April 7, 2020 (Anchorage, AK) – On Monday, April 6, Governor Mike Dunleavy signed into law the Fiscal Year (FY) 2021 budget, prioritizing public safety, education, state preparedness for natural and public health emergencies, economic development, and holding the line on State unrestricted general fund spending while preserving a balance in the State’s traditional savings accounts. House Bill (HB) 205, as enacted, maintains a balance in the constitutional budget reserve, takes advantage of Federal funds for COVID-19 response and stabilization, maintains spending across various programs and components at a level consistent with FY 2020, and funds an incomplete Permanent Fund Dividend.

“My administration worked to make a number of difficult, but necessary, decisions. The actions I’ve taken with this budget provide stability in times of uncertainty and allows our State agencies to maintain their core functions of serving Alaskans. We have been presented the unique opportunity to capitalize on a one-time fund source through the Federal Coronavirus Aid, Relief, and Economic Security (CARES) Act, allowing us to reshape pieces of the final FY 2021 budget. Now, as we face a drop in oil prices and face a global health pandemic, is not the time to irresponsibly increase our State’s budget,” said Governor Mike Dunleavy.

“This bill was sent to me with an estimated $1,000 Permanent Fund Dividend – once again ignoring the decades-old statutory calculation that is still in place, and just as importantly, ignoring the catastrophic fiscal realities of thousands of out-of-work Alaskans unable to buy food and pay rent due to the government-mandated economic slowdown. If ever there was a time to follow the statutes and put Alaskans first, now is the time,” observed Governor Dunleavy. “Our state constitution gives the governor the power to subtract, not add to the budget. Though many Alaskans have asked me to pay out the full PFD, this is something I can’t do without the Legislature supporting the PFD.”

“With the Legislature still in session, it is my hope, and the hope of thousands of Alaskans, that they act now to fix this glaring oversight,” continued Governor Dunleavy. “All across the world, leaders and economists are looking to mimic the PFD. Yet here in Alaska, our leaders are doing the opposite. I will continue to call on the Legislature to follow the law, utilize the statutory calculation for the Permanent Fund Dividend, and get money into the hands of laid off workers throughout Alaska. Call it a PFD, call it a distribution, call it a COVID-19 emergency relief payment; it does not matter. We must act now to help our fellow Alaskans. I remain committed to working with Alaskans and the Legislature to address State spending so we can eliminate our deficit over time. It is critical that we get our fiscal house in order and provide a secure and stable future for Alaskans.”

HB 205 as passed by the Legislature, added $314 million of new spending items to the FY 2021 operating budget, which represents an unsustainable, and in many cases, unnecessary level of spending. Through line-item vetoes to HB 205, Governor Dunleavy reduced the spend by $210 million in unrestricted general funds (UGF). With these vetoes, the FY 2021 operating, mental health, and capital budget, including previously enacted legislation, is $4,517.3M UGF, $905.9M Designated General funds (DGF), $748.4M Other State funds, and $3,855.5M Federal funds.

Key programs and services funded in HB 205:

• $99M to COVID-19 response and relief
• $135.6M to Alaska State Troopers
• $14M to Village Public Safety Officer Program
• $5M to Disaster Relief Fund
• $5M to Fire Risk Reduction Funding
• $34.8M to Pioneer Homes
• $54M to the Alaska Marine Highway System
• $1.26B to fully fund Education Foundation Formula
• $28.5M to Behavioral Health Programs
• $7.2M to Homeless Assistance Program
• $65M for Capital Federal Match Program to Highways and Aviation

Line-item vetoes in this bill include:

• The reduction of debt payments on behalf of other entities, which are not a core function of the State while facing fiscal uncertainty;
• A reduction in funding to the University of Alaska to the level agreed to in the 2019 compact between the University of Alaska Board of Regents and the Office of the Governor; and
• The elimination of one-time State general funds for programs that may qualify for funding under the Federal CARES Act.

Click here for FY 2021 budget items of interest.

Click here for additional information on the enacted House Bill 205.