Dunleavy and his secret fiscal plan

It appears that Gov. Mike Dunleavy will leave office the same way he came in, claiming that avoiding new taxes and shrinking government is the way to make Alaska the most competitive state in the nation to attract new business.

In 2019, he said the state needed policies to prevent the implementation of new “predatory taxes,” claiming Colorado was a good example and Washington was worth emulating because it had no income tax.

“What’s happening in Colorado right now? Did the economy collapse? Is it falling apart? It’s the second hottest economy in the nation right now. Investment is flooding into Colorado. It’s becoming a center for high-tech and other industries because they know if they go to Colorado, there’s not going to be a predatory tax imposed upon them. The state of Washington is somewhat similar. It’s got the hottest economy right now due in part to low electrical prices, but in the state of Washington there’s no income tax. And every time they talk about an income tax—Democrats, Republicans, independents—they don’t support it. So there’s no income tax in the state of Washington,” Dunleavy said in 2019.

“You do something similar here, get our spending reined in . . . you’re going to see investment flowing into Alaska like you’ve never seen before and then we’ll be able to build a private economy like other states have done,” he said. “And when you build a private economy you bring in more jobs, more opportunities. This allows municipalities, if they so choose, to tax some of those industries, to tax some of those jobs. They grow at the municipal level,” he predicted.

As I wrote in this space at the time: “Beware of anyone pushing miracles and magic beans. File this one with the Dunleavy pledge that a 12-week training course is all anyone needs to start making $75,000 a year doing computer coding anywhere in Alaska. Or that the state should recruit “distressed gun manufacturers” and create new jobs that will last for generations.”

This fall Dunleavy told the Resource Development Council that he wanted “alignment” with the Legislature on a secret fiscal plan that he can’t share with the public just yet but will release in 2026. (Hiding his plan from the public will not improve its chances for passage.)

I suspect he plans to recycle his 2019 package to try to cut spending and make it nearly impossible to raise taxes, which he will claim will lead to a business boom.

“We’re gonna be introducing a fiscal package to the Legislature. But it’s comprehensive. It’s not just gonna be a tax-and-spend approach. It’s gonna be how do we make Alaska the most competitive state in the country for investment in our resources, in our investments in AI, our investments in data centers,” he told the council this fall.

“I just need the Legislature to have an honest, sincere look at those bills because I think they’ll see the same thing that I do. And that is if we can make this state the most competitive, not OK, but the absolutely most competitive to compete with Texas, or the South Dakotas, or the Utahs, we will get an unbelievable amount of investment in this state of Alaska. And it’ll definitely revolutionize where this state’s gonna go over the next 50 years.”

Spoiler alert: Alaska is not going to become the most competitive state in the nation, regardless of what Dunleavy’s secret fiscal plan says.

His constant refusal to get the details before the public—complaining that elements of it will be criticized—is the strongest sign that he is not serious. This rerun has been on more times than Seinfeld.

The master plan seems to be that keeping it a secret prevents people from picking it apart.

“We understand that we’re gonna have to bite the bullet to some degree to come up with a fiscal plan that is sustainable, that is stable and that will serve Alaska well for some time,” he said on April 27, 2023.

He said the state was closer than ever to a fiscal plan, but the bullet has no bite marks.

Last spring he said he would get a fiscal plan together over the summer by working with legislators.

“I would sit down with them here in June and going into the summer to craft a fiscal plan,” Dunleavy said.

Dunleavy has promised a fiscal plan more often than Donald Trump has promised to end the war in Ukraine and inflation and fix health care.

Last May Dunleavy said he would have a fiscal plan for the Legislature this year or next year. It would before he leaves office.

“You might have higher thresholds to increase taxes. Whole host of things to ensure that we don't find ourselves in this position constantly, constantly, constantly. So you're going to see a comprehensive plan put out next year. I can guarantee you, because I've been around for a while, there will be those that will pick apart each part of the plan. But as a whole, I think it's going to be a plan that gets Alaska out of this reliance simply on a diminishing resource over time as oil,” he said in May.

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