Uncertainty continues as Dunleavy says he’ll decide budget ‘probably the end of next week’

Gov. Mike Dunleavy addresses the Legislature's Permanent Fund Working Group on June 19, 2019. (Photo by Matt Buxton/TMS)

Gov. Michael J. Dunleavy hasn’t tipped his hand much on what he plans to do with the operating budget since legislators approved it 10 days ago, and it looks like the governor will keep everyone waiting.

Dunleavy told reporters outside the Legislature’s Permanent Fund Working Group meeting on Wednesday that he will “probably” make his decisions on the budget by the end of the next week, leaving just days before the start of the next fiscal year.

“We’re analyzing everything that’s in the budget—both the operating and capital—and we’ll be making decisions on the operating budget probably the end of next week,” he said. “Capital we’re still examining.”

Though the governor initially suggested he might veto the entire budget over its lack of a dividend, the Dunleavy administration appears to have backed off the threats. A wholesale veto of the budget, especially one delivered late next week, would almost certainly assure a government shutdown on July 1.

Still, he didn’t explicitly say he would be signing the budget but will be “making decisions.”

With hundreds of millions of dollars between the budget Dunleavy proposed and the one the Legislature approved, there’s plenty of concern that the governor will use his line item veto power to dramatically cut the budget in places like the University of Alaska, public broadcasting and school bond debt payments to local communities.

It’s a situation that has caused uncertainty throughout state government for layoff-weary employees, commissions that rely on funding and local governments that would likely be forced to hike property taxes.

Most, if not all, local governments and school districts have already approved their budgets for the next year. With just days before the start of the next fiscal year, though, it’ll leave very little room for groups to respond to cuts.

The University of Alaska Board of Regents recognized this when it granted UA President Jim Johnsen the authority to tap into contingency funds to cover a gap in the budget. The Fairbanks Daily News-Miner explains the powers would allow the university to “tap into its dwindling rainy-day fund, which likely wouldn’t cover expenses for long, or could go into debt.”

“Where we sit right now is, of course, in a very uncertain place where we have the Legislature with a roughly 2% proposed reduction and the governor with a roughly 41% reduction,” Johnsen said at the meeting, according to the News-Miner. “That is an incredible range and it makes it extremely difficult to plan when you’re looking at a range that is that broad and we’re less than two weeks from the beginning of the fiscal year funded by that budget.”

Earlier in the session, Johnsen warned that the magnitude of cuts proposed under the Dunleavy budget would wreak havoc on the university, requiring dramatic and immediate changes like shuttering campuses.

“One thing is certain, there is a lot of uncertainty,” said Wasilla Regent Darroll Hargraves during the Wednesday meeting, according to the News-Miner.

The Legislature could override line item vetoes when it returns for a special session on July 8, but it’s unlikely given the high barrier needed to override vetoes. Budget veto overrides require 45 votes.

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