This is a developing story.
Gov. Mike Dunleavy kept a $680 per-student increase in education funding when he signed the state budget for the fiscal year beginning July 1, but he vetoed more than $230 million in other spending including major cuts to broadband assistance grants for rural schools and reading assistance programs for K-3 students.
Other line-item vetoes include Head Start grants, public broadcasting, seafood marketing, backstop funding for the Alaska Marine Highway System, and community and disaster assistance. In nearly all instances the governor’s reason for the vetoes was partially or wholly listed as “preserve general funds for savings and fiscal stability.”
The governor signed the operating and capital budget bills in a ceremony Thursday in Anchorage that was not announced or open to the media. The bills were transmitted on Friday, with the announcement of the signing publicized by the governor’s office at about 4 p.m.
“The FY2025 budget funds state government from July 1, 2024 through June 30, 2025,” a press release issued by the governor’s office states. “The operating budget totals $12.2 billion and the capital budget totals $3.5 billion. The governor’s line-item vetoes reduced the operating budget by $105.7 million and the capital budget by $126.3 million.”
The budget is expected to include a Permanent Fund dividend of about $1,718, according to the release. Legislative leaders in mid-May estimated the PFD will be about $1,655, based an estimated $1,360 from available Permanent Fund earnings and a $295 “energy relief dividend” due to average oil prices this year being higher than forecast last spring.
“This thing is full of sort of wins and disappointments,” said State Sen. Jesse Kiehl, a Juneau Democrat and member of the Senate Finance Committee, in an interview about an hour after the budget was released publicly.
Among the local vetoes he cited as significant was $2 million in the capital budget for road and infrastructure work at Pederson Hill to aid with housing development there.
“I worked with the governor’s team on some of the statewide housing money from early on in the session,” Kiehl said. “And then I read in his press release that he carefully and consistently applied his standards to the whole thing. I don’t see the consistency in approving $55 million of statewide housing money and vetoing Juneau’s.”
Other notable area vetoes in the capital budget were $1 million for decontamination of the ore terminal in Skagway — which is trying to redevelop its waterfront — and about one-third of the roughly $1.5 million designated for safety and regulatory compliance for areas such as walkways at the University of Alaska Southeast.
Among the notable local items cited by Kiehl that stayed in the capital budget were a new $9.5 million Alaska State Troopers patrol vessel for the area and $5 million in matching funds for the final stage of the Aurora Harbor reconstruction project.
Education funding was the biggest battle of the legislative session, focusing largely on the $5,960 Base Student Allocation that has remained mostly unchanged since 2017. The one-time $680 increase signed by Dunleavy — costing a total of about $175 million — is expected to provide an extra $5.2 million to the Juneau School District, with local school board officials on Friday meeting to discuss possible restorations to some employees and programs cut when the district was facing a nearly $10 million deficit earlier this year.
The budget also includes a $7.3 million one-time increase for pupil transportation.
But Dunleavy, who pushed heavily for political priorities such as more support for charter schools and homeschooling, vetoed numerous other education items.
Among them was $5.2 million for K-3 reading improvement programs that started out as a $9.7 million amendment by Rep. Andi Story, a Juneau Democrat, that was reduced in the bill passed by the Legislature. Dunleavy, in his veto explanations, cited the increase in per-student funding as the reason for rejecting the extra reading funds.
Story, in an interview Friday evening, noted many education leaders and lawmakers were asking during this year’s session for a permanent BSA increase of more than $1,400 to offset the effects of inflation since the last permanent increase in 2017, so the one-time $680 increase still leaves many districts short of fulfilling basic expenses.
Another veto was about $11.2 million in rural broadband meant for schools, although Dunleavy noted $21 million of such funding remains to secure federal grants awarded for the coming fiscal year.
Dunleavy also vetoed nearly $12 million that the federal government says the state owes school districts that weren’t funded equitably during the pandemic, with the Kenai Peninsula and Anchorage being the primary areas. The state is legally challenging the federal government’s assertion.
Other education cuts included $2.6 million in Head Start grants meant “to provide grantees with additional matching funds” (another $2.6 million remains in the budget), $4 million of the $10 million for the University of Alaska drones program, and $2.8 million in deferred maintenance to dorms at Mt. Edgecumbe High School in Sitka as well as $500,000 for the school “to provide each student with additional round trip between MEHS and home.”
Among the other vetoes:
• $10 million for the Alaska Seafood Marketing Institute, matching the industry’s contribution to the agency two years ago.
• $1.2 million for rural public radio stations that are considered essential emergency communications resources, an amendment added by Rep. Sara Hannan, a Juneau Democrat.
• $10 million in so-called backstop funding for the state ferry system, which the Legislature approved to ensure the ability to provide required matches for specific federal funding during the year. The governor’s office stated the funding will be reevaluated after federal grant money is received. “I think my great fear is that that’ll be a phony budget cut and we’ll have to come up with supplemental money because we’ll need more than the $10 million backstop,” Kiehl said.
• Contact Mark Sabbatini at mark.sabbatini@juneauempire.com or (907) 957-2306.
