Gov. Mike Dunleavy announced 182 line-item vetoes to the fiscal 2020 state operating budget Friday morning, cutting the Legislature's version by just under $409 million in general funds.

The vetoes eliminate $391 million in unrestricted general funds, more than $17.5 million in designated general funds, and about $12.3 million in other funding, all of which loses the state about $22 million in federal matches.

Some of the most significant cuts include more than $130 million from the Legislature's approved funding for the University of Alaska; $50 million from the state's Medicaid program; elimination of the Senior Benefits Program; $48.9 million from the state's School Bond Debt Reimbursement program designed to help K-12 schools with construction and capital improvement costs; and a complete veto of the Legislature's forward-funding of education for fiscal 2021.

A separate legal battle over education forward-funding approved for fiscal 2020 by the Legislature and signed by former Gov. Bill Walker last year looms. The Legislature has given authority to its Legislative Council to take legal action against Dunleavy should he fail to distribute the approved funding to school districts by the July 15 deadline.

The governor let stand the Legislature's funding level for the Alaska Marine Highway System, a hot button topic for Southeast and Southcentral residents.

Overall, the governor told reporters at a Friday morning news conference in Juneau that the budget will touch every Alaskan but that he feels strongly that the state needs to get its spending under control.

"Some of these reductions are going to be difficult," he said. "It's not going to be easy, we never said it would be."

Dunleavy's original budget, presented in February, sought to eliminate the state's entire $1.6 billion deficit in one year. Now, the governor said the state likely will see another round of proposed cuts leading into next year's legislative session.

The governor's current budget, following his vetoes, cuts about $760 million from the deficit as it existed in December, according to Office of Management and Budget Director Donna Arduin.

Dunleavy told reporters the administration decided to make the budget reductions a two-year process.

"This year eliminates close to 50 percent of the deficit," he said. "It's going to bring it down to a level we can completely take care of this next year."

In looking at about a 40 percent cut in state funding, UA President Jim Johnsen has previously said that a cut of this magnitude would likely result in closures of whole campuses. Dunleavy said he feels certain the university will be able to survive but in a different form.

“I don’t think they can be all things for all people," Dunleavy said. "Just like the state of Alaska, we can’t do all things for all people anymore.”

The governor has also cut $6 million from the state's Village Public Safety Officer program, eliminating 25 open positions in the program. The reduction is $3 million in fiscal 2020 funding and $3 million supplemental funding for fiscal 2019. This cut follows just weeks after U.S. Attorney General William Barr referred Alaska's rural public safety situation as an "emergency."

In discussing the cuts as a whole, Dunleavy added that he feels his desired full $3,000 dividend would "help mitigate" some of his cuts. The amount of the dividend is an unresolved issue between the Legislature and the governor.

As far as possible veto overrides by lawmakers, Dunleavy said he anticipates some effort to reverse his vetoes but feels that "there are enough legislators who understand the need to reduce the budget."

House Speaker Bryce Edgmon, I-Dillingham, said the governor's vetoes present an "imminent threat" to the state's economy.

“The Legislature presented Governor Dunleavy with a responsible operating budget that struck a balance between protecting essential services and making tough but necessary budget cuts," he said in a prepared statement. "Today, the governor made major vetoes that will have drastic, negative impacts on all Alaskans.

"The fundamental question is now squarely before Alaskans," he said. "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.”

Senate President Cathy Giessel, R-Anchorage, said the Senate will keep in mind reducing state spending but also maintaining core state services as it reviews all of Dunleavy's vetoes in the coming days.

“Over the past several years, the Senate has focused on reducing government spending. In making those reductions, we understand the importance of being careful to protect both the state’s economy and core services Alaskans count on, mandated by the Alaska Constitution," Giessel said in a statement Friday afternoon. "Protecting the permanent fund and prioritizing essential services were among the guiding principles of this Senate."

The Alaska Constitution gives legislators five days from the beginning of the next special session to act on any veto overrides.

Contact staff writer Erin McGroarty at 459-7544. Follow her on Twitter: @FDNMpolitics.

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