The Mat-Su Borough is getting ready to begin its annual budget process. This year, big potential cuts at the state level could have a significant impact on what the borough decides to do.
Mat-Su Borough Mayor Vern Halter, Borough Manager John Moosey, and Assembly Member Ted Leonard recently returned from a trip to Juneau to discuss Governor Mike Dunleavy’s budget proposal.
Under the governor’s proposal, the state would cut about $1.6 billion in spending in the coming fiscal year. Some of those proposals could have a major impact on the Mat-Su Borough.
One area of cuts that is familiar to borough officials is school bond debt reimbursement. In the past, the State of Alaska paid back the majority of bonds issued to build new schools. Under the proposed budget, that program goes away. John Moosey says that would mean a significant hit to this year’s budget.
“It would mean, for this upcoming fiscal year….an expected loss in revenue of $19.5 million.”
When school bond debt reimbursement was reduced a few years ago under Governor Walker’s administration, the borough picked up the budget gap for the Mat-Su Borough School District. With a much bigger dollar figure, Moosey says that would be much more difficult this time.
“There’s no way, unless we significantly reduce services, that we can adjust the budget to cover this.”
That is not a one-time cost, either. Borough Manager Moosey says, over the next sixteen years, the cut to reimbursement could cost the borough an estimated $200 million.
Beyond having to cover the revenue loss, Moosey says asking the taxpayers of the Mat-Su Valley to cover costs that the state was expected to pay breaches trust when it comes to potential future votes.
“My view of this is how, moving forward, can the taxpayers really count on us on any kind of bond issue? I think we’re really kind of breaking that trust with them.”
The governor’s budget also cuts the base student allocation, which is a major component of school funding throughout the state. The cost to the Mat-Su Borough School District would be around $40 million in the coming year. Last year, the Mat-Su Borough Assembly established a flat mill rate from property taxes to pay the borough’s portion of education funding. John Moosey says he can’t speculate as to what might end up happening with direct school funding, as the assembly makes that decision.
The cuts extend well beyond schools. In the end, Moosey says the borough has a responsibility to the taxpayers.
“The concern is going to be what is the impact on anything we respond to on the citizens from their pocketbook, but also services provided? So this is more than just numbers….What are our taxpayers going to get for the money they pay through property tax?”
The governor’s budget proposal is far from final. The legislature will have its opportunity to negotiate and change any item within it.
The borough has taken some steps to prepare for decreased revenue, including a hiring freeze and reviewing capital projects. For the borough, the next step in deciding what to do will come at a work session to be held on Tuesday.
