The status quo governor

Gov. Mike Dunleavy released his budget proposal last week, outlining a “status quo” spending plan that reflects his status quo politics.

Good evening, Alaska. It’s Wednesday.

In this edition: It’s been about a week since the governor announced his status quo budget that ducks the hard decisions with an insistence that drilling, mining and logging are the real fixes to the state’s financial woes. In this edition, I’ll unpack why there’s a lot of wishful thinking in that claim and how wishful thinking seems to be the favored option for this status-quo governor—also, a rundown of other stories I’ve been tracking.

Current mood: ☃️

The status quo governor

Gov. Mike Dunleavy released his budget proposal last week, outlining a “status quo” spending plan that reflects his status quo politics of calling for a big dividend, refusing to increase K-12 funding and providing no meaningful leadership on how to close the $1 billion deficit created by his spending decisions. The governor signaled disinterest in making the difficult, meaningful decisions—on cuts, taxes or the dividend—that most believe are needed to settle the impasse over the state’s finances.

“We’re now in an election year,” he said when asked about the deficit, the sales tax his administration teased but never introduced and the scrapped plans for the fall special session on a fiscal plan. “I don’t know how much momentum will occur this year.”

Instead, the governor regaled reporters for nearly an hour on how Alaska can and should drill, mine and log its way to fiscal stability. Even for a governor with the ignoble distinction of being one of the only elected officials to support the controversial Pebble Mine project, it was an effusive display. He even waded into the 2024 election, arguing that the outcome will determine Alaska’s future—a bustling resource-extraction state under Trump or a dark and joyless future under Biden.

“If we can’t do it, then we have to talk about reducing the size of government,” he said, which will force people to leave and the remaining Alaskans to ask questions like, “Why are we building more playgrounds? Where is the cheer and chatter and laughter of kids?”

Never mind that the government has been cut massively over the last decade, and outmigration is already eating away at Alaska’s future.

Like most of Dunleavy’s time in office, it’s an overly simplistic solution to a complex problem that will make reaching a lasting resolution to the state budget crisis that much more difficult. Even his own projections show the state will run its savings accounts dry within two years under his plan, a key point when timelines for resource projects to start pumping money into the treasury can easily top a decade.

When asked how this call for unbridled resource development comports with the complicated economics and logistics of developing resources in Alaska, the governor suggested Alaskans are simply not asking and fighting hard enough. That’s precisely why everyone, he argued, “should be saying ‘yes’ to as many projects as possible.”

But even with a project where everyone is saying “yes”—the Willow project, which legislators unanimously supported through a resolution this year and is moving ahead with the Biden administration’s approval over the protests of environmental groups—the financial picture is far from the silver bullet Dunleavy would suggest. That’s because Willow is being developed on federal land, meaning it won’t be a massive cash cow for the state and could be a drag in the early years.

It has about as much wind at its back as possible in today’s politics, and Alaska will still have drained its savings when it comes online if the governor has his way.

And by the way, even a Trump administration isn’t guaranteed to put shovels in the ground—remember when the former president recognized that Pebble is a bad idea?

The status quo

In the bigger picture, the exercise is just more out of the same playbook the governor has been using while in office: Put forward an unrealistic plan, hand it off to the Alaska Legislature to make the hard decisions and blame them for doing so.

The governor’s first-year budget is particularly illustrative of this approach. As far as I can tell, the sole parameters that budget director Donna Arduin received when crafting the proposal were “full PFD, no new taxes.” Everything else was left up to her. To make those two points work without magical thinking, Arduin put forward massive cuts to K-12 education, the University of Alaska and a scuttling of the Alaska Marine Highway System, to name a few. As odious as the budget was, it at least tried to provide an answer to the deficit—one anyone could’ve told you would be a non-starter.

The legislative resistance and subsequent recall effort cooled that kind of budgeting, but the governor hasn’t given up on his vague, wishful thinking.

Instead of showing Alaskans the reality of what a billion-dollar structural deficit means, the governor has essentially answered all questions about the massive deficits contained in his budgets with a shrug and a suggestion we pay for it with our meager savings or—in some particularly alarming moments—by overdrawing the Alaska Permanent Fund (recall also that it’s Dunleavy’s closest allies on the Board of Trustees that were pushing for the risky plan to boost the fund’s value).

To be clear, reaching a lasting fiscal plan will be no small feat. The Legislature is far from consensus on the preferred mix of cuts, revenue and dividend changes. These serious decisions require thoughtful deliberation and work, but Dunleavy has done little more than arrive in the 11th hour to blow up any progress.

Well-meaning efforts by legislators to address the fiscal plan in recent years through a reworked dividend formula or new revenues have all faltered under the Legislature’s internal divisions and the looming threat of the governor’s veto pen. At times, he’s demanded any taxes be put to a public vote, and at others, he’s first demanded constitutional amendments. Without any progress on those fronts, the Legislature has resorted to the path of least political resistance to balance the budget and preserve savings: Ignoring the formula on the PFD and cutting it via the budget.

Meanwhile, much of the rest of the state is sitting on hold.

Time after time over the last decade, legislators and the governor have nixed calls for the state to invest in itself, citing its ongoing financial woes. And, critically, it’s essential to remember that status quo funding doesn’t mean status quo delivery of services. Increasing costs and inflation eat into the funding and undermine its buying power, an experience that schools have felt throughout Alaska.

Dunleavy new insistence that resource development should be the solution to the state’s budget is just another excuse to hamper any efforts to address the state’s financial situation. Sure, it’s an election year where votes on taxes will become prime campaign material, but on a practical level, why even try when you have a governor who will veto any new taxes and assert we should simply be drilling more?

Stay tuned.

Other stories I’ve been tracking

• Alaska Legislature authorizes lawsuit against Dunleavy over anti-union spending. The Alaska Legislative Council voted 10-3 last week to approve a lawsuit challenging the Dunleavy administration’s decision to spend a total of $315,034 from the “Civil Division Except Contracts Relating to Interpretation of Janus v AFSCME” on contracts relating to the interpretation of Janus v AFSCME. It’s part of a bigger battle the governor has picked with public sector unions.

• Alaska Permanent Fund trustees approve plan to hide CEO reviews from the public. Claiming they were looking out for the best interest of future fund executives, the Board of Trustees voted unanimously to do away with pretty much any paper trail for executive reviews. That’s because the personnel records of non-union exempt employees can sometimes be ruled to be a public document, as was the case with the file for former APFC CEO Angela Rodell, who was fired by the board following perceived slights against Gov. Dunleavy.

• City, state officials suggest lowering expectations for snow removal in Anchorage. After blowing far past the plow-out deadline following the November storms, Anchorage and state officials told the Anchorage Assembly that some changes to coordination are in order and resisted calls for increased investment in plows and staffing—both of which are down from past levels—and suggested the best thing they can do moving forward is manage expectations.

• Campaign regulators deny latest bid to regulate anti-ranked choice voting campaign but order it not to disband. The Alaska Public Offices Commission will allow the anti-ranked choice voting campaign to continue gathering the signatures necessary to get it on the 2024 ballot despite several complaints charging the group with shoddy and misleading financial disclosures and reporting. In a particularly spectacular move, APOC ordered the group not to simply dissolve once they get their signatures to dodge the penalties. Members of the campaign have suggested they would do as much, and their attorney disgraced former Attorney General Kevin Clarkson, told the committee that there’s nothing inherent to the process that could stop them from doing so.