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Dunleavy vetoes $90M in spending as he signs $15.6B state budget
- Mark Sabbatini
- Jun 24
- 2 min read
Governor keeps large one-time education funding increase passed by Legislature, nixes various line items such as teacher incentives and oil-related community assistance payments
By Mark Sabbatini
Juneau Independent
Gov. Mike Dunleavy signed a $15.6 billion state budget on Wednesday that contains about $90 million in line-item vetoes, many of them to various education and early development programs.
The governor did allow most of a major one-time increase in education funds passed by the Legislature to remain. That includes up to $115 million in one-time student funding, which depends on oil prices remaining high enough to meet revenue goals, plus about $29 million in energy relief payments to schools.
The full budget includes a $13.1 billion operating budget, $2.5 billion capital budget and about $783 million allocated for Permanent Fund Dividends.
Dunleavy, in a prepared statement, noted the Iran war resulted in additional revenue for the state — but also higher energy costs for communities and companies involved in industries such as construction.
“This was an anomaly, not a trend, and it created both an opportunity and a responsibility,” he said. “While the state realized additional revenue, those same price pressures placed a real burden on school districts, particularly in rural Alaska. This budget makes targeted, responsible use of a temporary revenue increase to stabilize school facilities and address energy costs.”
However, the biggest single operating budget line-item veto by Dunleavy in a 23-item list was $20 million in extra community assistance payments, provided by the Legislature as a way of sharing some of the extra oil revenue with municipalities that are paying higher energy and related costs. His veto message stated it was to "preserve general fund resources to support long-term fiscal stability," a phrase repeated for many other line items.
Among the governor’s other vetoes were $16.4 million in backstop funds for the Alaska Marine Highway System (leaving $33.1 million "based on anticipated need"), about $11.5 million in higher Medicaid reimbursement rates for some services, $6.4 million for early education workforce recruitment and retention, and $3.8 million in Head Start funds (leaving $16.8 million remaining).
A veto that surprised some legislators was $16 million in worker training programs aimed at the possible construction of a natural gas pipeline, which has been Dunleavy’s highest priority this year. Legislators are currently in the middle of a second consecutive special session ordered by the governor to consider bills that would provide tax breaks and other incentives to the project’s developer.
"While the Education and Health Care cuts were unfortunately expected, what I did not expect from the governor are direct hits to items that would support the proposed gasline, such as the Fairbanks Pipeline Training Center, the Alaska Vocational Training Center, and a CDL Training Center," Senate Rules Chair Senator Bill Wielechowski, D-Anchorage, wrote in a social media post Wednesday.
The budget for the fiscal year starting July 1 is projected to balance if oil prices average $74 a barrel. People receiving Permanent Fund Dividends will get a $1,200 payout, with $200 of that amount being an energy relief payment.
• Contact Mark Sabbatini at editor@juneauindependent.com or (907) 957-2306.
