Last Friday, Gov. Mike Dunleavy issued a series of vetoes totaling $444 million to the state’s operating budget, many of which have the potential to impact residents of the Kenai Peninsula Borough.
Among the cuts was a veto of $130 million to the University of Alaska system, which could put the Kenai Peninsula College and Kachemak Bay Campus on the chopping block.
The university cut may also affect local college-bound students, Pegge Erkeneff, communications liaison for the Kenai Peninsula Borough School District, said.
“We want our students to study in the state and stay here, building a positive future for Alaska,” Erkeneff said. “Our freshman and sophomores who are college bound and beginning to plan may consider education options Outside. Our juniors and seniors will make firm plans. Many of our graduates in the class of 2019 have put plans in motion for studies beginning next month, and even turned down offers from educational institutions outside of Alaska.”
Dunleavy vetoed school bond debt reimbursement by 50%, or $48.9 million worth of the money used to pay the state subsidy for older bond debt from cities and boroughs. The cut means the borough will have to pay more on those older bonds, and a total local loss of $1.3 million.
In his original proposed budget, Dunleavy budgeted for a 100% reduction to school bond debt reimbursement, which resulted in a loss of $2.6 million for the borough. Mayor Charlie Pierce said the borough budgeted for the governor’s proposed plan, meaning they were preparing to face the $2.6 million cut.
“In February, when the original proposal came out, we took that to heart and we identified the impacts to the borough and what they could be,” Pierce said. “We went into strategic planning and we created two different plans.”
Pierce said the two plans dealt with higher and lower level cuts. Plan ‘A’ prepared for cuts like the $2.6 million school bond debt cut. He said the $2.6 million school bond debt cut was included in the budget as an actual cut.
“We incorporated those changes into our budget right away,” he said.
Plan ‘B’ considered deeper cuts, like the governor’s proposal to siphon $15 million in oil and gas property tax revenues from the borough. Pierce said when his administration met with Dunleavy several weeks ago, the governor said “he was not going to touch oil and gas tax at this time.”
“That was around $10 or $15 million net to us, which never materialized,” Pierce said. “We didn’t have to look at Plan ‘B’ but we still have that in the mix of ideas that are on the table.”
Overall Pierce said he feels “very favorable about” the vetoes.
“We’re sitting with the $1.3 million that we get back from the state and the sharing of the school bond debt,” Pierce said. “The real net gain at the end of the day — we’re sitting with a surplus in our budget of about $1 million.”
Pierce said the governor took one-time funding of $30 million out of the 2020 funding for schools, which he says the House and Senate will “need to deal with somehow.” The one-time funding was passed by lawmakers last year.
“That’s a big item that could impact our local schools here, so we’re concerned about that as well,” Pierce said.
The Kenai Peninsula Borough School District doesn’t feel as favorably toward the cuts.
“The uncertainty created, at this late date in the year, continues to affect our young people and communities,” Erkeneff said.
She said cuts to school bond debt reimbursement means less funding available for future expenditures on the peninsula, where roughly 30% of schools are over 50 years old, and half of the schools are 30 years or older.
A 90% veto of the Homelessness Assistance Program Grant will affect peninsula organizations offering assistance to some of the most vulnerable students and families in the district, Erkeneff said. A $2.7 million cut to public broadcasting will also affect the district, since they rely on local public radio stations to relay district emergencies and accurate stories and data about public education to the public.
The funding for the Live Homework Help program and the Online with Libraries Program was zeroed out. These programs are used in many public school libraries around the state. The Professional Teaching Practices Commission — which “serves as a preventative and positive force in helping to enhance the professional performance of all educators” — was cut in half.
All funding was eliminated for early learning programs, including pre-kindergarten pilot programs and grants, Head Start, Parents as Teachers, and Best Beginnings.
Pierce said the community and the state should be considering future cuts the governor plans to make in 2021.
“I hope folks don’t get lost or forget we still have a deficit in the state and we’re going to have to balance it,” Pierce said. “The way you fix the problem is with new revenue or create some cuts … I don’t see anyone coming up with new revenue ideas and the governor’s hands are tied.
Pierce said the borough is going to remain in close contact with the governor and his administration.
“We’re going to stay tuned in with his administration and try to hear early so we can strategize and plan accordingly,” Pierce said.
Legislators will reconvene Monday, and the last opportunity for lawmakers to override vetoes will be July 12.
