Gov. Mike Dunleavy signed the state budget Tuesday, vetoing statewide school maintenance funds that would have paid to renovate the Haines School’s outdated locker rooms.
The governor vetoed about $400 million in state spending in the budget, which takes effect Friday. He did not veto $3.2 million in funding for the Lutak Dock rebuild or about $2 million that the state will repay Haines for short-funding school construction debt reimbursement payments in past years.
Legislators last month passed a budget that would have funded the $1 million locker room project, with a local match, but the governor reduced by more than 60% the legislative appropriation for major school maintenance grants statewide.
The locker room project, which would overhaul ventilation, plumbing and lighting in the 50-year-old facility, is ranked No. 51 on a statewide list of maintenance projects for which the Legislature approved $100 million. The governor’s line-item veto reduced the appropriation to $37.5 million, leaving enough to cover roughly the top dozen projects on the Alaska Department of Education priority list.
Still, the budget Dunleavy signed Tuesday includes $35 million for Haines infrastructure projects, including funding for Lutak Dock renovation, Haines Highway reconstruction and airport resurfacing.
With that funding, the borough will be in position to move ahead with its plans to rebuild the failing Lutak Dock, determined eight years ago to be past its credible service life. The borough last fall secured $20 million in federal funds for the project and will match that with the state money and $2.4 million of borough funds.
Dunleavy also signed off on full school bond debt reimbursements for the first time in three years. The state’s reimbursement share on Haines’ debt will amount to $900,000 in the fiscal year that starts Friday and about $2 million in back pay for the years that the state cut its payments to municipalities.
Alaska statute says the state will cover 60% to 70% of a municipality’s annual bond debt repayments for school construction and major maintenance projects approved by voters before 2015, when the Legislature imposed a moratorium on payments for new projects to reduce the state’s ongoing and future expenses.
Dunleavy cut the debt reimbursements in half in 2020, as he shifted more expenses from the state to municipalities. He slashed the state’s contribution entirely in 2021.
With the governor’s signature on the budget and the debt back pay appropriation, the Haines Borough will fund Haines Economic Development Corp. at a full $40,000.
The Haines Borough Assembly two weeks ago committed $25,000 to the nonprofit but made an additional $15,000 contingent on the state’s commitment to covering past debt payments.
Despite Dunleavy’s vetoes, the budget still ranks as the state’s sixth largest ever. Much of the increase in state spending is from the Permanent Fund dividend and energy-relief payment that will go out to Alaskans later this year, totaling about $3,200 per person – almost $2.1 billion, about triple last year’s PFD.
With Alaska expecting a multibillion-dollar surge in oil revenue due to high prices caused by the Russian invasion of Ukraine, spending is up by $2.7 billion from the budget passed by the governor and lawmakers last year.
With higher oil revenues, the state is poised to end a decade-long streak of years in which it needed to spend from savings in order to balance the budget.
In addition to vetoing most of the funding for maintenance at schools and state facilities, the governor cut funding for the Alaska Long Trail (a proposed 500-mile trail from Seward to Fairbanks), cut support for the Food Bank of Alaska, Alaska Seafood Marketing Institute and the Alaska Library Network.