Lamer than a lame duck
- Rich Moniak
- 14 hours ago
- 3 min read
By Rich Moniak
“Alaska’s future is bright,” Gov. Mike Dunleavy proclaimed last week, “but we have to have discipline and be forward-thinking now so that our short-term budget challenges don’t turn into long-term burdens on Alaskan families and businesses.”
Although he made that statement in a video announcing the release of the last budget he’ll propose as governor, it’s the same pitch he made in 2019. But unlike former Gov. Bill Walker who actually developed a plan, Dunleavy squandered seven years trying to drive the state into a fiscal dead end.
Let’s start with a simple thought experiment.
Permanent Fund Dividends haven’t been based on the 1982 statutory formula since Walker used his veto power to cap the payout in 2016. In 2019, Dunleavy submitted legislation to give Alaskans $3,678 for the three prior years in the formula wasn’t used. Then and ever since, he used it in every budget he proposed.
Now what would the state’s financial picture look like today if the legislature gave him his way?
The answer in a word is broke.
During Dunleavy’s tenure, the PFD’s approved by the Legislature put about $11,000 in the bank account of every eligible Alaskan. His idea of forward thinking would have made us all $15,000 richer. But the state appropriation to cover it would have been about $16.5 billion instead of $7 billion.
To distribute $3,650 to each Alaskan this year, as he proposes, would require an appropriation of about $2.5 billion, leaving a budget deficit of $1.6 billion. The Constitutional Budget Reserve he wants to tap has a current balance of about $3 billion.
Lower-than-anticipated oil prices are partly responsible for that deficit. But it’s largely the result of stubbornly insisting the PFD amount should be based on 1982 formula. The reality he fails to understand or chooses to ignore is doing that would have depleted the CBR years ago. It’s the Legislature’s fiscal discipline that prevented that from happening.
The other part of his original long term plan that never worked out is related to his no new tax pledge. That forced him to try to balance the budget entirely by cutting spending. When he vetoed $440 million from the legislative-approved budget in 2019, it was supposed to reduce the deficit by half. His goal was “to complete this process and completely close this gap” the following year.
But within a few months, $60 million of the $135 million veto of the University of Alaska budget was restored. As was the entire $30 million veto of senior citizen and early education programs. And he never tried to cut that deeply again.
His no-tax pledge was also supposed to help grow the economy. Alaska was “open for business,” he declared. He created a team of financial, marketing, and research experts to “market Alaska to the world.” And imagined people and businesses flocking to the state “to fully realize our potential, including our location on the globe, our vast resources, and unbridled quality of life.”
Needless to say, no one came.
Partway through his second term, he said Alaska could “diversify its economy and stabilize the budget process by entering the rapidly emerging global market for carbon offsets.” Then he pulled some sort of new math out of a hat and claimed the state could earn “as much as $30 billion or more over 20 years.
According to a study commissioned by the state, the real figure was less than $100 million over 10 years.
The following year he saw gold in data farms. “I am excited to extend an invitation to you and your organization to consider doing business in Alaska, as you plan where your future data farm locations will be,” he wrote in a letter to the CEOs of 13 different tech giants. The problem in this case is the electric power they’d need to operate is well beyond what Alaska’s current infrastructure could deliver.
Fortunately for us, Dunleavy’s status as a lame duck governor leaves him powerless to influence the legislature. But even if he wasn’t, the self-destruction of his credibility should lead him to the Pogo like conclusion “I met Alaska’s fiscal enemy, and it was me.”
• Rich Moniak is a Juneau resident and retired civil engineer with more than 25 years of experience working in the public sector.
