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A Path Forward: Governor Dunleavy Proposes Budget to Stabilize Alaska Economy

by the Office of the Governor | Dec 14, 2020 | Featured, Finance, Government, News

Office of the Governor

Governor Mike Dunleavy announced his Fiscal Year 2022 (FY22) budget package, A Path Forward, with the goal of stabilizing the state’s economy in the wake of a devastating global pandemic while honoring his commitment to Alaskans.

The FY22 budget creates efficiencies within government, implements the basis for a stable fiscal future, puts money into Alaskans’ hands, and prioritizes job creation and infrastructure development.

“This year has presented Alaskans with challenges unlike any we’ve experienced in this lifetime,” Dunleavy says. “The widespread global pandemic led to economic devastation for every sector of Alaska’s economy. In the face of this, Alaskans adapted and overcame many hurdles, successfully completing a construction season and a safe fishing season. The state and federal government partnered to distribute $2.3 billion of Federal CARES Act funds to Alaska businesses, $1.3 billion to Alaskan workers, and $568.6 million in community assistance.”

Stabilizing Alaska’s Economy

Governor Dunleavy’s Path Forward includes key legislation as part of a concentrated effort to stabilize Alaska’s economy. In addition to the Operating, Capital, and Mental Health budget, the package includes:

Express Capital Budget—Help to Alaskans Now

Funding the rest of the 2020 PFD: $1,916 per eligible Alaskan
$4 million to address the sexual assault case backlog
$26 million to fisheries, wildlife, and resource projects
$24 million in construction and maintenance projects
$4 million for statehood defense

“A key piece of my proposal is the economic recovery payment—the remaining portion of the 2020 PFD. This would provide Alaskans with $1,900, driving $1.2 billion into the economy. Alaskans and the private sector need assistance now. Businesses that have been devastated, and Alaskans that are suffering, will benefit from immediate action by the legislature placing money into the people’s hands by March,” Dunleavy says.

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Infrastructure Bond

A $300 million to $350 million infrastructure proposal to put Alaskans to work
Building bridges, ports/harbors, and roads all across the state

“To put Alaskans to work, I am proposing the first statewide bond proposal in nearly ten years. This $300 million to 350 million package would fund roads to resources, renewable energy projects, ports, harbors, runways, bridges and other essential projects. I will work with the Legislature and take this to a vote of the people this spring. Projects mean jobs now, and critical infrastructure for all Alaskans.”

Fiscal Certainty for Alaskans

Honor the law: Proposing a full PFD for FY22, according to state law
Change the law: Proposing a new dividend formula going forward: if any money comes out of the Permanent Fund at least 50 percent needs to go to dividends. Proposes an advisory vote of the people to affirm this.
Protect the law: Provide fiscal certainty by Proposing Constitutional Amendments to
- Cap government spending
- Require a vote of the people to pass new taxes
- Protect the Permanent Fund

Dunleavy says, “For years, the PFD has been used as a political football supporting an unstable budget. Now is the time to act, to eliminate this instability and provide fiscal certainty for Alaskans.”

A Path Forward: FY22 Budget

The FY22 operating, mental health, and capital budget totals $4.3 billion unrestricted general funds, $950 million designated general funds, $948 million Other State Funds, and $4.1 billion federal funding.

The FY22 budget was developed in cooperation with all state agencies and reflects a total reduction of $294.6 million, achieved by efficiencies, modernizations, and better delivery of government services.

While the proposed budget does not currently reflect allocated cuts, discussions must begin to address underlying cost driving statutes and policies that increase spending year after year.

Key Items of Interest

Funds K-12 education with no current changes to the formula
Prioritizes Alaskans by increasing funding for public safety by $13.5 million
Funds the Alaska Psychiatric Institute to operate at full capacity
Restores school construction financing to FY20 level
Represents an overall reduction during the Dunleavy administration of 10 percent

In summary, Dunleavy says, “This budget is a call to action for all of us. Everyone in this room and across Alaska. It will be tough, but I have no doubt that together, we can do it. Even when we disagree, and we will, the goal remains the same: a stable and prosperous Alaska. Let’s dream big—let’s move forward together.”