If Alaska Gov. Mike Dunleavy signs them into law as they’re written, the First City will have some things to look forward to, Ketchikan Rep. Dan Ortiz explained in interviews on Thursday.
Ortiz was glad to see the Legislature settle on a roughly $3,200 Alaska Permanent Fund dividend, a compromise between the House’s more modest $2,600 proposal and the Senate’s $5,500 proposal. The Senate proposal would have resulted in a $970 million budget deficit that would be paid for with savings — which would require average oil prices to remain high over the next fiscal year.
Though the $3,200 PFD is less than the Senate proposal, it still would be among the highest payouts in the state’s history if approved by the governor.
“It comes at a time where we know people can really use it,” Ortiz said.
“This makes a big, big difference for the fiscal standing of the state and for the potential for us to continue to move into the future with a PFD program,” he added. “And it definitely takes the uncertainty of the potential of declining oil prices in the next year… and it just makes things quite a bit more stable and more reliable as to moving into the next fiscal year in our ability to meet our obligations. “
School bond debt reimbursement
The Legislature will also fully fund its School Bond Debt Reimbursement program for the next fiscal year, which has been underfunded or unfunded in recent years.
Ortiz explained the basis behind the state’s SBDR program: “Basically, when schools look to build new facilities or they have major repair issues in one of their schools, they have historically gotten support from the state to cover up to 70% of their expenses. And the idea that is under the constitution, the state is responsible for maintaining and providing an adequate education for their students. more cash flush, we started this program, but it was always at the discretion (of the state) — it says, in the wording of the program, the state may provide up to 70% of school districts cost, but it’s not fundamentally required unto
“So back when we were having some real financial issues, we stepped away from that responsibility, or at least from that potential obligation,” he added. “And so school districts were starting to … (move) forward with projects, and then the state didn’t come through with full funding. … And that’s happened … over several years.”
Not only did lawmakers fully fund SBDR for the upcoming fiscal year, they also back-funded about $172 million in SBDR payments that the state previously had not fully paid out: $24 million for the 2017 fiscal year, just under $48 million for the 2020 fiscal year and about $100 million for the 2021 fiscal year, according to information from the Alaska Council of School Administrators.
“That’s big, because it holds down the pressure for increased property taxes to cover school obligations, etc., etc.,” Ortiz said. “That’s a big, kind of a hidden benefit that people don’t think much about, but if they really stopped and thought about it, that’s a real benefit to local communities, because again, … (local communities) have to pay for these bonds, so if the state doesn’t step in, well, then they gotta find added revenue that they hadn’t planned on before.”
School major maintenance funding
The state also funded up to half of the roughly $200 million in backlogged projects in its major maintenance school grant fund, which will fund Ketchikan High School’s security upgrades project.
“There has been a buildup of deferred maintenance in schools across the state … that districts need to have — like I said, either their roofs repaired or remodeling done — … everybody has their own little different projects that they need to get done,” Ortiz explained. “The list had grown because we weren’t able to fund it very well. The last couple years, the list had grown up to $200 million.
“In this year’s budget, we fund up to $100 million of that list, so we wipe out half of it,” he added. “And why that’s good for our district is because one of the top priorities coming from the borough was to deal with security updates at Ketchikan High School to the tune of about $500,000. And that will get funded in this year’s budget.”
One-time school transfer
The budget also included a $57 million one-time supplement of education funds to districts, to be disbursed using the same calculation the state uses to determine normal education funding.
The Ketchikan School District already incorporated that funding into its budget for the upcoming fiscal year — the district will receive about $1.1 million, if it sees the increased enrollment it is projecting for the next school year — but seeing that assumption affirmed is “very exciting, Ketchikan School District Business Manager Katie Parrott said in a Friday phone interview.
She added later: “The $57 million supplemental funding to education is, we like to see that, but it’s not a BSA increase. And, $30 to the BSA is still not sufficient to make up for seven years of flat funding. So I think one thing for the public and the community to know is that we need to continue advocating for education funding and to a BSA increase that actually matches the cost of doing business.”
Forward funding education
Looking to future budgeting, the Legislature also set aside $757 million in education funding for the next budget cycle — about 63% of the $1.2 billion it included in this year’s budget for education. That money will add some security to the state’s education funding levels in a year that has been full of uncertainty.
“It really sets into place a better situation for the next Legislature,” Ortiz said. “When we start the next budgeting process, … we have $757 million already set aside, so now we only have to plan for what looks like $500 million. Or it might allow us to really address the BSA question — use some of that money to go towards a real increase in the BSA, those kinds of things.”
Initially, both the House and the Senate had planned to forward-fund the full $1.2 billion toward next year’s education needs, but the Senate reduced its forward-funding proposal when it proposed the $5,500 PFD payment.
Though it isn’t a full forward-funding, Ortiz said, it “just makes a world of difference in terms of moving forward and being able to maybe handle some other of our priorities and be able to … spend some money in other areas that we haven’t been able to do up until this point.”