Gov. Mike Dunleavy made virtually no cuts to existing state agency budgets in his spending plan released Dec. 15, and allowed increases for “formula” programs like school support and Medicaid. The governor also had to submit a balanced budget, so his plan includes $1.5 billion taken from the state’s Constitutional Budget Reserve to fund the proposal. This is a tacit acknowledgment of a $1.5 billion deficit for FY 2021, which begins next July 1. Since the CBR fund, which holds about $2 billion, is not a realistic solution for this funding (it must keep a healthy balance for state cash needs and emergencies) the governor said he will work with legislators on other solutions. Significantly, the governor’s budget officials say he is open to discussions on new revenues, including taxes. Increases in state fuel taxes and a state sales tax were specifically mentioned in briefings by administration officials.