Alaska Gov. Dunleavy vetoes bipartisan bills related to school maintenance and payday loans

Alaska Gov. Mike Dunleavy this week vetoed two bipartisan bills, extending the list of legislation that he has quietly nixed during his tenure.

One vetoed bill would have allowed the only state-operated high school in Alaska to compete for maintenance funding against other schools in the state, and another would have capped interest rates for payday loans in an effort to prevent predatory lending.

The education-funding related bill had passed with support from 54 out of 60 lawmakers. The payday lending bill had passed with support from 38 lawmakers, after it was introduced two years ago by a Republican lawmaker.

Dunleavy, a Republican, has made a habit of vetoing bipartisan legislation spanning a wide array of issues after lawmakers have dispersed from the Capitol in Juneau. Some lawmakers say governors in the past have typically worked with lawmakers to find a compromise that would help avert a veto, but Dunleavy has not done so.

"It would be helpful if the governor would engage with the Legislature and work with us," said Sen. Bill Wielechowski, D-Anchorage. "I don't know that we had heard that on either one of these bills."

In the past, lawmakers have in most cases refrained from attempting to override Dunleavy, including when he vetoed a bill in 2023 meant to minimize the use of cancer-causing chemicals, and a 2024 bill meant to ease access to contraception.

But lawmakers may take a different approach when they reconvene in January.

Last month, the Legislature succeeded for the first time in overriding Dunleavy's veto of an education funding bill, only for the governor to veto education funding from the budget. Lawmakers have vowed to convene a joint session in January to vote on overriding that veto as well.

Once they are in a joint session, they may have an opportunity to override other Dunleavy vetoes from recent weeks.

"These are important bills for the state," said Wielechowski. "I think it's highly likely they'll be added to the veto override list."

Payday loans

The payday loan bill vetoed by Dunleavy would have capped interest rates and fees for loans of up to $25,000 at an annual percentage rate of 36%.

According to research from the nonprofit Alaska Public Interest Research Group, roughly 15,000 Alaskans annually take out payday loans. Interest rates for these short-term, high-cost loans can range from 194% to 521%.

A cap like the one proposed in the bill already exists in federal legislation for military service personnel, and more than a dozen states have already adopted a loan interest cap of 36% or lower, including Nebraska, Montana and Arizona.

But in a two-sentence letter explaining his veto, Dunleavy wrote that such a cap would "reduce short-term credit options — particularly for those without access to traditional banking services — while creating enforcement challenges for the state."

Proponents of the bill said the cap could help borrowers avoid a cycle of crippling debt. Opponents of the measure in the Legislature — all Republicans — argued that consumers should be allowed to take on the high-interest rates if they so choose, even if they are financially precarious.

The bill had passed in the final hours of the recent legislative session after lawmakers failed to pass a similar bill last year.

The measure had been an "opportunity to improve the credit marketplace for Alaskans in a time of substantial economic instability," wrote Claire Estelle Lubke, a researcher with the Alaska Public Interest Research Group. According to data she presented, payday lenders garnished over $3.7 million from Alaskans' Permanent Fund dividends between 2017 and 2022.

The bill has been opposed by several organizations representing payday lenders, including the Online Lenders Alliance, which this year paid a total of $73,000 to two powerful Alaska lobbyists, Miles Baker and Frank Bickford, to fight the measure.

School maintenance

Dunleavy vetoed a bill that would have allowed Mt. Edgecumbe High School — the only educational facility directly owned and operated by the state — to directly compete with school facilities across Alaska for maintenance funding.

The state education department every year releases a ranked list of school maintenance projects after school districts across Alaska submit their desired projects for review. That list does not include Mt. Edgecumbe High School.

As it stands, the maintenance of Mt. Edgecumbe High School, which is in Sitka and serves students from rural communities across the state, is overseen by the Department of Transportation and Public Facilities.

Lawmakers said this year that adding Mt. Edgecumbe High School to the education department's major maintenance list would ensure that the school competes with other similar facilities for state funding, rather than getting lost amid a list of roads and bridges maintained by the transportation department.

The bill would also have allowed money from the school fund to be used for teacher housing projects. Rural school districts have long said they are unable to keep qualified teachers due to housing shortages, causing districts to contend with high turnover. Regularly, teachers in rural Alaska live for extended periods of time in school buildings and classrooms.

In his veto letter, Dunleavy said that adding Mt. Edgecumbe and teacher housing projects to the major maintenance list "diminishes the equity across school districts" and "commits the state to a local housing obligation."

Dunleavy also wrote that a bill provision eliminating the $70 million cap on the Regional Educational Attendance Area fund would allow "cash (to) accumulate without project deadlines."

Dunleavy has regularly vetoed major maintenance projects approved by lawmakers, including a veto this month of $25 million to cover projects from the major maintenance list and a veto of $2.7 million for a Mt. Edgecumbe maintenance project to replace dorm windows.

In response to the veto of House Bill 174, Sitka independent Rep. Rebecca Himschoot said in a text message that it was "one more thing to override."

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