Governor Mike Dunleavy transmitted the Fiscal Year 2025 state operating and capital budgets on Friday, June 28. The Governor line-item vetoed and signed the appropriation bills Thursday afternoon. One of the line item vetoes included $11.9 million marked by the legislature for the Kenai Peninsula and Anchorage School Districts to settle a dispute over pandemic relief funds.
According to a press release from Dunleavy’s office, “The result is a fiscally responsible budget that invests in Alaska’s public education system, enhances energy security, increases public safety, and improves affordability for Alaskans.”
The FY2025 budget funds state government from July 1, 2024, through June 30, 2025. The operating budget totals $12.2 billion, and the capital budget totals $3.5 billion. The governor’s line-item vetoes reduced the operating budget by $105.7 million and the capital budget by $126.3 million.
In March, a leaked letter obtained by KSRM that was sent from the U.S. Department of Education to DEED Commissioner Deena Bishop indicated that in 2022, the Kenai Peninsula Borough and Anchorage School Districts did not receive $22,389,141 of intended ARP Act funds.
The amounts provided in the letter are labeled “funding reductions considered disproportionate under the FY maintenance of equity requirement.” According to the letter, “ARP Act State maintenance of equity requirements help ensure that State funding supports LEAs with high concentrations of poverty and the students who have been subject to longstanding opportunity gaps in our education system and experienced the greatest impact from the COVID-19 pandemic.”
When finalizing the FY2025 state budget, legislators included $11.9 million to offset some of the state’s debt to these districts. However, the Governor chose to veto that amount on Thursday.
The budget includes a Permanent Fund Dividend of approximately $1,718 for each eligible Alaskan.
“The framers of Alaska’s Constitution codified a strong chief executive to ensure responsible budgeting. This budget reflects their intentions. By maintaining focus and fiscal discipline, this budget increases funding where it is needed most while at the same time reducing total Unrestricted General Fund spending,” said Governor Mike Dunleavy. “It provides additional funding to school districts needed to address the cost of inflation and provides additional targeted funding for programs that will improve student outcomes. We also are making essential investments in energy that will lay the groundwork for more reliable and affordable energy for Alaskans for decades to come. As has been the case every year I’ve been Governor, we are ensuring our Alaska State Troopers and Village Public Safety Officers have the resources they need to protect Alaskans, and through the Alaska Housing Finance Corporation, we are helping more Alaskans be able to buy their own home and find quality housing.”
Key items in the FY2025 budget include:
Education
- $174.6 million one-time $680 Base Student Allocation (BSA) increase
- $7.3 million one-time Pupil Transportation increase
- $62.8 million for School Major Maintenance, Relocations, Renovations, and Replacements
- $87.5 million for University of Alaska operations and deferred maintenance
Energy
- $23.0 million for the Alaska Housing Finance Corporation Energy Efficiency Research and Energy Weatherization
- $10.5 million for the Renewable Energy Grant Fund
- $11.1 million to the University of Alaska Fairbanks for Alaska Railbelt Carbon Capture & Sequestration Project
Public Safety
- $3.5 million for ten additional Village Public Safety Officer (VPSO) positions and VPSO salary increases
- $700 thousand for investigations, outreach, and education on missing and murdered Indigenous persons
- $9.5 million for the replacement of a patrol vessel for southeast Alaska to respond to emergencies, search and rescue operations, and enforce laws and regulations protecting Alaska coastline communities
Affordability
- $53.2 million for Alaska Housing Finance Corporation housing programs for home buyers, owners, and renters to provide safe, quality, affordable housing
- $2.8 million for the Alaska Addiction Rehabilitation Services residential expansion project
- $1.5 million for the Denali Commission housing program
Alaska’s Constitution gives the Governor the authority to veto or reduce line items in appropriation bills completely but does not authorize the Governor to increase amounts approved by the legislature. The vetoes in the FY2025 budget resulted from a thorough evaluation and consistent application of the Dunleavy Administration’s priorities to grow savings and ensure fiscal stability.
Since FY2019, budget growth has averaged 1.2 percent annually.
For further information, visit the Office of Management and Budget FY2025 website.