Daily Sitka Sentinel

Stedman: Budget Has Sitka Benefits, Savings

By SHANNON HAUGLAND

Sentinel Staff Writer

Sen. Bert Stedman says he is generally pleased with the FY 2023 state budget signed last week by the governor.

“All in all, things came out very well,” he said in an interview this week.

The Sitka Republican has represented Sitka, Ketchikan and a number of smaller Southeast communities in Senate District R since 2003. The most recent redistricting changed District R to A, and Stedman is seeking re-election to the Senate this year as a candidate in District A.

Sen. Bert Stedman (Sentinel Photo)

Stedman, who is co-chair of the Senate Finance Committee, spoke to the Sentinel Wednesday on the state budget, including capital and operating budgets.

The fiscal year started July 1 with a spending plan that includes additional funds for schools, the city and capital projects, and a $3,200 payout to Alaska residents – $2,550 as the Permanent Fund dividend and $650 for energy relief.

Stedman said he was particularly pleased to see some $221 million allocated statewide to cover three years of school bond debt payments to communities, funds that were withheld, or vetoed in recent years by the governor.

Sitka’s share of that makeup funding is $4 million.

“Two big things that will help cities across the state is school bond debt and municipal assistance,” he said. “Those both will have a big financial impact and keep organized cities from having to raise property tax from financial constraints due to COVID.”

Years ago the state committed to covering a percentage of bond debt costs for school projects, but Gov. Mike Dunleavy vetoed all or part of the funding in 2020 and 2021. The City and Borough of Sitka has been covering the school bond debt with the 1 percent sales tax collected in the summer. The tax will expire when the city has sufficient funds to pay off the bonds.

Resumption of the state contribution “will certainly bring the sunset date closer,” City Finance Director Melissa Haley said. “I think it’s pretty challenging because given the history of the state not covering their portion, it’s difficult to determine when we’ll have enough to pay the remainder of the debt service.”

The new state budget also includes municipal assistance of $495,000 for fiscal year 2023, plus $83,000 restored from a veto in fiscal year 2022, state budget officials said.

“There’s quite a bit of funding for schools,” Stedman commented. “They’ve had several years of flat funding for the BSA (base student allocation), and we’re concerned about inflation pressures coming at the schools.”

Funds for education include forward funding for K-12; a one-time payment of $57 million; $2.5 million for pre-K and a very small increase in the BSA, Stedman said. Some funding was provided for the Alaska Reads Act, directed toward rural and Alaska Native students.

“We wanted some flexibility for the districts,” Stedman said of the education funding. “Some of the districts are having significant challenges with reading and math in early elementary education.”

Stedman said that while not everyone is pleased with the Alaska Reads Act, some of the funds for education outside the per-pupil foundation formula “will give superintendents flexibility to address whatever needs they have.”

The Sitka School District’s share of the one-time $57 million payment to schools is $578,000, based on the school district’s estimated enrollment during this October’s count period, said Alexei Painter, director of the legislative finance division. Mt. Edgecumbe High School will receive $162,000 from that source, he said.

Some $1.2 billion was approved for forward funding for FY 2024.

Stedman was also pleased to share the news about funding to replace the picnic shelter at the Halibut Point Recreation Area that was destroyed when a tree fell during a storm last October.

“I had to bird-dog that to get a decent shelter,” he said. “That state park is used a lot, as everyone knows, for the community, not only when the weather is nice.” He added that he checked on the shelter this week, and found the area clear of debris.

Stedman said he saw some success in getting funds set aside for savings. Revenue generated when oil is over $110 a barrel will go into the Permanent Fund. That’s above the $100 benchmark in the original legislation.

“It’s still savings,” he said. “We’re setting up the beginning of a conversation to come up with a structure so that when we have excess revenues we have a mechanism to protect it in the long term, to smooth out the boom and bust cycle we’ve been dealing with for decades, frankly forever.”

This is not a new concept, he said.

“Countries around the world have mechanisms to put in sovereign wealth funds – it’s nothing new,” he said. “It will be the start of a conversation to set that up.”

A news release from the governor’s office said some $1.6 billion will be deposited into the budget reserve in 2023.

Some of the $100 million in capital projects in the budget will go toward Southeast projects including heating upgrades to one of the Kake schools and rehabilitation of Craig Middle School.

The capital budget includes $30 million for bridges and roads across the state, and Stedman said he hopes some of the funds will be directed to the Katlian Bay road project.

“DOT needs more funding for Katlian Bay due to the terrain and design,” he said. Money for the project was included in a statewide bond issue passed by the voters in 2012.

As for the ferry system, the main problem is not funding, but a labor shortage and the condition of some of the old vessels in the Alaska Marine Highway System fleet, Stedman said.

“The problem is we can’t get the crew to run the ships,” he said. “It’s doubtful the Columbia will run for the next two years – next year it’s going in for prop repairs. I saw the Matanuska go by me in Peril Strait and it was like a rust bucket going by.”

Some $200 million for the Marine Highway was included in the federal infrastructure bill, and there is language in the state operations budget to keep the funds from being spent in the general fund, Stedman noted.

“We don’t want the fare box going to the general fund,” he said. “We put in a mechanism in to allow us to hold it and carry it forward.” That particular piece of legislation is awaiting the governor’s signature, he said, “And I’m fully expecting him to sign it.”

Stedman ran last in 2020, but after the most recent redistricting, he must run in November for his next four-term term. The only other candidate in the primary is Republican Mike Sheldon of Petersburg, and both candidates will advance from the August 16 primary to the November 8 general election.