Alaska’s financial picture isn’t getting any brighter

  • Thursday, May 7, 2015 7:59pm
  • Opinion

As the economics of the state’s budget deficit trickle down, local governments are now faced with having less to spend — and making tough decisions on how to hang on to the funds they do have.

The Kenai Peninsula Borough School District is facing the biggest impact as it already was facing a deficit, and proposed cuts exacerbate the situation — particularly as the district budget was formulated before many of the cuts were proposed. And the school district remains in fiscal limbo as the Legislature approved a budget but has yet to agree on funding for it.

Meanwhile, the district is looking to the borough government for help that in years past would have come in the form of a last-minute allocation from the Legislature — the proverbial rabbit pulled out of a hat. The borough assembly opted to leave the rabbit in the hat for the moment, approving a resolution to allocate $46 million to the school district, a number below the maximum amount the borough is allowed to contribute. Should the assembly decide to revise that number upward after the Legislature finishes with the budget, the additional funding would only put a dent in what could be as much as an $8 million school district deficit — though the school district’s savings would at least stretch a little further.

The state’s financial situation doesn’t just impact the school district. The city of Kenai has been squirreling away funds for the past several years to address bluff erosion. Some of that money comes from state grants that, if unused, will lapse next year. City Manager Rick Koch noted that the Legislature did not re-appropriate any funds this year; lapsed funding went back into the state’s general fund.

Kenai Peninsula residents also heard directly from elected representatives on Tuesday, however, and their message was that as deep as cuts have been this session, things are going to be even tougher next year. And they made clear that, when it comes to using state savings, they would remain conservative in their approach.

In other words, while entities that rely on the state for a significant portion of their funding — such as the school district — may be able to hold off on significant cuts this year, they’re coming.

While the start of the next budget cycle is a few months away, organizations need to start implementing contingency plans immediately, because — barring an unexpected turnaround in the price of oil — the only way to have some funds in reserve for next year will be to spend less this year.

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