The federal and state stars are not lining up well for Wrangell’s budget future, at least not for the next few years. And that will mean some hard choices for the community, particularly when it comes to deciding the future of its schools and how to pay for that future.
The borough has been using money from a federal program that dates back to 2000 to cover much of its annual contribution to the school district operating budget. But Congress failed to appropriate the money last year — the Republican-controlled U.S. House declined to take up the Senate-passed bill — and Wrangell lost out on about $800,000, most of which would have gone to the schools.
That federal aid, distributed to rural communities hurt by the decline in the timber industry, represented more than half of what the borough had budgeted for the schools last year.
The odds that Congress will restore the funding this year are not looking good, which leaves a big hole in Wrangell’s finances. Next year’s funding is iffy, too.
The borough could cover that hole by eliminating hundreds of thousands of dollars of spending every year from other public services, or raise the sales tax rate, or raise the property tax rate. None of which are attractive options. Yet, those kinds of decisions could become more frequent for residents and elected officials.
Clearly, federal spending is headed downward, with President Donald Trump and his chief adviser Elon Musk firing federal workers, freezing federal grants (such as the Tyee Lake hydroelectric generating capacity expansion), pausing federal grants (such as subsidies to convert more Southeast homes to electric heat pumps), and starting a trade fight with Canada (which could jeopardize cruise ship tourist travel to Southeast and local sales tax revenues).
It’s not just the president who wants to reduce spending. The Republican-led U.S. House is taking aim at money for Medicaid — almost half of all Wrangell households receive the free medical care.
Meanwhile, at the state level, Alaska is facing its largest budget deficit in years as oil revenues are in decline. Most legislators are pushing to increase state aid to schools, but there is a limit as to what the state can afford.
It all means that Wrangell should not expect state or federal funds to completely patch its own finances.
The borough assembly and school board are scheduled to meet in a joint workshop at 6 p.m. Monday, March 24, at the Nolan Center. The eventual decisions will come down to how much the borough can afford to contribute to the school budget and where to get the money. The borough figured it needed a bigger room to accommodate all of the public who might show up.
The community will need to decide: What kind of schools does it want; how many more programs can it cut and still provide a good education; and how do people want to pay for it. Looking for federal help or more assistance from the state longer term is not reality.
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