Gov. Mike Dunleavy delivers the State of the State address on Jan. 22, 2019 in the Alaska Capitol. (Michael Penn | Juneau Empire)

Gov. Mike Dunleavy delivers the State of the State address on Jan. 22, 2019 in the Alaska Capitol. (Michael Penn | Juneau Empire)

Legislators brace for unknowns of Dunleavy’s budget

Large cuts expected as governor takes different approach to process

Gov. Mike Dunleavy’s proposed budget will be released Wednesday, and very few people outside his office know what to expect.

Finance Director David Teal, who has worked in the Legislative Finance Division for about 20 years, said the budget process has been a little less transparent this year than most years. The Office of Management and Budget and the governor’s administration haven’t tipped their hands much, he said in a phone interview Monday.

“We just don’t know what’s coming,” Teal said.

Many legislators know that at the very least, cuts are coming. Senate Majority Leader Sen. Mia Costello, R-Anchorage, said lawmakers are bracing themselves for major budget cuts.

“I expect, from what we’re hearing about it, that it’s going to be surprising to a lot of people in terms of the reductions,” Costello said of the budget.

[‘The $1.6B problem’: Senators, commissioners gear up for budget challenge]

In meetings, press conferences and news releases, legislators have expressed that they’re expecting major cuts in the budget. For example, Sen. Click Bishop, R-Fairbanks, proposed legislation Monday to try and raise money for school districts with the expectation that there will be budget cuts.

It’s difficult for lawmakers to start their most important job — putting together the budget — when they don’t know the governor’s budget proposal for the first month of session, Costello said.

Dunleavy and OMB Director Donna Arduin sat down for an interview with the Empire on Saturday, and Dunleavy said he expects to hear a great deal of feedback when the budget is released.

“We expect that certainly the budget will be questioned, which it should,” Dunleavy said. “We expect a lot of folks to then lobby their Legislature to put funding in certain areas that they wish to see. We expect that to happen. That’s part of the process. I don’t think anyone will be surprised at that.”

A press conference is scheduled for 10:30 a.m. Wednesday where Dunleavy will talk about the details of the budget.

A look into the process

During Saturday’s interview, Dunleavy shied away from using the word “cuts.”

“It may sound philosophical, but we’re not cutting,” Dunleavy said. “We’re building a budget.”

Dunleavy said there will definitely be state jobs cut in this proposed budget.

“Yes I do,” Dunleavy said when asked if he knew how extensive those cuts would be, “and you will on Feb. 13.”

Dunleavy said he believes this administration’s budget process is different from many recent ones because the aim is to match revenues and expenditures without pulling from the state’s savings. A phrase Dunleavy used repeatedly was “core services,” saying his administration identified the most important functions of government and put a priority on funding those.

[Finance director warns of budget ‘death spiral’]

Examples of core services, he said, include public safety, transportation and natural resource management. If a government-funded service didn’t fit into one of these categories, that service was put up for consideration about whether to continue to fund it.

Arduin spoke very little, deferring to Dunleavy, but said she’s confident in the people around her and the work they’ve done.

“I know what works and what doesn’t,” Arduin said.

Arduin has worked in several states as a budget director, and has earned a reputation as someone who finds ways to make major budget cuts. A glowing 2006 profile in Duke University’s alumni magazine referred to her as “The Governor’s Axe.”

Teal said it’s a bit unusual to bring in someone from outside Alaska (Arduin lists her residence in Michigan) to put together the budget. Dunleavy said it’s different to how the state has done it in recent years, but corporations and nonprofits bring in outside experts fairly often to help with their budgets. Having a fresh pair of eyes and an outside perspective, he said, can greatly aid this process.

Arduin said she arrived in November, just after Dunleavy was elected. Teal said it was clear that Dunleavy was looking for someone who was going to help figure out a way to trim the budget.

“He was looking for a particular expertise in cutting the budget and I think probably made a decision that he wasn’t going to find that (in state), so he hired someone who’s got experience doing exactly what he wants to do,” Teal said.

After those proposed cuts are announced Wednesday, Costello said, she expects to be “inundated” with feedback from constituents providing feedback.

“We’re just bracing ourselves,” Costello said. “We’re very curious, but our job is not to rubber-stamp the proposal. It’s to hear it, hear it justified to us and listen to the public. That’s what I’m planning to do, is do a lot of listening.”


• Contact reporter Alex McCarthy at 523-2271 or amccarthy@juneauempire.com. Follow him on Twitter at @akmccarthy.


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