Daily Sitka Sentinel

Stedman Asks: State Budget Cliff Ahead?

By SHANNON HAUGLAND

Sentinel Staff Writer

State Sen. Bert Stedman says Gov. Mike Dunleavy’s budget appears to be balanced – and not balanced – at the same time.

“It’s balanced but not when you compare recurring revenues to recurring expenditures,” Stedman said today. “We’ve got to unwind that. The structural deficit is going to be $375 million at least. Then we have to see what’s included and not included in the budget.”

So far, he sees some positive things for Sitka, including full funding of school bond debt reimbursement, which affects the sunset of the seasonal 1 percent sales tax here. The governor has previously vetoed some or all funding for local school bond debt.

But Stedman pointed to a few glaring problems with the budget the governor submitted to the Legislature on December 15. 

One is the “backfilling” of the structural shortfall with federal pandemic relief funds, which cannot be counted on in future years.

“When the largesse ceases to come in, we’ll have a tougher hole to fill in the budget,” Stedman said. “It’s technically a balanced budget but it does not match recurring revenue with recurring expenses.”

Also, since next year is an election year, Stedman is concerned that items funded now will be cut in a non-election year, after programs have been built around the one-time funding.

“We’ve got to be cognizant that it’s an election year,” he said. “It’s ‘you can have your cake and eat it too – and more ice cream.’ You’d better slow down and take a look.”

Stedman confirmed today that he is running for re-election in the new Senate District A, which adds Yakutat to the Southeast communities he has represented in the Senate since 2003. A Senate term is four years, but Stedman, who was most recently reelected in 2020 representing District R, will have to run again in 2022 because of the redistricting changes.

Stedman is co-chair of the Finance Committee in charge of the operations side of the budget, the longest serving finance co-chair in the history of the state and territory. He estimated it will take three weeks for the legislative finance staff to get a better picture of what’s in the governor’s budget.

Like others in Southeast, Stedman was pleased that the recently passed federal infrastructure bill includes funding for Southeast ferry operations, but he also wants a plan in place for the future that doesn’t rely on federal funding.

“We have to make sure we don’t set up a cliff for the Marine Highway to pile into,” he said. “Just remember, it’s an election year and this is an election year budget.”

Stedman said the budget picture has improved in the last year, but the Legislature needs to start looking forward to creating programs and projects to help future generations.

A few projects he is looking at for Sitka are a new classroom building at Mt. Edgecumbe High School and making sure the new SEARHC expansion project on Japonski Island has the power supply it needs from both Green Lake and Blue Lake. He described it as “a bigger extension cord.”

Stedman said he will meet with Sitka city leaders soon about the city’s greatest needs.

He hopes the Legislature in this year of “unprecedented federal largesse” will look at putting some money into savings.

“We need to build up our financial position to weather another economic hiccup,” he said. “We’ve so depleted our cash reserves over the last decade. That’s not on the table and it needs to be. Just because it’s an election year doesn’t mean you can spend every dime you can get your hands on. So I’ll be advocating for strengthening our financial position – we’re going to have another hiccup – it comes and goes like the tide. We did it before – we had $18 billion set aside and we were ready for the last hiccup. We’re nowhere near that today.”

Stedman said the legislative finance staff in its analysis of the governor’s budget will present year-to-year comparisons going back to the Walker administration, so he and fellow finance committee members – and the public – can see what has been added or cut over time.

He said a few hot button issues from the past – university funding, ferries and school bond debt – appear to be funded in the governor’s budget.

“There will be a discussion of arrears funding on school debt,” Stedman added.

He said the base student allocation appears to be funded at last year’s level.

Stedman plans to file his candidacy paperwork soon, and looks forward to continuing work “to make the state better for future generations than previous ones.”

City staff is also reviewing the governor’s budget, which at this point does not appear to have matching funds for harbor projects.

“The thing we’re excited about is the 100 percent funding of school bond debt reimbursement,” City Administrator John Leach said. “We’re watching right now to see what develops.”