David Teal, director of Legislative Finance, gives an overview of the state’s fiscal situation to the Senate Finance Committee at the Capitol on Wednesday, Jan. 23, 2019. (Michael Penn | Juneau Empire)

David Teal, director of Legislative Finance, gives an overview of the state’s fiscal situation to the Senate Finance Committee at the Capitol on Wednesday, Jan. 23, 2019. (Michael Penn | Juneau Empire)

Finance director warns of budget ‘death spiral’

Budget director gives insight into decision-making process

Two budget officials offered differing views on the state’s fiscal situation Wednesday morning, giving senators a look into the governor’s budget process while also providing them a reminder of how serious the state’s budget deficit is.

During her presentation to the Senate Finance Committee on Wednesday, Office of Management and Budget Director Donna Arduin said the governor’s amended budget will be released Feb. 13. The governor has 30 days from the start of legislative session to release a budget plan, and Feb. 13 is the 30th day of session.

Arduin didn’t offer specifics about the budget, which is still in progress, and repeatedly said to expect full information when the budget is unveiled Feb. 13. Dunleavy’s initial budget included a $1.6 billion deficit, in large part to allow for larger Permanent Fund Dividends.

Arduin says that one of the guiding principles for putting the budget together is asking departments to “do less with less” instead of asking them to do more with less money. She said her office is currently identifying each department’s core mission and figuring out if that department’s expenditures match up with that mission.

“Rather than asking agencies to do more with less, we’re asking them to do less with less in many instances,” Arduin said.

[Gov’s crime message resonates, but Juneau lawmakers hesitant about constitutional amendments]

After Arduin’s presentation, Legislative Finance Division Director David Teal spoke frankly and directly to the committee members. Teal painted the budget situation in a much more dire light than Arduin did.

Teal said the state of Alaska’s finances has been masked by savings accounts, making the deficit seem smaller than it is because the state continues to dip into savings to balance the budget.

“Larger deficits mean larger unplanned draws (from savings) from next year to fill those,” Teal said. “This is a death spiral.”

Arduin has extensive experience working with Republican governors to cut budgets. She said she’s worked with seven governors in six states on state budgets over the course of “a few decades.”

Sen. Bill Wielechowski, D-Anchorage, said during the meeting that he was skeptical of having Arduin come in for a few months to do the budget and then leave.

“We have commissioners who are selected by the governor and approved by the Legislature. You are not approved by the Legislature,” Wielechowski said. “You’ve been in Alaska for what, six weeks? I know you’re planning on leaving Alaska in the next few months after we’re done here. I guess I’m concerned about so much power focused and budget-creating ability placed in your hands.”

Arduin responded by saying that she reports to Dunleavy, and that all decisions go through him.

Teal’s presentation differed from Arduin’s in a number of other ways. Arduin showed a graph indicating that Alaska’s spending per person is one of the highest in the nation. Teal said he believes it’s more practical to compare the state’s spending not to other states (which all face different challenges), but to previous years in Alaska. A graph of his showed that Alaska’s current spending per person is one of the lowest totals since 1976.

Arduin talked about simplifying the budget process. During Tuesday night’s State of the State address, Dunleavy also said he wants to have a budget that the average person can comprehend. Teal urged members of the Senate Finance Committee to not gloss over details as they figure out where to cut and where they can collect revenue.

“I’m all for simplification if the simplification helps you make decisions,” Teal says. “But your decisions will be a lot easier to make, and better, if you understand your fund sources.”

Teal made clear that he wasn’t making any recommendations to the committee, but was merely providing them with information and his interpretation of Alaska’s fiscal state.

The bulk of the Legislature’s task is balancing the budget, and based on Wednesday’s presentation, it sounded like that process won’t begin in earnest until Feb. 13. When that budget is released, Teal said, legislators will have tough decisions to make.

“I hope you have a short and productive session,” Teal said, as those on hand chuckled.


• Contact reporter Alex McCarthy at 523-2271 or amccarthy@juneauempire.com. Follow him on Twitter at @akmccarthy.


Donna Arduin, right, director of the Office of Budget and Management, speaks to the Senate Finance Committee at the Capitol on Wednesday, Jan. 23, 2019. (Michael Penn | Juneau Empire)

Donna Arduin, right, director of the Office of Budget and Management, speaks to the Senate Finance Committee at the Capitol on Wednesday, Jan. 23, 2019. (Michael Penn | Juneau Empire)

More in News

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

Forecasts from the University of Alaska Fairbanks’ Geophysical Institute for the week of March. 19

The FBI Anchorage Field Office is seeking information about this man in relation to a Wednesday bank robbery in Anchorage, the agency announced Thursday afternoon. Anyone with information regarding the bank robbery can contact the FBI Anchorage Field Office at 907-276-4441 or tips.fbi.gov. Tips can be submitted anonymously.  (FBI)
FBI seeks info in Anchorage bank robbery

The robbery took place at 1:24 p.m. on Wednesday.

Kevin Maier
Sustainable Alaska: Climate stories, climate futures

The UAS Sustainability Committee is hosting a series of public events in April…

Reps. Tom McKay, R-Anchorage, and Andi Story, D-Juneau, offering competing amendments to a bill increasing the per-student funding formula for public schools by $1,250 during a House Education Committee meeting Wednesday morning. McKay’s proposal to lower the increase to $150 was defeated. Story’s proposal to implement an increase during the next two years was approved, after her proposed amounts totalling about $1,500 were reduced to $800.
Battle lines for education funding boost get clearer

$800 increase over two years OKd by House committee, Senate proposing $1,348 two-year increase

A call for a joint session of the Alaska State Legislature to cast a vote that would reject recently-approved salary increases for legislators and top executive branch officials is made by State House Speaker Cathy Tilton, R-Wasilla, during a press conference Tuesday. Senate President Gary Stevens, R-Kodiak, rejected the joint session in a letter to Tilton on Wednesday. (Mark Sabbatini / Juneau Empire)
House efforts to nix legislative pay raises hit Senate roadblock

Call for a joint session rejected by upper chamber, bills to overturn pay hikes may lack support

A simulated photo shows the tailings stack and other features of Hecla Greens Creek Mine under the most aggressive of four alternatives for expanding the mine in an environmental impact assessment published Thursday by the U.S Forest Service. The tailings stack is modestly to drastically smaller in the other alternatives. The public comment period for the study is from March 24 to May 8. (U.S. Forest Service)
New study digs into alternatives for Greens Creek Mine expansion

Public comment starts Friday on four options that could extend mine’s life up to 40 years

This image shows the Juneau Lions Club Gold Medal Basketball Tournament's logo. The club is looking for submissions of logos for the historic tournament's 75th anniversary. The winning artist will receive a $250 prize. (Screenshot)
Take your shot at a Gold Medal logo

Upcoming milestone prompts call for art.

(Michael Penn / Juneau Empire File)
Police calls for Thursday, March 23, 2023

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

The Juneau School Board recently announced the three finalists for the district’s superintendent position: Frank Hauser, Carlee Simon and Thom Peck. The district is hosting a public forum from 6 to 7:30 p.m. on Monday, March 27 at Thunder Mountain High School for students, parents and staff to meet the three candidates. Additionally, the trio will be interviewed by the school board on Tuesday, March 28. (Clarise Larson / Juneau Empire File)
School district announces finalists for superintendent post

Public forum and interviews scheduled for next week.

Most Read