Cuts to education, VPSO in supplemental budget draw scrutiny
It’s quickly going to become another extremely tense legislative session if the release of Gov. Michael J. Dunleavy’s supplemental budget is any indication.
Senate Finance Committee members noted as much Jan. 29 when Office of Management and Budget officials presented their fiscal year 2019 supplemental budget proposals to the committee for the first time.
This year’s supplemental requests were made in two bills; one dealing with regular budget adjustments and another $139.3 million “disaster supplemental” to deal with state earthquake repairs and wildfire suppression efforts within the Department of Natural Resources.
Specifically, the administration is proposing $29.4 million in state earthquake-disaster funding to match $102 million in expected federal disaster support. Another $7.9 million would address DNR’s wildfire needs.
The more standard capital and operating budget proposals total $110 million; however, the vast majority of that — more than $92 million — would come from federal programs. The remaining nearly $18 million would be money from outside sources such as fees or transfers between state agencies.
The big sticking points for legislators are a $20 million proposed cut to education funding and a $3 million reduction to the Village Public Safety Officer program.
OMB Director Donna Arduin said other than the earthquake spending the administration wanted to present a supplemental that didn’t spend more from the general fund than the original 2019 budget passed last spring.
“We worked collaboratively with our agencies to identify areas where there was cash available, where items had not been spend yet during the fiscal year because we felt we needed to prioritize the fiscal situation that we’re facing in Alaska as well as our need for disaster response and recovery,” Arduin told the committee.
Senators from both parties took issue with the $20 million education cut, as the money was part of an end-of-session budget compromise last year. Northwest Alaska Democrat Sen. Donny Olson emphasized that it was meant to partially offset the impacts of inflation on school districts after several years of flat formula funding through the state’s Base Student Allocation, or BSA.
Sen. Lyman Hoffman, D-Bethel, questioned whether or not the $30 million for 2020 that was also a part of last year’s budget deal would be cut in Dunleavy’s budget plan for next year, which must be released by Feb. 13.
The state is facing a roughly $1.6 billion deficit and Dunleavy opposes new taxes so large budget cuts are expected.
Arduin said that would be addressed in the upcoming budget.
“In my opinion you’re talking to the wrong people first. You should be talking to the school districts first to see where that money is going to be obligated going forward so we don’t have another supplemental,” said Sen. Click Bishop, R-Fairbanks.
Arduin generally responded that school districts or other groups expecting state money should budget for it until it has actually been allocated and changed hands, not just approved by the state.
Hoffman contended that the education spending bills “are the law of the land,” recalling Dunleavy’s campaign promise to follow state laws, particularly in regards to the Permanent Fund dividend calculation.
Arduin noted the spending cuts are simply proposals at this point and the money will be spent if the Legislature rejects them.
Hoffman and Olson also pressed administration officials on plans to increase Alaska State Trooper spending by $3.6 million for salary increases meant to improve Trooper recruitment and retention while the VPSO program is cut by $3 million; although Arduin said the $3 million reduction is money approved that the program did not receive requests to spend.
Hoffman said the public safety funding changes could appear to prioritize urban Alaska over rural residents.
“The salary structure that exists for the VPSOs needs to be addressed as well,” he said. “Taking the money at this time is shortsighted and does not do justice to the services that are required for the people in the far flung corners of Alaska.”
Those cuts would offset an additional $15 million for Medicaid claims made in fiscal year 2018 that still need to be paid after the Legislature knowingly short-funded the program in the current year budget.
The supplemental also includes a $5 million re-appropriation from the Alaska LNG Project fund back to the General Fund. That money would not come out of the Alaska Gasline Development Corp.’s $10.3 million operating budget for this year, but instead would lessen the corporation’s available funds for future years.
As of the end of November AGDC had $39.7 million left from prior legislative appropriations, according to corporate finance reports.
AGDC spokesman Tim Fitzpatrick said via email that the corporation worked with the administration to identify where savings could be found and the $5 million in unused funds was the result of that work.
“As AGDC works to focus its priorities, and brings stakeholders to the table, we are confident that we will have the resources and funding to operate successfully,” Fitzpatrick said.
Elwood Brehmer can be reached at [email protected].