Candidate Dunleavy's budget fantasy gives Gov. Dunleavy zero budget credibility

If we are to believe the Dunleavy administration, the reason the governor abandoned his campaign promise that he could fix the state budget with “efficiencies,” is that he counted on higher oil prices.

As he famously put it earlier this year, “we were told that we were going to have $75 a barrel oil.”

Anyone who has been in Alaska for a long weekend knows that it doesn’t matter what you are told about oil prices. They go up and down. Right now they are above $70 a barrel, close to what they were during much of the Dunleavy campaign when he was making extravagant promises to Alaskans about giant dividends and pain-free budget cuts.

The truth is that Dunleavy wanted to get elected and the best way to do that was for him to peddle a fiscal fantasy—no cuts in services, no taxes and larger Permanent Fund dividends. The contradictions between his campaign and his administration have gone largely uncovered by the news media in Alaska.

I was glad to see that Nat Herz of Alaska Public Media take a stab at comparing the Dunleavy campaign promises for no cuts in the ferry system, K-12 schools and the University of Alaska, etc. to the Dunleavy administration proposals for serious cuts to almost every state program.

This is a topic that requires more attention because it reflects on Dunleavy’s lack of credibility on the budget.

One of the most astonishing claims in the story is the notion put forward by Dunleavy press secretary Matt Shuckerow that candidate Dunleavy often said he planned no cuts to particular services ”at this time,” so he left himself some wiggle room.

Shuckerow might be more believable if he claimed that Dunleavy also had his fingers crossed behind his back.

Herz made reference to an appearance by Dunleavy on a public TV show “Alaska Insight” in which Dunleavy again said that he based all of his budget comments during the campaign on the dream of higher oil prices.

“When I was running for office, even into October, late October, the price of oil hit $85 a barrel, I think, in October. We were looking at that revenue and we were trying to deal with numbers that we were getting form some members of the administration. We thought that we might be able to do this with reductions and efficiencies in certain areas in state government,” he said.

“When we got into office in December we were hit with oil prices in the $50s and some said it was going to go further south in terms of less oil price, so we put together a budget, we put together a budget that had, that has reductions in it, there’s no doubt about it. Because we’re trying to get this under control this year. But the initial conversations were centered around high oil prices,” he said.

It makes no sense to plan a budget based on the daily price of oil, whether that was the $54.19 price posted on Dec. 27 or the $85.36 level recorded on Oct 3. It was above $85 for one day only.

During the campaign, when Dunleavy was promising no cuts to services, the state was still guessing that oil would be $64 a barrel in the next fiscal year. That is again the guess for 2020.

The state needs new taxes, higher oil taxes and a cap on the Permanent Fund dividend, but Dunleavy would rather stick with a new fantasy—one in which he doesn’t have to defend or explain any of his budget cuts and the impact on Alaskans.

The Legislature has taken a more realistic approach, but he has veto power and it will be hard to get three-quarters of the Legislature to vote to override.

Dermot Cole7 Comments