FAIRBANKS—The Fairbanks borough and the school district together face more than $50 million of revenue losses if Gov. Michael Dunleavy’s new budget proposal is approved.
Local leaders studied the numbers Wednesday following Dunleavy’s announcement that state spending would be brought in line with revenues. His 2019-2020 budget plan, as expected, cuts more than $1 billion.
“They are all very big numbers,” Fairbanks North Star Borough Mayor Bryce Ward said. “I’m thinking we have a very difficult road in front of us. I think the governor acknowledged that. There is going to be impacts across the state because of this budget.”
The biggest number for the Fairbanks borough is the potential $30 million cut to the local school district. Dunleavy is requesting a 24.3 percent across the board reduction in K-12 spending.
“Imagine 25 percent less of everything—teachers, support staff, operations support,” Superintendent Karen Gaborik said in a prepared statement. “This level of reduction would mean increases in class size and decreases in supports for students, staff and schools.”
“Crippling” and “devastating” were some of the adjectives used by other education leaders to describe the impact of the proposed cut.
Gaborik said she hopes the Legislature rejects the cut. Her proposed budget for next year asks the state for flat funding or about $130 million.
The next big number of note is $11 million—the amount of tax revenue collected by the borough on the trans-Alaska oil pipeline, according to Ward.
Taxes from the pipeline are the biggest chunk of property tax revenues collected by the borough.
A bill filed by the governor would nix the borough’s claim on the property tax money, which would instead be collected by the state. The bill impacts all municipalities along the pipeline route.
The legislation caught Ward by surprise.
“I was not expecting that one,” he said.
The third big number to know is $9 million. That is how much the state provides the borough in debt reimbursement for bonded school projects. Dunleavy’s budget proposal eliminates that assistance, Ward said.
Some of the smaller cuts shared by the borough mayor include about $1.4 million in community assistance, which Ward said goes into the general fund, and about $270,000 for grants that flow to local nonprofits.
Ward is drafting a new borough budget proposal and said the governor’s plan presents challenges.
“We’re going to have to make some assumptions that could be interesting,” he said.
City of Fairbanks spokeswoman Teal Soden said the city stands to lose about $500,000 in community assistance. Officials are evaluating what impact the pipeline property tax legislation has on their budget.
In North Pole, Mayor Michael Welch said he is concerned that diminished state support and state services will harm his ability to plan for and manage growth due to the buildup at Eielson Air Force Base.
Welch was disappointed that Dunleavy’s budget proposal leaves problems with the Public Employees’ Retirement System unaddressed. Obligations to PERS are eating up too much of municipal budgets, he said.
“We are prisoners of that system. We can’t afford to stay in it. We can’t afford to get out of it,” he said.
Contact staff writer Amanda Bohman at 459-7587. Follow her on Twitter: @FDNMborough.