Alaska News

Governor plans to boost community revenue sharing

Gov. Bill Walker told municipal leaders from across Alaska Wednesday his upcoming budget will propose $50 million for community revenue sharing, a boost of $12 million from expected levels and good news for some 200 Alaska communities that use the cash to help pay for everything from sewage haulers to safety officers and road maintenance.

"It will bring warm homes, keep our water and sewer systems running and help keep schools open in some cases," said Virginia Washington, city administrator in St. Michael, a Yup'ik Eskimo community of about 400 southeast of Nome.

The program paid out $57 million this year, a drop from the $60 million provided in previous years, officials said. The distribution was expected to fall to $38 million next year, a victim of budget cuts amid a towering state deficit brought on by low oil prices and production.

Revenue sharing began in 2008 and has provided a stream of funding used broadly by communities. Based in part on population, it may provide just $10,000 in some villages, but that's critical money for some cash-poor economies, officials said.

Lawmakers contributed no additional funding to the program for the current year, reducing the amount available to be paid and sparking fears revenue sharing would vanish within three years as the fund dwindled.

Walker's budget is due to the Legislature by Dec. 15, though he has indicated he'll submit one earlier, said Senate President Kevin Meyer, an Anchorage Republican.

Meyer said the call for extra funding will be reviewed with a critical eye when the Legislature reconvenes in January.

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"We're going to be looking at some substantial reductions," he said.

Meyer said the program was created when the state had excess oil income. Now that oil prices have sunk and the state faces a budget gap of $3 billion, it's prudent to ask whether that and other programs created during boom times should continue.

"We owe that to everyone in Alaska," he said. "Before we start talking about taxes or taking part of the dividend like the governor has proposed, we have to make sure that we are spending money appropriately."

The state is currently plugging its gap by drawing on savings, with $9 billion available in the Constitutional Budget Reserve, an amount that's expected to last less than three years at current spending and income levels.

Walker's proposal, if it passes the Legislature, will represent a $7 million drop from the current year, but it's much more than communities were expecting, said Kathie Wasserman, executive director of the Alaska Municipal League, which is hosting the statewide meeting of local officials in Anchorage.

"That's a decrease from last year, but that's OK," she said. "We know we have to suffer a little bit."

Walker made his announcement at the municipal league's annual local government conference in Anchorage, generating applause. He said he didn't know if extra funding could be sustained past this year.

"It's a challenge because some communities survive because of revenue sharing," he said. "Ten thousand dollars to some is their very existence."

Rose Loera, city manager in Dillingham, population 2,400, said the program has been worth about $250,000 a year in an $11 million budget, enough to support about four of the city's 53 employees with salaries and benefits.

She said the city already operates a no-frills "skeleton budget." Last year, the city lost about $50,000 from the drop in revenue sharing, forcing it to reduce services provided at the local senior center.

"It would be a big impact for this to go away," she said.

The money is vital to helping provide city services in the community of Quinhagak, a village of 700 in the Bethel region, leaders said.

Without it, the city may have to trim services, such as police or sewage haulers who pick up human waste dumped by the bucket into roadside hoppers by families without plumbing.

"Everything depends on that money," said Fannie Moore, city clerk.

Alex DeMarban

Alex DeMarban is a longtime Alaska journalist who covers business, the oil and gas industries and general assignments. Reach him at 907-257-4317 or alex@adn.com.

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