Dunleavy unveils budget proposal, with deep cuts to education and health care

Gov. Mike Dunleavy discusses his proposed budget and Permanent Fund Dividend related constitutional amendments with reporters at a press conference held at the Capitol, Jan. 30, 2018. (Photo by Skip Gray/360 North)

Alaska’s schools, universities, health care programs and ferry system all would see huge spending cuts under a new budget proposed this morning by Republican Governor Mike Dunleavy.

The spending plan would overhaul major government functions and eliminate specific programs and services. Dunleavy says the cuts are needed to balance the state budget while paying out larger Permanent Fund dividend checks under a historical legal formula.

“I’m going to be bold here for a moment. I think everyone in this room knows we have to get our fiscal house in order,” Dunleavy said. “And I think everyone in this room and in this state knows there are going to be sacrifices across the board. That this has gone on too long and it’s got to stop.”

The proposals were released Wednesday morning, and state lawmakers and budget experts were still piecing through them by mid-day.

One of the big takeaways is a 25 percent cut to Alaska’s per-student
schools spending, a reduction of $280 million.

The proposal would cut state spending on its university system nearly in half — from $350 million to $195 million.

Dunleavy also wants major reductions in spending on Medicaid, the state-federal health-care program for low-income Alaskans. And he’s proposing big cuts to state ferries and the potential to privatize parts of it.

One way Dunleavy would raise more money for the state? Take it from municipalities. He’s proposing to eliminate the ability of municipalities to levy property taxes on oil and gas infrastructure; that tax revenue would flow to the state instead.

Dunleavy’s budget proposal is only the first in a long legislative process — the plan now goes before the House and Senate, which have the power to add money back.

This is a developing story. Check back for updates.