Alaska Legislature

Dunleavy wants to spend $131 million on Alaska earthquake reconstruction; suggests cutting $20 million for schools

JUNEAU — Gov. Mike Dunleavy has proposed spending $131 million, mostly from the federal government, for rebuilding after the Nov. 30 Southcentral Alaska earthquake.

The figure was revealed Monday in a draft supplemental budget introduced in the Alaska Senate. It’s believed to represent a basement: Additional surveys and the arrival of spring are expected to reveal additional earthquake damage.

“It is anticipated that as spring comes, more and more roads will be identified with damage,” said Lacey Sanders, budget director in the Office of Management and Budget.

In a separate but related move, the governor is proposing the elimination of a planned $20 million one-time boost to K-12 public schools. Last year, lawmakers approved the boost as part of a budget compromise at the end of the legislative session.

It isn’t clear whether there will be support in the Legislature for reversing that compromise.

“I was under no intention of doing that,” said Sen. Gary Stevens, R-Kodiak, chairman of the Senate Education Committee, on Monday morning.

“For a guy who said he was going to be the education governor, this is not the right way to start that,” said Senate Minority Leader Tom Begich, D-Anchorage.


Rep. Lance Pruitt, R-Anchorage, said he was expecting this kind of move from a governor who has promised to balance the state’s budget.

“I think that if people are surprised with this $20 million, then they’re going to have a heart attack on Feb. 13,” he said.

Feb. 13 is the deadline for the governor to deliver his final budget proposal to the Legislature. That document covers spending in the budget starting July 1.

Monday’s legislation covers changes to the current budget, which runs through June 30. There are supplemental budgets each year to reconcile the state budget approved by lawmakers in the spring with events that have taken place since then, such as the Nov. 30 earthquake.

This year, the governor has proposed two supplemental budget bills. One is devoted to disasters, primarily the earthquake, and the other is devoted to other items, including the education funding cut.

Within the disaster budget bill is $65 million in federal funding and $6.5 million in state funding for road and highway reconstruction. A legislative committee had voted in December to allow the state to accept up to $35 million in federal aid; the governor’s bill would increase that cap to $65 million.

The bill also allows the state to spend up to $1 million to repair state buildings. Insurance is expected to pay for the bulk of repair costs, Sanders said, and the funding within the supplemental budget covers what insurance does not.

The bill calls for spending $21.9 million from state coffers on disaster relief. The state will also be able to distribute up to $46 million in federally funded disaster relief, up from $9 million in the budget passed by lawmakers last year.

“I anticipate that this will change, again, shortly,” Sanders said. “There are some costs that won’t be covered by FEMA, and that’s covered in that $21 million."

With the state spending on disaster reconstruction and aid, Donna Arduin, the director of the Office of Management and Budget, said the goal in the non-disaster bill was to reduce state spending to limit the need to take from the state’s savings accounts.

“Not only did we inherit a budget that had supplemental needs built in, but we had an earthquake,” Arduin said in a Monday morning talk with reporters.

The nonpartisan Legislative Finance Division has repeatedly warned lawmakers that the state’s Medicaid program was underfunded by the budget approved last year. In a report published in August, the division warned that the shortfall was as much as $50 million.

According to OMB, the shortfall is $37 million, but the Department of Health and Social Services has been able to find ways to cover most of that amount. The remainder, $15 million, is included in the supplemental.

In total, according to the plan provided by OMB and the governor, the non-disaster supplemental budget would cut $5.8 million in state spending from the budget approved by lawmakers last year. Overall spending would rise, however, because of greater federal contributions.

In addition, the savings identified by the governor’s office include money that was unlikely to be spent. For example, the supplemental budget cuts $3 million from the Village Public Safety Officer program, but many fewer VPSOs have been hired than were planned for, and that money was scheduled to return to the state general fund anyway.

The spending plans will have their first hearing at 9 a.m. Tuesday in the Senate Finance Committee.

James Brooks

James Brooks was a Juneau-based reporter for the ADN from 2018 to May 2022.