The Fiscal Year 2022 (FY22) budget proposal Gov. Mike Dunleavy released on Dec. 11 contains several significant cuts for the Haines Borough including 50% funding for school bond debt reimbursement, additional cuts to the ferry system, cost shifting associated with prosecuting misdemeanors from the state to the borough and closure of the local Division of Motor Vehicles (DMV) office.
Haines’ DMV office is one of six the governor’s budget proposes closing beginning in FY22.
“The DMV office in Haines is 20 miles away by ferry to the next closest DMV office,” a budget document on the Alaska Office of Management and Budget (OMB) website reads.
“It shifts DMV costs from the state to individual Alaskans,” Haines’ State Sen. Jesse Kiehl said. Instead of being able to apply for driver’s licenses locally, residents in Haines and the other five communities—Tok, Valdez, Eagle River, Homer and Delta Junction—will need to drive, or in Haines’ case, ferry or fly, to the nearest DMV.
It’s unclear how the Haines branch was selected for closure. The Haines DMV office generated $95,868 in FY20, according to the OMB document. The proposed savings in personnel and lease costs totals $94,900. The Alaska Division of Motor Vehicles didn’t respond to a request for comment by press time.
Kiehl characterizes a number of the governor’s proposed budget cuts as shifting costs from the state to municipalities and individual Alaskans.
Another proposed change involves shifting a portion of misdemeanor prosecution costs to home rule communities across the state, including Haines. Historically, the Department of Law has taken responsibility for costs associated with misdemeanor prosecutions for these communities, but it doesn’t have to.
“Home rule communities have the power to legislate what conduct will be a misdemeanor crime in their community. With that power to legislate comes the responsibility to govern their community as they see fit. Anchorage and Juneau have both done this. Other communities, despite having the power to do so, have simply left it to the state,” Deputy Attorney General John Skidmore said. “The state can no longer provide that same level of service without assistance.”
Home rule communities in the First Judicial District include Juneau, Sitka, Ketchikan, Petersburg, Wrangell, Haines and Yakutat. The cost shift to these communities is estimated to be a total of $311,300 with Haines responsible for $11,900, based on average yearly misdemeanor prosecution volumes.
“A memorandum of agreement will be arranged with each community,” according to an OMB document.
Kiehl said the proposal raises a number of questions.
“It leads us to wonder if the Haines Police department sends a misdemeanor assault to the DA’s office, but they don’t have a negotiated agreement there, does the DA say, ‘Never mind?” Kiehl said. “Sometimes you have to rely on prosecutors’ discretion on which cases to pursue, but it’s supposed to be about justice, not dollars.”
Skidmore said the department will continue working to provide prosecution services with whatever funds are made available.
“The Department of Law will continue to provide prosecution services to the best of its ability with (the) funding it is provided. How much that funding will be and from what sources that funding might come will be determined by the legislature, the administration and local communities,” he said.
Another cost shift leaves the borough responsible, once again, for 65% of school bond debt payments, roughly half a million dollars more than the borough was expected to cover prior to Fiscal Year 2020 (FY20).
Until FY20, the state routinely paid for 70% of municipal school bond debt with individual municipalities responsible for the other 30%. In FY20, Dunleavy cut the state’s share in half, reimbursing municipalities for 35% of payments. For the current fiscal year, the governor eliminated funding entirely.
“The state should honor its commitments to local governments and taxpayers that took on debt under the assumption that the state would share in these costs,” Alaska Municipal League (AML) director Nils Andreassen said in a written statement.
While 50% funding is less than promised, it’s better than no funding, interim borough manager Alekka Fullerton said at an assembly meeting earlier this month. “We would still get 50% of our bond debt reimbursement for our school if this proposal is adopted, so that’s some good news for us.”
In past years, Haines covered the unanticipated school bond costs by spending down savings accounts and funding set aside for capital projects, and this year, with money freed up by the CARES Act.
The governor’s budget proposal also includes a roughly $2.4 million decrease in operating funds for the Alaska Marine Highway System, which is currently operating at historically low funding levels.
“I don’t think panhandle communities can afford any more cuts to service,” Kiehl said. Last winter, Haines went without ferry service for seven weeks, the result of budget cuts and the breakdown of the department’s sole functioning mainliner, the Matanuska, in late January.
In general, the FY22 budget proposes similar funding levels to the current fiscal year with a few notable increases including roughly $5.1 billion to pay for a total of $5,000 in Permanent Fund Dividend payments over the course of the year—a $2,000 spring payment and a $3,000 one in the fall—and a $350 million capital bond, subject to voter approval, that would put Alaskans to work upgrading state infrastructure including roads, bridges and airports.
K-12 education funding in the proposed budget is another glass half-full situation, according to Haines Borough School District superintendent Roy Getchell. He said he was “pleasantly surprised” by the flat-funded budget.
“When you compare it to what was proposed two years ago, it’s significantly improved,” he said, with the caveat that flat funding is, in effect, a cut as routine operating costs increase every year.
According to AML, there is also concern that schools will receive less funding in the upcoming fiscal year due to pandemic-driven decreases in enrollment. The education funding formula is based on student population in the prior fiscal year.
Getchell said there’s been a significant increase in students enrolled in correspondence programs, which are funded at a lower rate. However, he said it’s too soon to say definitively how the school’s budget will be impacted as the FY22 budget is far from set.
“It’s very much a process, and this is just the beginning of that process,” Getchell said.
Kiehl said the upcoming legislative session is likely to involve many difficult budget discussions as the price of oil remains low, leaving lawmakers with options for balancing the budget including substantial cuts to state services, introducing new sources of revenue and continuing to drain state savings.
“We’re at a real inflection point here. Apparently, the governor heard that Alaskans wouldn’t stand for the level of cuts he once proposed, but without changing the structure, his proposal takes what we did to the Constitutional Budget Reserve, spending it to zero, and sets us on a path to do the same with the Permanent Fund Earnings Reserve Account,” Kiehl said.
Both the State House and State Senate remain unorganized as lawmakers struggle to assemble majority coalitions in the wake of the Nov. 3 election. The legislature is scheduled to convene on Jan. 19.