Gov. Mike Dunleavy unveiled his proposed state budget on Thursday — but this year, he skipped the usual press conference.
Instead, the governor released a short YouTube video and Facebook Reel outlining his plan.
“Here are the examples of the larger budget items proposed in this year's budget,” Dunleavy read, “a full Permanent Fund dividend, as called for in law, full funding for K-12 schools and school transportation, continued funding for public safety.”
That full dividend would be roughly $3,600 per Alaskan. But it’s unlikely to materialize.
Dunleavy’s budget release sets the stage for months of debate in his final legislative session as governor. And lawmakers are already signaling concerns: The plan relies on drawing more than $1.5 billion from the state’s primary rainy-day fund, the Constitutional Budget Reserve — about half of Alaska’s remaining savings, and a deficit nearly identical to what the governor proposed last year.
This year, though, Dunleavy himself says the state’s persistent budget gap is untenable.
“Drawing down our savings is not a sustainable plan, nor is using your PFD year after year a sustainable plan,” he read in his video.
Since oil prices collapsed in the mid-2010s, Alaska has struggled to make ends meet. That’s despite efforts to slash government spending and the 2018 decision to use Permanent Fund earnings to fund state programs, like state troopers, jails and public schools.
Dunleavy said he’ll introduce his latest attempt at a plan to stabilize the state’s finances sometime next month. A required 10-year plan released alongside the budget includes about $1.6 billion in unspecified “New Revenue Measures” starting in mid-2027. His office declined to say what those would be, and also declined a request to interview the governor.
Sitka Sen. Bert Stedman, a Republican who co-chairs the powerful Senate Finance Committee, said he's skeptical Dunleavy could push through a fiscal plan in his last year in office.
“Quite frankly, he's out of time,” Stedman said.
He said lawmakers tried to reduce the state’s budget deficit during this year’s session — but Dunleavy said no.
“We tried to take a couple of small steps to deal with some revenue enhancements or taxes, and then hold back the spending, and he vetoed the revenue measure,” Stedman said.
Stedman said there’s not much left to cut when it comes to state services. So he’s skeptical Dunleavy will be able to push through a resolution to the decade-long issue during his final year in office.
Plus, he said the governor’s decision to again propose spending half the state’s savings on large Permanent Fund dividends is unwise with oil prices stubbornly low.
“If we would have followed his plan, after this year, we'd be completely broke,” Stedman said. “So it's not acceptable, and we're going to have to work through our process. And like I said, we need to veto that $1.5 billion deficit.”
Stedman said he’d like to see a balanced budget, not a draw from savings. He said he does not want to see a Permanent Fund dividend smaller than this year’s $1,000 payout — but low oil prices will make that difficult to achieve.
“We’ve got to make payroll,” he said.
Rep. Andy Josephson, D-Anchorage, who co-chairs the House Finance Committee, isn’t quite as put off by the savings drawdown — but he said he wouldn’t use it to pay a large dividend.
“That isn't how I would spend half of the CBR, right, for example, but I might still spend half the CBR,” he said.
He said he sees lots of needs around the state.
“The Municipality of Anchorage’s school district needs $75 million to maintain the status quo in funding of K-12,” he said. “That's where I would spend the money. That's example one.”
Dunleavy’s proposed budget fully funds the state’s education funding formula, which lawmakers increased by $700 last year despite a veto from Dunleavy.
Josephson said he’d also like to see the state invest in capital projects and beef up things like the Division of Public Assistance.
Like Stedman, Josephson said he’s viewing the governor’s forthcoming fiscal plan with a skeptical eye.
“He told me and others, two years ago, he was filing a sales tax bill,” Josephson said. “He never did.”
Lawmakers return to the Capitol on Jan. 20.
