Candidate Mike Dunleavy proposed 'sustainable budget,' promising no cuts in services

Two key Dunleavy administration officials appeared on Talk of Alaska Tuesday to discuss the slash-and-burn budget proposed by Gov. Mike Dunleavy.

During his campaign, Dunleavy gave what may have been the most detailed description of his vision for the state budget during his appearance on that public radio program.

In an interview Sept. 4, he said the state could have a sustainable budget without cutting state and local services.

Fiscal fantasy was the hallmark of his campaign. Because of a weakened press corps and the diversion of the three-way horse race, he was never held accountable for promising everything to everybody, starting with no taxes and bigger Permanent Fund dividend checks. It was always wishful thinking.

He never failed to mention the need to cut the budget, end redundancy and improve efficiency—the triumvirate for all Republicans—but he refused to name any significant service to cut. News stories and editorials that say his campaign was focused on budget cuts are incorrect.

I suggested to host Lori Townsend that to put the slash-and-burn budget in the right historical context, it would be worth replaying for the audience the comments made Sept. 4 by Dunleavy. He said the state needed “efficiencies,” not cuts in services.

She said afterwards that there was no time and that the station had a large number of phone calls and emails. A web link to Dunleavy’s September solution was posted on the Talk of Alaska site.

I think another show is in order to explore questions of context and credibility as every budget comment made by Revenue Commissioner Bruce Tangeman and Deputy Chief of Staff Jeremy Price contradicted the budget statement made by candidate Dunleavy almost six months ago.

Oil was $76 a barrel then, it is $68 a barrel now.

Candidate Dunleavy said the budget would be made sustainable with no cuts to services, though he proposed $450 million in cuts that would not impact Alaskans. Painless budget cuts are a close relative to imaginary budget cuts, but candidates love to talk about them.

He made similar comments about a pain-free sustainable budget on several other occasions, but on public radio he provided the most detail.

1. He said he would cut 2,000 funded but unfilled positions to save $200 million.

About the alleged 2,000 unfilled jobs, he said:

"There's roughly 24,000 state employee positions. Last year 22,000 of those positions were filled, but 24,000 were funded. So 2,000 positions were funded but not filled. This represents almost $200 million. We're not quite sure where that money went. They call it the vacancy factor. Some of that money was probably used for overtime in some of the departments and divisions. Some of it was probably used for travel, equipment, who knows? But the point is that money was supposed to be used for positions, but those 2,000 positions were not filled.

"So there's $200 million right there that can be discussed as to how we want to use that going forward. Do we want to use that money and hire more Troopers? Do we want to use that money and hire more prosecuting attorneys? Do we want to use that money and keep the courts open on Friday to improve our public safety situation?"

(The proposed Dunleavy budget does not eliminate 2,000 funded but unfilled positions. There are always more unfilled positions than there are funded positions in state government. That is what is called the vacancy factor. There is not a $200 million slush fund to be redirected.)

2. He said he would have a voluntary plan to combine school health insurance plans to save $100 million.

3. He said he would save $150 million by making Medicaid more efficient.

"So between those three moves with no cuts at all you're looking at potentially $400 million plus; $200 million in the vacancy factor issue, $100 million in the health insurance and the $150 million in efficiencies, just in those three areas, it's several hundred million dollars," Dunleavy said.

"That could get our budget down to about $4.1 billion without cuts. If we get our budget down to about $4, $4.1 billion, somewhere in that neighborhood, and then let it grow—the operating aspect of the budget, the operating side of the budget—at about 2 percent a year, we can maintain, we can keep up with some inflationary costs at 2 percent a year. But it also gives us some breathing room to get these other resources on line, to get this other oil in the pipeline and increase our revenue stream."

He said earlier in the interview that "we have the revenues to pay for government going forward," and said oil production and revenue would increase.

"Within two years we're anticipating another additional 100,000 barrels in the pipeline from the new finds that were discovered next to the pipeline over the last several years. Then there are predictions that over the next three to seven years we'll have another additional 300,000 barrels in the pipeline."

The state forecast for oil production does not predict a 100,000-barrel increase in the next two years, or an increase of 300,000 more barrels over the next seven years.

The state Department of Revenue predicts oil will "remain relatively stable in coming years."

In attempting now to reconcile his campaign promises with his slash-and-burn budget, Dunleavy told Alaska Public Media in early February that he “had no access at that time to the inside workings of government,” so he was uninformed. That excuse is not the least bit convincing.

Dermot Cole3 Comments