Community Perspective

Governor has no real plan for Alaska’s budget gap

The governor’s spending plan is more than $1.5 billion in the red and he hasn’t offered a single big-dollar specific proposal to substantially close the gap for this year’s budget deliberations.

I’m not surprised.

Gov. Mike Dunleavy was correct in his Jan. 27 State of the State speech that any fiscal fixes without public support could incur the wrath of voters, “for they have the power of the ballot box.” No argument on that point.

But if no one tries to fix the problems for fear of voter anger, the mess will continue and the state will keep digging itself into a deeper financial hole. The governor admitted in his speech that Alaska is running out of time to find a cure for its fiscal virus.

Got that right.

The state has withdrawn $16 billion from our dwindling budget reserve funds the past half-dozen years to pay for public services. But the governor’s plan is simply to take 75% of what’s left in that shrinking account to cover the $1.5 billion budget hole, then hope for something better next year when the account would be near empty.

That’s not leadership.

And pumping up his stump speech with all the usual politically popular visions of more state revenue from oil, good rocks, timber, seafood industries and sugar plums isn’t leadership, it’s cheerleading. I figure each departing governor leaves a note card for the new boss to repeat those same visions. That card must be getting pretty faded.

If not new revenues, then budget cuts, right? Nope, said our governor, not this time. Acknowledging that his budget plan last year “was a shock to many Alaskans” for its deep hacks to public services, this year’s status quo budget proposal (Latin for “no recall”) shows a retreat from those damaging cuts.

To their credit, legislators have at least put specific plans on the political table and endured the criticism, though they have been unable to agree on a plan to share Alaska Permanent Fund earnings between public services and dividends and balanced spending.

Lawmakers have considered bills in recent years for an income tax, a motor fuel tax increase, a per-person tax to fund education, maybe a sales tax. They have tried and been vilified in social media. But at least they tried.

Many understand that economic diversification without tax revenue does nothing to pay for public services. And most realize that the biggest reason the governor’s budget is $1.5 billion out of whack is because Dunleavy insists on sticking with his 2018 winning campaign pledge of a large, unaffordable permanent fund dividend.

Legislators are willing to make changes. They are trying to do their job to balance spending and revenues — just as Frank Murkowski, when he was governor, knew something had to be done, and he was OK with a sales tax in 2003, and just as Bill Walker, who served as governor from 2014 to 2018, offered significant tax proposals and a restructuring of the dividend.

Dunleavy’s answer is to avoid making a recommendation for much of anything to help solve the $1.5 billion chasm. Everything should go out for a public vote, he said. If we’re going to govern by popular vote on unpopular choices, why do we need elected officials? A voting machine could do the job at less cost.

The governor did lay out a weak hand and support a state lottery. He said 45 states have lotteries to raise money for the treasury, so it must be OK. But he neglected to add that 41 states have a personal income tax and 45 states have a sales tax. I guess he figures it’s OK to use the facts that support his position, not the facts he doesn’t like.

Come on governor, put out some dollar-specific proposals for this budget year and argue for them. Or cut back on the dividend. Alaska cannot afford another year of draining its savings.

Larry Persily is a longtime Alaska journalist, with breaks for federal, state and municipal service in oil and gas and taxes, including as deputy commissioner at the Alaska Department of Revenue from 1999 to 2003.

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