State Sen. Bert Stedman, who represents Sitka and central and southern Southeast, including Wrangell, is in his 20th year in the Senate, serving much of that time as co-chair of the budget-writing Finance Committee. As lawmakers prepare to resume work Jan. 18 in Juneau, Stedman said Gov. Mike Dunleavy’s proposed budget appears to be balanced — and not balanced — at the same time.
“It’s balanced, but not when you compare recurring revenues to recurring expenditures,” Stedman said. “We’ve got to unwind that. The structural deficit is going to be $375 million at least. Then we have to see what’s included and not included in the budget.”
The governor’s budget relies heavily on one-time federal pandemic aid dollars and high oil prices — always uncertain — to pay for public services and a 2022 Permanent Fund dividend twice as large as last year’s payment.
Stedman pointed to a few glaring problems with the budget the governor submitted to the Legislature on Dec. 15. One is the “backfilling” of the structural shortfall of state funds with federal pandemic relief money, which cannot be counted on in future years.
“When the largesse ceases to come in, we’ll have a tougher hole to fill in the budget,” Stedman said. “It’s technically a balanced budget, but it does not match recurring revenue with recurring expenses.”
Also, since next year is an election year, Stedman is concerned that some budget items will be cut in a non-election year, particularly programs built around the one-time funding.
“We’ve got to be cognizant that it’s an election year,” he said. “It’s ‘you can have your cake and eat it too — and more ice cream.’ You’d better slow down and take a look.”
Like others in Southeast, Stedman was pleased that the recently passed federal infrastructure bill includes funding for state ferry operations, but he also wants a plan in place for the future that doesn’t rely on federal funding.
“We have to make sure we don’t set up a cliff for the Alaska Marine Highway to pile into,” he said. “Just remember, it’s an election year and this is an election-year budget.”
Stedman said the state’s budget picture has improved in the past year, with higher oil prices and healthy Permanent Fund earnings, but the Legislature needs to start looking to create programs and projects to help future generations.
“We need to build up our financial position to weather another economic hiccup,” he said. “We’ve so depleted our cash reserves over the last decade. That’s not on the table and it needs to be. Just because it’s an election year doesn’t mean you can spend every dime you can get your hands on.”
An advocate of new revenues and saving any windfalls for the future to pay for state services, Stedman added, “I’ll be advocating for strengthening our financial position — we’re going to have another hiccup — it comes and goes like the tide. We did it before; we had $18 billion set aside and we were ready for the last hiccup. We’re nowhere near that today.”
So far, he sees some positive things in the governor’s budget, including full funding of local school bond debt reimbursement. The governor has previously vetoed some or all funding for local school bond debt, leaving cities and boroughs to cover for the lack of state aid.
Stedman said other controversial issues from the past — university funding and the ferries — appear to be well funded in the governor’s budget.
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