August 19, 2019 (Anchorage, AK) – In a 10 minute address to Alaskans, Governor Michael J. Dunleavy today announced his final decisions on the FY20 budget through the enactment and targeted vetoes of HB 2001, legislation sent to the Governor earlier this month that funded an incomplete dividend and restored previously vetoed funds.
In his announcement today, Governor Dunleavy made clear he would not veto the Legislature’s incomplete dividend, calling it a difficult decision based on three parts (see below):
“Many have asked me to veto this incomplete $1,600 dividend passed by the legislature this year, said Governor Dunleavy. Others have asked me to accept this partial dividend and to continue our fight for a full PFD. And while this decision was not easy, it’s not easy at all, I decided that I will not veto this incomplete dividend. I and many others view this as a partial payment, not a full PFD, and we will continue to fight for a complete statutory dividend going into this fall.”
The enactment of HB 2001, which includes approximately $156 million in budget restorations, brings to close a months-long discussion on the state budget, a billion-dollar-plus deficit, and the need to better align state revenues with state expenditures. As a result of the FY 20 budget, approximately one third of the state’s deficit has been eliminated through the reduction of $650 million in total state spending.
Key excerpts from Governor Dunleavy’s video address to Alaskans. A full transcription can be found here:
A Difficult Conversation
“There is no doubt Alaskans got engaged, and a much needed and, at times, difficult conversation took place in the media, at the dinner table, and amongst friends and family. I believed, and still believe, that in order for this discussion to be successful and to be taken seriously, we have to show Alaskans exactly what our fiscal picture looks like and what it will take to solve it.”
We Can No Longer Pretend the Problem Will Fix Itself
“Alaskans need to understand that we can no longer afford to spend at our current rates. We can no longer afford to deplete our savings and hope for higher revenues. We must begin making the long-term changes to put ourselves on a path to a more sustainable future, and we can no longer pretend the problem will fix itself. It will take difficult decisions to get us to a sustainable budget, and I am prepared to make those difficult decisions.”
Result: Eliminated 1/3 of the Deficit, Reductions of $650 Million
“…important steps are being made to address our deficit, to right size our government and to put Alaska on a more sustainable path. Effective today, through the enactment of HB 2001, we have eliminated over 1/3 of the state’s deficit through reduction of approximately $650 million in state spending. Reforms have been initiated to make services and programs, such as Medicaid, University of Alaska, and the Alaska Marine Highway System more efficient and more sustainable.”
Multi-Year Step Down Requires Us to Rethink the Way We Provide Services
“The driver for these reductions continues to be Alaska’s current fiscal outlook, requiring all of us to rethink the way we provide services, the way we prioritize limited state resources and the way we spend state dollars moving forward. While state savings will continue to be exhausted as we move into a multi-year step down, reducing our rate of spending must be a priority for all Alaskans. More must be done in the coming months, but we as Alaskans are resilient, and I honestly believe our future remains bright.”
Budget Approach and Timing Caused Significant Angst Among Alaskans
“I understand that this budget approach and timing, being so late in the legislative year, caused significant angst among Alaskans, I really do. This was certainly not our intention. However, certain programs, programs we value, got caught in a budget discussion that went on way too long. The seriousness of the deficit, the need to begin making reforms and the length of our legislative session all contributed to the level of uncertainty we experienced the past several months. We have listened and we have learned from this past year’s budget process.”
Reduction to State Spending of 8%
“Overall, this year’s budget limited 1/3 of the deficit, reduced state spending by 8% and began the difficult process of changing the way we deploy limited state resources. The discussion that occurred ultimately helped Alaskans understand the seriousness of our challenges, forced the conversation about priorities and, in the end, helped shape this year’s budget.”
PFD: Arbitrarily Set Political Football
“Unfortunately, this process was thrown into chaos the past several years when oil prices fell. Too many in the legislature now treat the PFD as a political football, arbitrarily setting its amount rather than following the statutory formula Alaskans know and trust. For 35-plus years, Alaskans could rely on the system we had in place, a process outlined in law and immune from politicians who wanted more for government spending. Now some politicians in Juneau are attempting a complete takeover of the PFD, converting it into revenue for government and denying Alaskans their full statutory PFD.”
Dunleavy: “The legislature has once again denied the people of Alaska the full statutory PFD.”
If I had the authority to add more money to the budget for a full PFD, I would. However, only the legislature, by Constitution, can appropriate these funds. The legislature has once again denied the people of Alaska the full statutory PFD.
“Veto Today Would Have Resulted in a Zero Dividend in October”
“This decision was based on three parts. First, a veto today would have resulted in a zero dividend in October, leaving approximately 660,000 eligible Alaskans who expect the PFD with absolutely nothing, zero, not a dime. Over $900 million would have been taken out of the economy if I veto the PFD, hurting Alaskans businesses and exacerbating our recession.”
Veto: “Win for those wanting to eliminate the PFD in its entirety.”
“A veto would have been a win for those wanting to eliminate the PFD in its entirety. I’m not about to give them that win. Quite the contrary, I’ll continue to fight and I will not let up for Alaskans until they receive what they are due.”
The Legislature’s Job is Not Over
“By funding an incomplete dividend, the legislature understands that their job is not finished. Many in the legislature know that this incomplete dividend must be fixed as soon as possible. I have begun the conversations with legislators to map out a path to appropriate the funds remaining for the full PFD. I anticipate a special session this fall to complete this process. I’ll introduce legislation to provide for a full statutory PFD through a payment from the Earnings Reserve Account.”
PFD Will Be Sole Focus of the Next Special Session
“Finally, now that the budget has been addressed, the full PFD will be the focus in this next special session, the sole focus. I will not let up until the remaining funds are appropriated for the full statutory PFD. I know Alaskans understand this decision and I appreciate all of your input.”
House Bill 2001 as passed by the legislature, added $375 million to the FY 2020 operating budget, which represents an unsustainable level of spending. Through line-item vetoes to HB 2001, Governor Dunleavy reduced spending by $220 million. With these vetoes, the FY 2020 operating and mental health budget, including previously enacted legislation, totals $4.193 billion Unrestricted General funds (UGF), $883.6 million Designated General funds (DGF), $702.1 million Other State funds, and $2.7 billion Federal funds.
Key programs and services restored in HB 2001:
- $21.5M to Senior Benefits Program
- $110.25M to the University of Alaska
- $8.8M to Early Learning Programs, including Head Start, Early Childhood Grants, Parents as Teachers, and Best Beginning
- $759,100 to Alaska Legal Services Corporation
- $809,100 to Online with Libraries and Live Homework Help
- $3.8M to Alaska State Council on the Arts
- $100,000 to Office of Veterans Affairs for an additional Veterans’ Services Officer
- $2.2M to Human Services Matching Grants and Community Initiative Grants
- $533,500 to reopening the Utqiagvik Law Office
- $2.7M to Agricultural Programs
*A restored items of interest document can be found here.
*A restored items summary can be found here.
Line-item vetoes in this bill include:
- The elimination of unconstitutional commitments of future year funding;
- The elimination of optional Medicaid services to ensure adequate funding for federally required Medicaid programs; and
- The elimination of debt payments on behalf of other entities, which are not a core function of the State.
*A vetoed items of interest document can be found here.
*A vetoed items summary can be found here.
Click here for additional information on the enacted House Bill 2001, including a funded project summary, a vetoed project summary and more.