The State needs all these funds to keep giving a fiscal free ride to all those areas of the state that refuse to create local organized boroughs with local taxing authority.  The Legislature has the authority to do this; however that would require a modicum of political courage and some adult behavior.  After watching them first create (then run away from) this fiscal crisis don't hold your breath waiting for them to address this issue.  From the Alaska State Constitution: 

"Section 10.6 - Unorganized Boroughs. : The legislature shall provide for the performance of services it deems necessary or advisable in unorganized boroughs, allowing for maximum local participation and responsibility. It may exercise any power or function in an unorganized borough which the assembly may exercise in an organized borough."