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How the state budget could impact Juneau’s local government

February 22, 2019 – News

Since the release of Gov. Mike Dunleavy’s budget, the City and Borough of Juneau has been actively assessing what impacts it could have on local government. While the state budget is at the beginning of its process and information will evolve, the Governor’s cuts would translate into an $7.8 million direct loss to CBJ, as well as additional reductions to the Juneau School District and Bartlett Regional Hospital.

“Based on this loss, we’re still evaluating what it could mean for CBJ. How do we fill that gap? We would reduce services and programs, raise taxes, and try to absorb some cuts with savings. Likely, if it comes down to it, it’ll be some combination of all three,” City Manager Rorie Watt said. “Juneau Assemblies have managed our municipal finances to avoid precipitous swings in services and taxation and this budget proposal would undo 20 or more years of hard work in one fell swoop.”

The governor’s budget also translates into at least a $10 million reduction to the Juneau School District and a roughly $6.2 million cut to Bartlett Regional Hospital. The University of Alaska system faces more than a 40 percent cut. These reductions will lead to job losses, less programs and services, and the potential for residents to leave Juneau. The economic impact of the loss of the ferry system on coastal Alaska is unknown, but likely disastrous.

“Cuts this large to local government, schools and the University of Alaska would have a dire impact on Juneau’s economy. Ninety percent of CBJ’s general government budget is funded by taxes, like sales tax and property tax, that are dependent on the economy,” Watt said.

Watt said it’s important to remember that budget information will evolve over time. “It’ll evolve at the legislative level. We’ll evolve our own understanding of the impacts. But if you’re feeling anxious or panicked by this, channel that sense of outrage and concern by doing something – engage in the legislative process, contact all state legislators, reach out to the governor’s office, advocate for what you think makes sense.”

He added: “It is important that the legislature and Governor clearly and promptly convey a sense of direction; absent that information, Alaska could suffer economic contraction simply from the fear of budget uncertainty. We call on our elected officials to provide timely guidance.”

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The level of cuts being proposed in Governor Michael Dunleavy’s state budget would have a devastating impact on local communities, including Juneau. As the state budget process moves forward, information will evolve. This is an initial look at how the City and Borough of Juneau, as well as the Juneau economy, could be affected directly. The impacts to other communities are likely to be equally dismal.

  • The City and Borough of Juneau would experience a direct loss of about $7.8 million in fiscal year 2020 from state programs that are proposed for elimination. Where $7.8 million comes from:
    • $7.1 million in school bond debt reimbursement
    • About $400,000 in shared fisheries taxes
  • The Juneau School District would experience a direct loss of at least $10 million due to the proposed 26 percent cut in education funding through the foundation program, as well as in the allowable local contribution. What this could mean:
    • Previous cuts of $11 million since 2011 have resulted in the loss of 92 full time positions; another cut of this size could lead to similar job losses in a single year
    • Class sizes would increase, programs and services would be cut
  • Bartlett Regional Hospital would experience a loss of about $6.2 million in Medicaid funding, which would have an adverse effect on hospital operations, including loss of services and jobs.

For more information, contact the City Manager’s office at 586-5240.