Kiehl: Governor used 'meat ax' approach
February 21, 2019
State Sen. Jesse Kiehl’s visit to Haines was dominated by questions about Gov. Mike Dunleavy’s proposed budget that aims to reduce more than $1 billion in state spending by significantly cutting the Alaska Marine Highway System, education and municipal revenue-sharing programs.
Kiehl described the governor’s proposed budget as a “meat ax” approach, and told assembly members and borough staff that if the budget is passed as it stands, it would “crash our state’s economy.” He said some aspects of the budget didn’t reduce state spending, but instead shifted costs onto municipalities.
In his proposed budget, Dunleavy zeroed out the state’s school debt reimbursement, a program that the state reimburses municipalities across the state 70 percent of bond repayments for school improvements or construction. Such a cut would leave the Haines Borough on the hook for about $900,000 in annual bond debt through fiscal year 2026 for the construction and improvement of the Haines School.
“The unfortunate thing about what we’ve seen proposed is that it in many cases it doesn’t really cut what gets spent,” Kiehl said. “It shifts who has to spend it.”
Dunleavy also proposed eliminating the state’s shared fisheries tax contribution to municipalities where fish are landed within its boundaries—revenue that totaled $352,884 for the borough this year. Under Dunleavy’s proposal, the state would keep that money. He also proposed keeping the state oil and gas property tax revenue that other municipalities generate.
“We have some allies in protecting what municipalities have available because you use it to meet basic infrastructure needs and keep sales and property taxes at a reasonable level,” Kiehl said. “If all the state does is shift costs onto cities across the state, you haven’t avoided tax increases, you just made somebody else do them.”
Dunleavy also proposed cutting the ferry system’s budget by 75 percent, and finding a way to privatize the system. Kiehl said such a proposal, that would effectively end service by October, can be negotiated during the legislative session.
“Love him, hate him, whatever you think about him, I’ve never seen him break his word,” Kiehl said of the governor. “If he negotiates a deal, I think he keeps it.”
The state legislature can change the governor’s proposed budget, but he has the power to veto those changes. It takes three-quarters of the legislature to override a governor’s veto on a budget item. That means 45 of the 60 legislators in the House and Senate would have to agree to override such a veto.
Borough manager Debra Schnabel asked Kiehl how the legislature plans to negotiate Dunleavy’s proposal and if there will come a time when Kiehl and other legislators will have to choose between one service or another. “Is it education or is it Alaska Marine Highway?” Schnabel asked. “Is it public safety or is it community assistance? Do you see it coming down to programs that will be left on the ground, or everything crippled equally?”
Kiehl said state tourism marketing and programs to protect clean water are among state programs that will likely go away. “You can’t cut everything 20 percent because some things just stop functioning 20 percent below where they’ve been cut for years,” Kiehl said. “It’s going to be a fairly brutal process of figuring out which is which.”
Assembly member Brenda Josephson asked the senator what he could do to ensure the Alaska State Troopers accept jurisdiction outside the townsite. The troopers moved its highway officer to western Alaska in 2017, and officials have repeatedly told borough staff and assembly members that policing outside the townsite is now the borough’s responsibility.
“It’s okay for us not to have a trooper here, it’s not okay for the troopers to say it’s not their jurisdiction,” Josephson said. “Even if we don’t get a 'blueshirt' restored, we still need them to accept their responsibilities.”
Kiehl said he’s spoken with the governor’s commissioner designee about the issue, and that she is open to the possibility.
At a townhall meeting in the Chilkat Center lobby later that evening, Kiehl told residents that Dunleavy has no plans to raise revenues through broad-based taxes—a revenue source Kiehl said Alaskans need to consider along with budget reductions, and spending from the permanent fund earning’s reserve.
“There are going to be budget cuts I don’t want and I’m going to minimize the pain to Alaskans where ever I can, but if we’re going to get serious, more serious than this meat ax approach, we’re going to have to look at a lot of pieces,” Kiehl said.
Dunleavy also proposed reducing per-student funding, known as base student allocation, by 23 percent statewide—a $598,000 cut for the Haines Borough School District next year, according to state data.