of at least two state House races unknown, which may determine chamber’s leadership

Most Read