Dunleavy refuses to say how he would pay for state government

There is nothing special about the pair of special sessions called by Gov. Mike Dunleavy to deal with the Permanent Fund dividend and state finances.

The biggest flaw is the continuing lack of leadership—Dunleavy wants a special session to start Thursday to rewrite the state financial plan without giving Alaskans or legislators a clue about what he sees in future taxes and spending on state services.

Dunleavy wants to talk only about dividends now—without saying how Alaska will pay for state government and for the local services that rely mainly on state spending, such as education.

He wants the Legislature to approve a constitutional amendment on the Permanent Fund, the largest source of money to run state government, without running the numbers on education, taxes, public safety, roads, etc.

He thinks that by telling Alaskans his plan will give them the largest dividend in history, (a false claim when inflation is included) he is excused from presenting a financial plan and can set himself up for re-election in 2022.

Then in August, the Legislature can deal with a state spending limit and a measure that would strip Alaskans of the right to raise taxes by initiative. Dunleavy has repeatedly mischaracterized the three constitutional amendments that he has been harping on for more than two years.

The recycled amendments do not add up to a fiscal plan.

One amendment is for a state spending limit, a universally popular idea as long as it is discussed in vague enough terms that no one has any idea what it means or what has to be cut.

The August special session could also include “potential measure to increase state revenues.” He is offering no specifics, staying on the sidelines, where he has been since the recall began two years ago.

Dunleavy has proposed putting the annual Power Cost Equalization payments into the Alaska Constitution. The PCE doesn’t belong in the Constitution, but this is a vote-getting ploy aimed at winning the support of Sen. Lyman Hoffman and a few others.

“Once the PFD and PCE fund are off the table, lawmakers and the administration can roll their sleeves up in August and start addressing long-term solutions to the current fiscal reality of Alaska,” the governor’s office claims.

“Two constitutional amendments were introduced at the beginning of session: one would institute an appropriation limit; the other would prohibit the establishment of a state tax without voter approval. The structural deficit Alaska faces also must be acknowledged through revenue measures. Everything must be on the table.”

Everything is on the table, according to Dunleavy, as soon as the Permanent Fund is off the table and the state has to either cut expenses by up to $1 billion a year or more or increase taxes by $1 billion or more.

Dunleavy refuses to take a position on cutting $1 billion or increasing taxes by $1 billion, hiding behind lines like “Everything must be on the table.”

Until he says how he would pay for state government, that means nothing is on the table.

What Dunleavy ignores in his claims about the dividend is that setting the size of the dividend will impact the rest of state and local government in Alaska and the future course of state taxes. It is irresponsible to ignore the big picture the way that Dunleavy does.

In February 2020, Dunleavy said the budget he introduced with former temporary budget director Donna Arduin was his vision for the future of state government. He continues to act as if he is powerless to lead.

“Our ideas were put onto the table last year, they're still in play with our bills and our constitutional amendments,” Dunleavy said in 2020. “But we want to see what the Legislature has in mind.”

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