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2/13/2019
PoV: What to expect from Gov. Dunleavy's budget proposal

By DAN ORTIZ

Gov. Dunleavy's budget is due out today, and perhaps by the time you read this, you'll have seen the details. The governor campaigned primarily on paying a full Alaska Permanent Fund dividend according to the original formula and paying back the limited dividend from the past three years. With these promises in mind, I'd like to go over what a full PFD and pay back program would look like in context of our current financial situation.

Dividends are the single largest expenditure in our state budget. In Gov. Dunleavy's first round of fiscal 2020 budget amendments, which was published in December, Dunleavy provided a full dividend, which resulted in a $1.6 billion deficit. In comparison, we would have to completely eliminate 16 of our 18 state agency's Unrestricted General Fund monies in order to afford that $1.6 billion pricetag. That would mean no UGF funding for the departments of Fish and Game, Public Safety or Corrections; the University of Alaska; and many other departments. That does not include his plan to pay back the past three capped dividends, which is projected to cost an additional $2.4 billion. Gov. Dunleavy's PFD payback plan is expensive.

The budget due out today will have provisions on how to pay for such a large price tag. Gov. Dunleavy does not want to create new sources of revenue, which leaves cutting the budget as the sole solution. Dividend funding directly competes with funds for our schools, roads, pioneer homes, and other government services.

His supplemental budget, which came out on Jan. 28, is a testament to his desire to make substantial cuts. In his supplemental budget, Dunleavy revoked $20 million from the education budget. Last spring, the Legislature— with strong bipartisan support — voted to allocate an additional $20 million for school districts in FY19, and $30 million in FY20. District 36 was set to receive an additional $539,000. If Dunleavy's supplemental budget passes, those funds will no longer be available, even though our local school district has budgeted those monies for this year's operations.

Lastly, the dividend payments directly compete with our ability to invest funds in the Earnings Reserve Account. Gov. Dunleavy's plan to pay back the capped dividends, in addition to the full dividend, could potentially drain the ERA and thereby end the dividend program by 2026. In contrast, the Legislature took steps last year to protect and inflation-proof the ERA by passing Senate Bill 26, which limits the percentage that can be taken out of the ERA.

The governor wants to propose a balanced budget that includes his full PFD promises without creating new sources of revenue. The goal of the Legislature is to ensure a balanced budget while also making sure sizeable cuts do not hinder Alaska's future: students, industries, resources or otherwise. As your representative in the Alaska State House, I'm most interested in what you have to say about these issues. Please take the time to give me a call, shoot me an email, and be looking for my survey that I plan to make available soon.

Rep. Dan Ortiz, I-Ketchikan, represents House District 36 in the Alaska House of Representatives.