Taxes, program cuts likely in Mat-Su if Dunleavy's proposed budget passes

PALMER, Alaska (KTUU) - The Mat-Su Borough is warning that the governor's proposed budget could cost the borough, and taxpayers, hundreds of millions of dollars, and it's all over who's going to pay back the debt for building new schools.

For the Mat-Su Borough, writing a budget for fiscal year 2020 is a bit like leaping before you look – the Borough's budget is due before the governor's final budget. A huge question the borough has to consider is what happens with the school bond debt reimbursement the state has already agreed to pay back, which the governor's proposal would take off the table?

Channel 2 asked Borough Manager John Moosey what it’s like to build a budget without knowing what the state will ultimately do. "Holy crap,” Moosey said. “It's a challenge."

In 2011, Dunleavy was president of the Mat-Su School Board. He was the final vote to push forward a request for $214 million of bonds to build new schools.

The request passed the assembly-- and the voters -- on one condition, Moosey says.

"The state was very consistent — they said, voters you pay 30 percent, the state will pick up 70 percent. That was the deal."

Former Gov. Bill Walker changed that amount to 50/50, but Moosey says if Gov. Dunleavy's budget proposal goes through as written, “We would have to pick up the whole payment."

Moosey says the total debt is around $300 million, and that includes interest. That would amount to $18.3 million in 2020, and subsequent amounts each year over 17 years. Moosey says this money would likely come from a mixture of cuts and increased taxes.

"Certainly, my assembly I believe is not going to want to raise taxes -- or at least taxes significantly to cover that,” Moosey said. “Even if they did, you don't do that on a maybe. So we're kind of shooting in the dark, making a best guess."

The school district testified at the Mat-Su Borough regular assembly meeting Tuesday, March 5. Assistant Superintendent Amy Spargo said the district needed the bond money to build new schools and improve existing schools in order to accommodate rapid growth in the Valley.

"We agree that cutting school bond debt reimbursement disproportionately penalizes the Mat-Su Borough, compared to the rest of the state,” Spargo told the assembly. “Valley residents voted on a bond with the expectations that they were going to receive debt reimbursement from the state. It is reasonable then that they would expect that to continue and not to be retroactively pulled away."

In a written response from the Office of the Governor, press secretary Matt Shuckerow said the Governor started the budget conversation, and it’s now the Legislature’s responsibility to join it.

"The school bond debt reimbursement program has been a topic of debate for some time, particularly in the face of billion dollar state deficits over the past six years,” Shuckerow wrote. “The governor's budget was built around the idea of matching expenditures and revenues, which required making a number of difficult but required decisions about how and where we spend."

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