Legislators fail to overturn Dunleavy’s vetoes

Alaska legislators last week failed to overturn Governor Mike Dunleavy’s Fiscal Year 2020 operating budget vetoes. Despite more than two hours of emotional testimonies in Juneau on July 10 as well as a second Joint Session the next day, the Legislature was unable to obtain the 45 votes necessary for an override. Dunleavy’s budget, which includes roughly $444 million in 182 line-item vetoes and drastic cuts to education, healthcare and other social services, will stand unless lawmakers are able to find a way to compromise.
While the public was made aware of the potential impact of the cuts when the governor released his budget at the end of June, the possibility of a legislative override—though a tall task—was there. As of Friday, though, the vetoes are more or less finalized. The deadline to overturn the vetoes has passed, but many lawmakers have not given up hope of changing the budget.

Divided Legislature
The Legislature’s special session, which began on July 8, was tumultuous from the start. In an unprecedented arrangement, the Legislature convened in two separate locations. Dunleavy urged lawmakers to meet in Wasilla, and about 20 Republicans did so. However, roughly twice as many members of the House and Senate from both parties convened in Juneau, the traditional location. The lawmakers in Juneau announced that they would hold a vote on the veto overrides on Wednesday July 10. With the exception of North Pole Republican Tammie Wilson, the Wasilla contingent held their ground and remained in the Mat-Su Valley. In Juneau, lawmakers voted 37 to 1 to override, but without 45 members of the Legislature in the same room, there was no possibility of overturn the vetoes.
Despite the override vote being doomed from the start, lawmakers from both parties spoke out against the vetoes for over two hours. Over and over again, they referred to the budget in terms such as “unconscionable” and “irresponsible.” A few members noted that a silver lining to Dunleavy’s budget was that it served to unify lawmakers from all political stripes. While this may have been true of those in the room, the division between legislators in Juneau and those in Wasilla remained stronger than ever. Interestingly, the biggest fraction occurred within Alaska’s Republican lawmakers. Those in Wasilla agreed with Dunleavy’s decision to use the traditional formula to determine the amount of the PFD (which would come out to about $3,000 this year), while the majority of those in Juneau did not. All members of the Legislature aligned with the Democratic and Independent parties were in Juneau.
Many in the July 10 meeting, including Wilson, voiced their disappointment with their colleagues who chose not to attend the vote, equating the failure to attend with a failure to stand up against the governor for the sake of Alaska. As House Speaker Bryce Edgmon (I-Dillingham) said, “These are not partisan decisions: Democrats, Republicans, and Independents from the House and Senate voted together today. We must stand together for Alaska.”

The Outfall
Interim City Manager John Handeland explained that the City of Nome partners with the State of Alaska for many programs. One example is the school bond debt reimbursement program, which Dunleavy reduced by half. The program was created to reimburse cities for the cost of construction, maintenance and repair of infrastructure in their schools. Handeland said the City of Nome issued bonds for school construction under this program and is still responsible for the bond coupons.
Handeland, who also serves as Nome Joint Utility System Manager, said defunding the Power Cost Equalization program “will have a significant impact” on both the City of Nome and its residents. In addition to an increase in household energy bills, the City benefits from the PCE for community services, including streetlights.
When asked about the biggest impacts the cuts will have on the Bering Strait region, both Representative Neal Foster and Senator Donny Olson’s offices listed the closure of the Nome Youth Facility, the elimination of the Senior Benefits program and cuts to the Village Public Safety Officer program.
Dunleavy, who ran on the platform of increasing public safety, cut $3 million from the VPSO budget. This comes on top of a $3 million reduction made in an earlier budget passed by the Legislature. Dunleavy Press Secretary Matt Shuckerow said that this veto does not undermine the governor’s commitment to public safety. He explained that the program has declined and, at the end of the past few years, about $3,000 of the VPSO budget has not been used. By cutting $3,000, the governor was attempting to align the allocated money with funds spent. Shuckerow added that the administration wants to fill vacant positions and is looking for ways to do so with the current budget.
Kawerak runs the VPSO program in the Bering Strait region. According to VPSO program Director Gina Appolloni, they are currently only funded for the five positions, which are filled. Though Kawerak was in the process of hiring more VPSOs, they had to stall the hiring, so Dunleavy’s cuts are already being felt. In a region with 15 villages, this means that two-thirds of communities are without public safety officers. Because of reduced travel, Appolloni said she will be unable to fly out to communities to recruit VPSOs. And, also due to the cuts, the current officers will not be able to receive their annual training.
Kawerak President and CEO Melanie Bahnke was particularly concerned by Dunleavy’s disregard for vulnerable populations such as homeless and elderly Alaskans. The Senior Benefits Program provided low-income elders with $250 a month, which many individuals depended upon to pay for food and rent. Removing this vital resource from elders, Bahnke said, is “shameful.” Additionally, Dunleavy eliminated all state funding for Nome’s NEST Shelter, the only cold weather shelter in the region. Since NEST has been open, there have been no deaths due to freezing. Bahnke fears that without the shelter “we will see people dying or maybe committing crimes on purpose so that they can go to jail so that they can have a roof over their heads.”
Some of Dunleavy’s biggest cuts were to education. This includes a 41 percent reduction in state support for the University of Alaska. Dunleavy’s vetoes to the university system constitute a 17 percent cut to their overall budget. Shuckerow said that the administration made this decision by comparing the amount Alaska spent per student with what other states spend on their land grant universities. This came out to about $10,000 more (per student), so in an attempt to balance the budget, the governor decided to lower the amount Alaska spends on its university system.
Shuckerow does not think cuts to the university will cause students to leave Alaska to pursue an education elsewhere or that they will harm the state’s economy. Rather, he said, the goal is simply to make the system more efficient. “We can take a different and better approach,” said Shuckerow. This could look like eliminating small programs and consolidating duplicate programs. For example, certain degrees would only be offered in Anchorage and others only in Fairbanks.
In addition to reducing state spending on higher education, the governor completely eliminated funding for Head Start programs. According to Kawerak’s CEO Bahnke, the vetoes resulted in a loss of half a million dollars of funding for Kawerak, which runs Head Starts that serve over 220 children in 11 communities. A state grant funded nine positions at Head Start as well as classroom supplies and staff training. Bahnke said that Kawerak has a rainy day fund that will allow them to get through the upcoming school year. However, this is not a permanent solution. “We will have to determine a path forward as we cannot sustain the program by continually dipping into reserves,” she said.
The Rural Alaska Community Action Program, or RurAL CAP, operates Head Starts in Savoonga and Stebbins. RurAL CAP Chief Executive Officer Patrick Anderson said that he is unsure what the fate of these programs will be. Dunleavy’s vetoes reduced RurAL CAP funding by close to $5.5 million. “There will be Head Starts closed, we just don’t know which ones at this point,” said Anderson. He added that the CEOs will meet next week to make these tough decisions.
The elimination of the Nome Youth Facility is perhaps one of the largest issues facing the region. “What a travesty,” said Bahnke, “This is heart-breaking, knowing that [youth] are now even hundreds more miles away from their families, with no access to the region’s cultural activities to help support their journey toward becoming law-abiding young citizens.” Nome Public Schools Superintendent Jamie Burgess said the district lost about $200,000 with the closure of the youth facility. The NYF aid position was terminated and another position was reduced to part time. Burgess said the district planned for this possibility in their budget, but the loss is more than monetary. “We are, of course, disappointed in the Governor’s decision not only for the overall impact on the district but for the students from our region that will be sent far away from their homes, families and culture,” she wrote in an email to the Nugget.
Other services impacted by the vetoes include the complete defunding of the Alaska State Council on the Arts and the Online with Libraries program. When ASCA closed its doors on July 15, Alaska became the only state without an arts agency. Nome’s Alice Bioff, who was appointed to the ASCA board in 2016, explained that defunding the agency will have wide-spread impacts. “This is not just about supporting the Arts as a concept, it is about community, economic opportunities, and cultural identity,” she explained. In past years, ASCA grants brought visiting artists to Nome and Bering Strait School District schools through the Artists in Schools program. ASCA’s Silver Hand Program provided Alaska Native artists with a way of proving their work’s authenticity, thereby reducing competition from fabricated works of Alaska Native art.
The defunding of ASCA will not have much of an impact on the Nome Arts Council, according to Arts Council President Carol Gales. Though ASCA partially funded a few events over the past few years, “We don’t rely on them too much,” said Gales. Other arts councils around the state that are not entirely volunteer operated like Nome’s will likely suffer without ASCA support, however.
Online with Libraries, a program created in 2013 to provide rural Alaskans with high-speed internet access, was also defunded. OWL funding ended with Fiscal Year 2019, so the nearly 100 libraries who participated in the program have already lost their high-speed internet. Nome’s Kegoayah Kozga Public Library was one of the libraries to benefit from OWL. According to Library Director Marguerite La Riviere, the Kegoayah Kozga Library currently still has internet under an e-rate program, which subsidizes about 90 percent of the bill. The OWL program provided additional support and, because this secondary subsidization was cut, “the cost of providing internet to our community will go up if the budget remains as it is,” said La Riviere.
On top of the governor’s vetoes, an additional $1.6 billion could be eliminated from savings accounts that fund crucial programs. This is due to a legislative process called the “reverse sweep.” According to a constitutional amendment, the Constitutional Budget Reserve, whenever it is used, must be paid back at the end the Fiscal Year.
Essentially, at 11:59 p.m. on June 30, money from the general fund and various savings accounts is “swept” into the CBR. What typically happens next is the reverse sweep, where the funds return to the accounts at 12:01 a.m. on July 1 as if nothing had happened. But while the money is constitutionally mandated to return to the CBR, there is no law declaring it must be reverse swept. Redistribution requires a vote that this year did not happen; the Republican House minority refused to vote for any spending from the CBR, including the reverse sweep, in order to try to convince the House majority to approve a full-sized Permanent Fund Dividend. The House majority, however, did not budge. So the reverse sweep did not occur, which means programs have effectively been defunded because their accounts are empty.
On July 12 Office of Management and Budget Director Donna Arudin released a list of 53 accounts the Dunleavy administration decided to sweep. Two accounts that have raised particular concern are the Power Cost Equalization Fund and the Higher Education Investment Fund. The PCE, run by the Alaska Energy Authority, was created to lower the cost of utilities in rural Alaska. As its name suggests, the cost of power in rural areas is subsidized to rural energy customers to match costs in cities such as Anchorage, Fairbanks and Juneau. Last year, nearly 200 communities benefitted from the PCE, including all of Nome and the Bering Strait and Norton Sound communities. Without the program, the price of power will increase. In Nome, the subsidy lowers the cost of electricity by about $800 per year and that number is even higher in the region’s villages.
Alaska’s Higher Education Investment fund provides money for Alaska Performance Scholarships, Alaska Education Grants and the WWAMI Regional Education program. According to a fact sheet from the Alaska Commission on Postsecondary Education, funding for the 2019-2020 school year is provided through the Fiscal Year 2020 budget. This means that about 12,000 Alaskan students will be without scholarships for next semester. WWAMI allows medical school students from Alaska as well as Washington, Wyoming, Montana and Idaho to enroll in both the University of Washington School of Medicine and their home state’s institute. By eliminating funding from WWAMI, Alaska would become the only state to not fund medical education.
Representative Neil Foster’s Chief of Staff Paul Labolle explained that the future of these accounts is usually a non-issue because in past years the Higher Education and PCE funds were not among the accounts emptied into the CBR June 30. However, the Department of Law under the current administration determines which funds are sweepable. This could be only temporary, or, if three-quarters of the Legislature do not vote for a reverse sweep, the accounts could remain empty.
A further problem with the lack of a reverse sweep is that a portion of the capital budget comes from funds that are currently in the CBR. Because this money is inaccessible without the vote, the capital budget is not fully funded. Dunleavy released a list of 11 vetoes in the capital budget.

 What is next?
The Legislature held a second Joint Floor Session to discuss the overrides on July 11 to give those who were absent another chance to vote if they chose to do so. Only David Wilson (R-Wasilla) came to Juneau before the Thursday session. Still unable to get 45 lawmakers in the same room, the Legislature adjourned on Thursday without a revote. Members of the House Finance Committee introduced a draft of a new proposal to reverse the vetoes on Monday.  
Republican members of the Legislature who stayed in Wasilla for the duration of the second special session were, from the House: Majority Leader Lance Pruitt (Anchorage), Ben Carpenter (Nikiski), David Eastman (Wasilla), Sharon Jackson (Eagle River), DeLana Jackson (Palmer), Gabrielle LeDoux (Anchorage), Kelly Merrick (Eagle River), Mark Neuman (Big Lake), Sara Rasmussen (Anchorage), Josh Revak (Anchorage), Laddie Shaw (Anchorage), Colleen Sullivan-Leonard (Wasilla), Dave Talerico (Healy), Cathy Tilton (Wasilla) and Sarah Vance (Homer). In Wasilla from the Senate were: Mia Costello (Anchorage), Lora Reinbold (Eagle River) and Mike Shower (Wasilla).
The Republicans in Juneau were, from the House: Majority Leader Steve Thompson (Fairbanks), Jennifer Johnston (Anchorage), Gary Knopp (Kenai), Chuck Kopp (Anchorage), Bart LeBonn (Fairbanks), Louise Stutes (Kodiak) and Tammie Wilson (North Pole).
From the Senate: President Cathy Giessel (Anchorage), Chris Burch (Anchorage), Click Bishop (Fairbanks), John Coghill (North Pole), Bert Stedman (Sitka), Gary Stevens (Kodiak), Natasha von Imhof (Anchorage). All Democratic legislators were in Juneau.

 

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