Dunleavy launches ‘massive’ plan to cut state spending

  • Alaska Gov. Michael J. Dunleavy is proposing to cut spending by $1.6 billion in the fiscal year that starts July 1. (Photo/File/Anchorage Daily News)

JUNEAU — Alaska Gov. Mike Dunleavy on Wednesday unveiled his proposal to balance the state’s budget without new taxes and without a reduction to the Permanent Fund dividend.

“This budget is going to impact all Alaskans. It’s too massive not to,” the governor said in a televised news conference from Juneau.

The state released a trove of documents detailing his proposal on the state Office of Management and Budget’s website Wednesday morning.

Initial figures released by OMB show the governor is proposing to spend $9.1 billion in the fiscal year that starts July 1. That figure does not include the Permanent Fund dividend.

If the governor’s $1.9 billion in dividend spending is included, overall spending is near $11 billion.

Last year’s budget, not including the dividend, was $10.9 billion, according to OMB figures. The dividend last year cost $1 billion.

The governor had said he would cut the budget by $1.6 billion, but based on dividend-included figures, spending in his plan will be down less than that because of the boost to the dividend.

Health care and K-12 education, the largest components of the state’s budget, are cut under the proposal. The Department of Education is cut from $1.66 billion to $1.34 billion under the governor’s plan. The Department of Health and Social Services is cut from $3.25 billion this year to $2.47 billion, according to figures from the Office of Management and Budget.

One of the biggest duties of Health and Social Services is overseeing the federal-state Medicaid program, which provides health care to more than 210,000 Alaskans, according to the latest figures from the state. Of those, almost 48,000 are covered by Medicaid expansion by an executive order signed by former Gov. Bill Walker.

Dunleavy will not reverse that order at this time, he said Wednesday, but the state will work with the federal Centers for Medicaid Services to adjust benefits, he and Arduin said.

Medicaid spending, which stands at $2.27 billion, will be cut by $714 million, according to OMB figures. About one-third of that cut is state money; the remainder consists of federal dollars the state will forego, according to OMB’s analysis.

State support for the University of Alaska is cut 45 percent, from $327 million to $193 million, but the university is granted the authority to raise additional money through tuition, grants or other sources to make up the difference if it can.

Arduin said about 625 full-time state jobs would be cut under the budget, and if part-time positions are included, that figure is above 700. Those figures do not include cuts at the University of Alaska.

The governor’s proposal must be vetted and approved by the Alaska House and the Alaska Senate before it becomes official. That process is expected to take several months, and the timeline may be lengthened by the House’s ongoing inability to elect a leader, a prerequisite to officially consider legislation.

“We know this is just the beginning. This is the beginning of the journey for this budget,” Dunleavy said.

Groups and agencies affected by the budget cuts are expected to spend Wednesday and the next few days examining the governor’s proposal to see how it would affect them.


02/13/2019 - 1:36pm