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Wednesday, February 13, 2019

DCRA Commissioner email today.

From: Morgan, Deborah M (CED) 
Sent: Wednesday, February 13, 2019 10:41 AM
To: Morgan, Deborah M (CED) <>
Subject: Governor Dunleavy's Budget Announcement
Importance: High


Good morning DCCED Employees,

Thank you for the hard work you do every day on behalf of the people of Alaska.  I appreciate having a few minutes of your time to share with you Governor Dunleavy’s proposed Fiscal Year 2020 budget for our department and his vision for our state.

As we all know, the State continues to face fiscal challenges in the wake of low oil prices. I, along with our budget team and the staff at the Office of Management and Budget, have worked diligently over the last six weeks to align our programs with our core services and identify areas of opportunity for efficiency.

To focus on our priorities, it is critical that state expenditures equal revenue and avoid taking hard-earned money from Alaskans.

When developing our department’s budget, we focused on our core functions: “Economic Growth, Sustainable Energy, Strong Communities and Consumer Protection.”

Specifically, our department will see the following changes effective July 1, 2019:

Primary Structure Change:

Eliminate the Economic Development component within DCCED and transfer to the Governor’s Office to establish a cabinet level focus on statewide Economic efforts

This transfer will elevate the focus of the Alaska Economy to a Governor's level to engage the business community, provide and oversee outreach efforts, and advise the Governor on the economic impacts of policies across all departments.

This change will realign business processes, provide more efficiencies through the coordination and reduce state costs.

The Investment portion of the Division will remain but at a reduced capacity pending the Revolving Loan Fund repeal legislation and the review of the portfolio management. More details on this repeal below.

 Budget Change:

50% department wide travel reduction based on FY2018 actual expenditures

The Administration is taking a critical view of all travel and wants each agency/board/commission to eliminate nonessential travel regardless of the fund source.

In recognition that not all programs will be able to cut their travel in half and still accomplish their mission, we will have the flexibility to set a more accurate travel budget in Management Plan but it will have to be accommodated with other cost savings in the overall reduced budget.

Specific guidance on the current Administration’s travel restriction and approval process is currently under development

$1 million GF reduction within Community & Regional Affairs associated with the realignment of Local Government Support and Services for better efficiencies

We are reviewing all departmental expenditures and practices in efforts to reduce expenditures and dependence on government in accordance with Governor Dunleavy’s efforts. This change will reduce the DCRA budget down to FY2018 actual expenditure levels.  A full review and realignment of processes and prioritization of programming services will assist in meeting this reduction and stay within budget. There are no changes to staffing levels with this reduction at this time.

GF reduction within Community & Regional Affairs eliminating the grant funding for the Alaska Legal Services Corporation in efforts to reduce dependence on government

Fund Changes Include:

Replacing the PCE funding with GF to continue to support the Rural Energy Assistance Program

This will return the Rural Energy Assistance Program to a general funded program and will require this program to compete for general funds in the same fashion as other state funded programs through the legislative process. 

Replaced all general funds within the Alcohol & Marijuana Control Office with Marijuana Licensing receipts for licensing and regulation activities

This funding change will fully support the program thru collected receipts. Receipts are sufficient to support the program 100% and is anticipated to "lapse" approximately $100.0 to $200.0 in FY2019.

These fees will continue to support the consolidated investigator positions through a reimbursable service agreement (RSA) with the Department of Law.

Additionally, the Administration has also considered several longer-term, enterprise-wide initiatives that will positively impact our agency and the state as a whole. These will be carried out through administrative orders (AO) and focus on restructuring programs and administrative processes within state government, thereby improving effectiveness, increasing cost savings, and achieving better alignment between programs and department core services. 

One example of streamlining processes can be seen in the AO to consolidate procurement and human resources across all State agencies. This will standardize and streamline processes that improve efficiencies, provide greater consistency, and result in cost savings. This process will take place over time, allowing agencies to collaborate and care for an effective implementation.

There are also four directives that further support the Governor’s desire to improve services to Alaskans and deliver cost efficiencies across agencies. These include restructuring and directing agencies to investigate, analyze, and review additional opportunities for streamlining processes, reducing costs, and improving service to Alaskans. Examples of these directives include evaluating rural airport systems, the Alaska Marine Highway System, and state-owned property for potential divestment, transfer, or public/private partnership options. For departments with laboratories, they have been asked to evaluate their individual laboratories and explore opportunities for consolidating functions.

Administrative Order:

Consolidating investigator positions from DCCED, DOLWD, DEC and DHSS into the Department of Law will result in efficiencies, reduced costs, and prioritization for life, health, and safety investigations.

This will reduce the cost of criminal and civil investigations and prosecutions by pooling resources and breaking down inefficient silos.

For example, right now a report of a potential bad actor business would have to go to DCCED to ensure compliance with corporations, business and professional licensing laws and three different units within DOLWD to ensure compliance with workers’ compensation, wage and hour, and unemployment insurance laws. This is neither efficient nor effective.

The investigators will be able to focus on being the experts in how to conduct investigations and gather information because they will be more closely connected to the attorney’s that are the experts in the laws.

Governor’s Legislation: 

Repeal of Quasi Dedicated Funds

This will repeal the quasi dedicated funds within DCCED, including the community assistance fund and the power cost equalization fund, but retains the programs.

The program will remain on the books, but will compete for general funds like any other program through the legislative budget process.

Repeal underutilized Revolving Loan Funds currently operated by the State and exit the area of the economy more appropriately filled by the private sector

This will eliminate the State from competing with the private banking industry and/or making loans to borrowers who do not meet the credit requirements of a private lender.

Repeal of the Marijuana Control Board and Alcoholic Beverage Control Board

The intent is to transfer the authority and responsibilities of the two boards to the commissioner and remove the marijuana control board and the alcoholic beverage control board.

Reducing the regulatory burden in efforts to expand entrepreneurialism

Commissioner may adopt regulations and processes to allow alcohol and marijuana licenses to be processed more akin to that of professional licenses.

This removes the limitations on the selection and appointment process of the director by the Governor.

Professional Licensing and Regulatory Reform

Review of statutes and regulations are being completed to streamline business functions and operations

Encouraging growth within Alaska’s economy by repealing unnecessary regulatory burdens, by not increasing taxes, and by creating stability

Review professional licensing requirements and ensure requirements are in line with industry best practices and modern consumer expectations

Review for potential repeal of statutes and regulations for professions with strong national licensing agencies that could take the place of state licensure

Our budget, along with the budgets of the other agencies, provide the State with a sustainable, predictable, and affordable framework by: eliminating non-essential programs, eliminating duplication across agencies, realigning business process within agencies, unleashing entrepreneurialism, and maximizing our return on assets.

I look forward to our continued work together to find efficiencies in our department and to improve processes for our customers as a team.


Commissioner Anderson

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