The Alaska Senate Finance Committee adopted its substitute to the House’s operating budget Monday afternoon with a few significant changes, one of which is the funding level for a state program designed to provide financial assistance to local governments for school construction and capital improvements. 

The Senate committee substitute would fully fund the school bond debt reimbursement program at current state contribution levels, while the House-approved budget only funded the program at 50 percent of current levels. Gov. Mike Dunleavy had proposed to eliminate the program entirely.

The program has been the topic of debate throughout the session with local governments raising concerns over potential negative effects on local taxpayers as, without state funding, the financial brunt of school construction would fall on the backs of boroughs and municipalities.

At a recent Fairbanks Chamber of Commerce event, Borough Mayor Bryce Ward warned residents that the elimination of school bond debt reimbursement would likely increase property taxes by 1.1 mills. One mill is the equivalent $100 of tax per $100,000 of assessed property value.  

“This is really, I think, the big touching point for our community and the local tax base. ... That is something that has to be paid,” Ward said, adding that debt falls outside of the borough’s revenue cap.

The Senate Finance Committee budget substitute remains open for amendment through Wednesday, after which the substitute will be reviewed once more before passing it along to the full Senate.

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