**Governor Dunleavy Proposes State Budget with Steady Funding for Borough Priorities Amid Deficit Concerns**
Last week, Governor Mike Dunleavy released his proposed state budget, which aims to maintain mostly steady funding for many borough priorities. However, this would be achieved by spending half of the state’s remaining savings.
### State Budgeting Process
Under Alaska’s budgeting process, the governor is responsible for drafting the initial spending plan each December. The state legislature then convenes in January to review, amend, and ultimately vote on a final budget by late spring.
### Borough Priorities
The Haines Borough has a role in providing input on the state budget by submitting its recommendations and highlighting specific projects it hopes will receive funding. While the borough’s priority lists for this year have not yet been finalized, last year’s priorities offer insight. Previously, the Haines Borough Assembly identified education, state troopers, and the Alaska Marine Highway System as top areas for state spending.
In the governor’s current draft budget, funding for these three areas would remain similar to last year’s levels:
– **Education:** Last year’s education funding was contentious. The Haines Borough School District, along with others statewide, lobbied for increased funding to avoid critical cuts. Legislators approved increased per-student funding, but Governor Dunleavy vetoed the increase. However, the legislature overrode the veto in an August special session. Now, the governor’s draft proposes “full statutory funding for K-12 education,” indicating plans to fund schools at the full per-student rate legislated last session.
Despite this, the budget reflects a $25 million decrease in K-12 aid compared to last year—$1.365 billion proposed versus last year’s $1.390 billion. This figure includes per-student payments plus school transportation funding.
– **State Troopers:** The proposed budget includes a slight increase in funding for state troopers.
– **Alaska Marine Highway System:** The operating budget for the Alaska Marine Highway is slated to decline by roughly 2%.
### Deficits and Dividends
The budget proposal faces a significant $1.5 billion deficit. To bridge this gap, Governor Dunleavy plans to use half of the state’s remaining $3 billion savings. The deficit primarily stems from declining oil revenues; the Alaska Department of Revenue projects $1.44 billion in oil revenue for the next fiscal year. This amount would need to more than double to cover the budget as proposed.
Adding to the budget challenge is the governor’s proposal of a $3,650 per person permanent fund dividend, totaling approximately $2.47 billion. Given past legislative actions, this area may see reductions. For comparison, last year the governor recommended an almost $3,900 dividend, but the legislature cut it to $1,000 per person, saving roughly $1.7 billion.
### Capital Projects
The Haines Borough Assembly plans to review its funding priority lists during this week’s meeting, including requests for state funding of capital projects. Last year, these included the Letnikof Dock floats, a new Public Safety Building, and an expansion of the borough Administration Building.
However, funding availability for capital projects has decreased significantly in the governor’s proposal—down 32% from last year.
### 10-Year Fiscal Outlook
Beyond this year’s budget, Alaska lacks a definitive plan to address the long-term decline in state oil revenues. In October, Haines state Senator Jesse Kiehl expressed hope that Governor Dunleavy’s draft budget would include a comprehensive fiscal plan.
While the governor did release a 10-year outlook, it offers few concrete solutions. According to the plan:
– Permanent fund dividends are projected to rise above $3,000 per person by fiscal year 2036.
– The state’s total operating budget would increase by 62%.
– Oil revenue is expected to grow modestly.
– The bulk of the increased spending—over a billion dollars—would be covered by so-called “new revenue measures,” though the governor has not specified what these might entail.
### Looking Ahead
As the state legislature begins its review and amendment process, significant changes to the budget proposal are likely. The Haines Borough and its residents will be closely watching to see how their priorities are addressed amid ongoing fiscal challenges.
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*For more updates on the state budget and local priorities, stay tuned to Chilkat Valley News.*
https://www.chilkatvalleynews.com/2025/12/16/gov-proposes-budget-that-would-spend-1-5-billion-in-savings-haines-borough-submits-priorities/
