Gov. Mike Dunleavy unveiled an austere budget Wednesday proposing widespread cuts, the privatizing of some state services, and shifting certain local tax revenue back to state coffers.

In a long-awaited spending plan to reconcile a $1.6 billion budget deficit, Dunleavy is pitching significant reductions to public education, Medicaid and the University of Alaska system. Anchorage Mayor Ethan Berkowitz was among a chorus of opposing voices Wednesday, calling the proposal an "attack" on Alaskans. 

If fully implemented, the cuts could also mean more than 600 state jobs lost for the next fiscal year that begins July 1.

Dunleavy’s rollout set the stage for what many expect to be prolonged scrutiny from lawmakers, including the Senate Finance Committee, which begins budget hearings Thursday morning.

“Now that we have the governor’s proposal, we can get to work taking it apart and understanding the impacts,” Senate Finance co-chair Bert Stedman, R-Sitka, said in a statement.

Wednesday was Dunleavy’s deadline to roll out an amended budget to what he originally proposed in December, a revision of a budget template offered by former Gov. Bill Walker.

The governor spoke in Juneau Wednesday morning, taking questions on the budget even as reporters first laid eyes on new budget documents released by the state Office of Management and Budget. 

“We have to get it solved this year and I’m determined to get it solved this year,” he said. “We can’t kick this down the road anymore. It’s got to be solved. We have to preserve our savings. We have to recalibrate Alaska.

“We have to get back to our essential services and we have to have a robust discussion, which I’m looking forward to, as to what are our needs as versus our wants. What are the needs that impact the majority of Alaskans and how do we want to pay for this going forward?”

Some of Dunleavy’s proposals include:

  • Cutting $134 million from the University of Alaska system, which will force the universities to consider significant tuition hikes.
  • Wiping out funding for public broadcasting radio ($2 million) and TV ($633,000). Public TV's Gavel Alaska offers live statewide Legislature coverage.
  • Reducing Medicaid services by nearly 40 percent (or about $271 million).
  • Hiking fees paid by residents of the Alaska Pioneer Homes. Two years ago, proposed cuts to the Pioneer Homes created short but intense political furor.
  • Retracting a proposed $21 million increase for Alaska State Troopers promised by Walker last summer.
  • Nearly $100 million in cuts to the Alaska Marine Highway System, which has become a regular target for Department of Transportation cuts.  Dunleavy want AMHS to migrate toward privatization, and will work with a marine consultant to pursue options.
  • Property sales. The state owns more than 1,800 facilities worth nearly $7 billion, and state agencies have been asked to research sale options.

Dunleavy also introduced three bills that would repeal funding or revenue to local municipalities and senior citizens.

Under Senate Bill 57, Dunleavy wants to repeal local property taxes collected in municipalities with oil and gas facilities. The taxes would divert to the state treasury, costing local governments an estimated $420 million.

Under Senate Bill 58 Dunleavy wants to repeal a senior benefits program, which has always been politically difficult to cut much less remove. This would save nearly $20 million for the next fiscal year and $24 million in fiscal year 2021.

Under Senate Bill 59, Dunleavy wants to repeal reimbursement costs for capital projects at the University of Alaska and municipal capital projects. This would save about $2 million, according to a fiscal analysis.

Dunleavy isn’t through filing restructuring bills, according to members of his budget team. Before rolling out the budget, he said there could be as many as 25 such bills.

The proposed changes have prompted caution from some lawmakers like acting House speaker Rep. Neal Foster, D-Nome, who last year served as a House Finance Committee co-chair.

“The State of Alaska is in a difficult fiscal position, which obviously demands budget discipline,” he said in a statement. “In the coming days I believe the people of Alaska will make their concerns loud and clear. I support the development of a budget that reflects Alaskans values, maintains our savings, and supports a growing economy and thriving communities."

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