Gov. Mike Dunleavy signed into law House Bill 2001, the final piece of the fiscal year 2020 budget, Monday. In a 10-minute video, Dunleavy addressed the PFD and budget vetoes.

HB 2001 was passed by the Legislature Aug. 7, adding $375 million to the FY2020 operating budget, after Dunleavy’s June 28 line-item vetoes, which reduced the state budget by $444 million. Through line-item vetoes to HB 2001, Dunleavy again reduced the budget by $220 million.

“Alaskans need to understand that we can no longer afford to spend at our current rates. We can no longer afford to deplete our savings and hope for higher revenues,” Dunleavy said. “We must begin making the long-term changes to put ourselves on a path to a more sustainable future, and we can no longer pretend the problem will fix itself. It will take difficult decisions to get us to a sustainable budget, and I am prepared to make those difficult decisions.”

Dunleavy’s vetoes include $50 million in Medicaid funding, $2 million in support for public radio broadcasting, $3 million in funding for the Village Public Safety Officer Program and $5 million in funding for the Alaska Marine Highway System, among other cuts.

Notably, the governor’s vetoes eliminated $49 million in the statewide school debt reimbursement program. 

The Kodiak Daily Mirror previously reported that the elimination of these funds would leave the Kodiak Island Borough with a $2.6 million budget gap. According to Borough Mayor Dan Rohrer, some of the burden will likely fall on KIB tax payers.

“It’s unfortunate that he’s choosing not to have the state live by its commitments to municipalities. The reality is that we are looking for ways to fund that through savings, but ultimately I suspect there will be a mill rate increase,” Rohrer said. “I would frankly hope that the legislature looks at overriding the veto of those funds. 

Senator Gary Stevens (R-Kodiak) and Representative Louise Stutes (R-Kodiak) did not respond to a request for comment at the time of print. 

Kodiak Island Borough School District Superintendent Larry LeDoux said the loss of these funds would not affect the operation of the school district. However, “it does put pressure on our assembly and our community,” LeDoux said.

“Those communities that are in organized boroughs are paying a lot for these schools already,” LeDoux said, calling the debt reimbursement program “a civic commitment that the state has made to support education.”

The KIB assembly has already begun to appropriate funds towards bridging the budget gap, but is still far from meeting the total amount.

On a regular meeting held Aug. 1, the KIB assembly voted unanimously to transfer more than $300,000 to the Debt Service Fund in order to address the school bond debt reimbursement. 

The assembly was able to save money from last year’s budget and reallocate funds from the current fiscal year, Rohrer said. 

Rohrer said in addition to the loss of the debt reimbursement funds, the governor’s veto of $30 million out of the Community Assistance Fund will likely affect Kodiak in the coming year, but noted that KIB will not know the impact of that veto for a while.

Additionally, Dunleavy vetoed almost $1 million in debt reimbursement for the Kodiak Electric Association. Rohrer said the impact will be felt by KEA directly, and not by the borough.

HB 2001 reinstated numerous programs, including $21.5 million to the Senior Benefits Program, $110 million to the University of Alaska, $3.9 million to the Alaska State Council on the Arts and $800,000 to Online with Libraries and Live Homework Help. 

Dunleavy announced he would not veto the Legislature’s $1,600 dividend, despite his commitment to providing Alaskans with a full PFD.

“I and many others view this as a partial payment, not a full PFD, and we will continue to fight for a complete statutory dividend going into this fall,” Dunleavy said.

The governor noted that he hopes an additional special session in the fall will provide an avenue to secure additional funds, in order to provide Alaskans with a full statutory PFD, in the amount of $3,000.

“Now that the budget has been addressed, the full PFD will be the focus in this next special session, the sole focus. I will not let up until the remaining funds are appropriated for the full statutory PFD,” Dunleavy said.

The final FY2020 budget eliminates one third of the state budget deficit, with budget reductions amounting to $650 million. Through the initial budget vetoes announced by Dunleavy on June 28, he had hoped to reduce the state deficit by half. 

“I understand that this budget approach and timing, being so late in the legislative year, caused significant angst among Alaskans,” Dunleavy said. “This was certainly not our intention. However, certain programs, programs we value, got caught in a budget discussion that went on way too long. The seriousness of the deficit, the need to begin making reforms and the length of our legislative session all contributed to the level of uncertainty we experienced the past several months. We have listened and we have learned from this past year’s budget process.”

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