Though he vetoed funding for several projects and public services around Alaska, Gov. Mike Dunleavy did not cross out $4.1 million in state grant funding toward a new $15 million water treatment plant in Wrangell.
The borough hopes to finish design work and go out for bids on the project later this year. Federal funds are covering about $11 million of the cost.
The governor also left intact a one-time $57 million legislative appropriation to boost state funding by 5% for local school district operating budgets. The increase for the 2022-2023 school year will add about $143,000 to Wrangell schools funding — an amount the school district had counted on and already included in its spending plan for the school year that starts next month.
Educators and many legislators had pushed hard for a permanent increase this year in the state’s per-student funding formula, but had to settle for the one-year appropriation.
Wrangell also will receive about $300,000 in state funds under the budget as its share of make-good payments to municipalities that were shortchanged in recent years when the state underfunded its share of local school construction debt payments.
The money will go to the municipality, which owns the school buildings and paid the bond debt, not to the school district operating budget. There are no spending restrictions from the state on how municipalities might choose to spend the catch-up funds.
Alaska statute says the state will cover 60% to 70% of a municipality’s annual bond debt repayments for school construction and major maintenance projects approved by voters before 2015, when the Legislature imposed a moratorium on payments for new projects to reduce the state’s ongoing and future expenses.
Dunleavy cut the debt reimbursements in half in 2020, as he shifted more expenses from the state to municipalities. He slashed the state’s contribution entirely in 2021. The Legislature this year appropriated money to restore those state payments.
Despite Dunleavy’s vetoes, the budget still ranks as the state’s sixth largest ever. Much of the increase in state spending is for the Permanent Fund dividend and energy-relief payment that will go out to Alaskans later this year, totaling about $3,200 per person — almost $2.1 billion, about triple last year’s PFD.
The precise amount of the payout will be determined based on the number of eligible applicants. The governor said he expects to announce a payout date “probably” this week.
The dividend has traditionally been paid the first week of October, but Dunleavy ordered the 2020 dividend paid early, and several lawmakers have called on the governor to do so again this year.
With Alaska expecting a multibillion-dollar surge in oil revenue due to high prices caused by a global supply squeeze and Russia’s invasion of Ukraine, spending is up by $2.7 billion from the budget passed by the governor and lawmakers last year — mostly for the dividend and public works projects statewide.
The new state budget year started last Friday.
With higher oil revenues, the state is poised to end a decade-long streak of years in which it needed to spend from savings in order to balance the budget.
In addition to vetoing more than $110 million in funding for deferred maintenance at schools, university and state facilities, the governor vetoed funding for public radio, a Sealaska Heritage Institute — Alaska Native Arts Economy and Workforce training program, the Alaska Long Trail (a proposed 500-mile trail from Seward to Fairbanks). He also cut additional state support for the Food Bank of Alaska and the Alaska Library Network.
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