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Alaska governor slashes university budget by $130M

Alaska Gov. Mike Dunleavy slashed the University of Alaska system budget by $130 million as part of more than $400 million in vetoes he characterized as difficult but necessary amid an ongoing state deficit.

Cuts include less support for public broadcasting, Medicaid, low-income seniors

Alaska Gov. Mike Dunleavy speaks to reporters about his budget vetoes at the state Capitol in Juneau, Alaska. The university system, health and social service programs and public broadcasting were among the areas affected by vetoes. (The Associated Press)

Alaska Gov. Mike Dunleavy slashed the University of Alaska system budget by $130 million US on Friday, part of more than $400 million US in vetoes he characterized as difficult but necessary amid an ongoing state deficit.

Critics called the cuts disappointing and dangerous for an economy that's shown bright spots after a prolonged recession.

Dunleavy, a Republican, also cut state support for public broadcasting, reduced spending for Medicaid and eliminated a program that provides money to senior citizens who have low or moderate incomes.

He cut about $330,000 US from the state court system that his budget office said was commensurate to state funding for abortions. A budget document says the "only branch of government that insists on state-funded elective abortions is the Supreme Court."

The Alaska Supreme Court earlier this year struck down as unconstitutional a state law and regulation seeking to define what constitutes medically necessary abortions for Medicaid funding.

Jessica Cler, with Planned Parenthood Votes Northwest, called the cut spiteful. A court system spokeswoman had no immediate comment.

'We can't continue to be all things for all people'

Dunleavy, in a letter to legislative leaders, wrote the budget "focuses on the state's basic responsibilities while understanding our fiscal constraints."

He told reporters he has faith in university leaders but said he doesn't think the university system "can be all things to all people. And I think that's, generally speaking, the state of Alaska. We can't continue to be all things for all people."

The cut to the university is on top of a $5 million US reduction previously approved by lawmakers and is in line with what Dunleavy previously proposed.

Jim Johnsen, University of Alaska system president, says university officials will advocate for a veto override of budget cuts. (The Associated Press)

University system president Jim Johnsen said university officials took the threat of the bigger cut seriously but said "there's no way to rationally plan for a cut of that impact."

Johnsen said they will advocate for a veto override but, if that fails, he expects the University of Alaska Board of Regents will be asked to consider a special declaration that would allow officials to make reductions quickly — with less process and notice to staff and faculty.

Dunleavy said there is no easy way out of the state's budget predicament and suggested a full payout, or dividend, to residents this fall from the state's oil-wealth fund, the Alaska Permanent Fund, could help meet the needs some Alaskans have. The state has wrestled for years with a budget deficit that has persisted amid low to middling oil prices.

"We have to close this gap," he said. "This budget touches practically every Alaskan. It's not necessarily going to be easy. We never said it would be. But we do believe that in some of these cases, a full, statutory PFD (permanent fund dividend) could mitigate some of the issues."

PFD refers to the Alaska Permanent Fund dividend. Lawmakers have yet to finalize this year's payout, which is the subject of an upcoming special session. Dunleavy maintains the Legislature should follow a longstanding dividend formula that has not been followed the last three years, when residents have received a reduced payout. A full dividend would cost an estimated $1.9 billion US and equate to checks of around $3,000 US for residents.

Some legislators say the formula is unsustainable, particularly as the state has been using fund earnings — long used for dividends — to also help pay for government.

Residents will have to decide what's more important 

House Speaker Bryce Edgmon, an independent, said residents will have to decide what's more important, "a healthy economy, our schools, university, and seniors, or doubling the Permanent Fund Dividend at the expense of essential state services? The governor has made his choice clear."

The dividend paid last year, $1,600 US, was artificially set at the level that could pass the House.

Minority Senate Democrats denounced Dunleavy's budget as short-sighted.

"The governor's vetoes today would crash Alaska's economy and trash our future," Sen. Jesse Kiehl, a Juneau Democrat, said in a statement. "Now it's up to the legislature to protect our state, for this generation and the next."

Alaska House Speaker Bryce Edgmon says residents will have to decide what's most important when it comes to budget cuts. (The Associated Press)

Lawmakers have the ability to override budget vetoes if they can muster at least 45 votes. Lawmakers themselves have faced divisions ahead of the next special session, with legislative leaders proposing to buck Dunleavy's chosen meeting location and other lawmakers insistent on following Dunleavy's call to meet in Wasilla.

Sen. Bill Wielechowski, an Anchorage Democrat, said his office already was getting calls about the budget from worried constituents.

"I think this is going to have a galvanizing impact. Whether you get to 45 is another question," Wielechowski said. "But I think this definitely got us more votes today."

The state, which had long relied on oil to help pay for government, last year began using permanent fund earnings to help cover expenses. Alaska has no personal income or statewide sales tax and there was no consideration of any such taxes this year.

Dunleavy's predecessor, independent Gov. Bill Walker, unsuccessfully pushed tax proposals as part of a fiscal plan. Dunleavy said he's taking a different approach that includes reduced state spending.

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