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Gov. Mike Dunleavy is starting his sixth year as the state’s top elected leader. Sadly, he’s not providing much fiscal leadership, other than beating the drums for his perpetual political bandwagon that trumpets the Permanent Fund dividend at the front of the parade, with public schools playing second fiddle. It’s off-key and off-base.
The governor unveiled his proposed state budget last week, setting out a spending plan for the fiscal year that will start July 1 and which legislators will start working through when they reconvene in Juneau in four weeks. As he has done consistently during his time in office, Dunleavy put the PFD ahead of all else in the budget. Consistency is good, but too bad it’s fiscally irresponsible in this case.
He proposes handing out about twice as much in next fall’s dividend as he recommends spending on K-12 education. And while the governor’s mythical dividend grows each year, school districts have not seen a noticeable increase in the state’s funding formula since before Dunleavy took office in 2018.
His budget request for a $3,400 PFD equals more than half of the entire cost of the state general fund budget for public services and agency operations for the year. The governor’s dividend isn’t just the elephant in the room; it’s the elephant that eats everything in the forest.
The fat dividend would push the budget far past what the state by law can withdraw from Permanent Fund investment earnings and what it will receive in oil revenues. So, Dunleavy wants to pull about $1 billion out of the state’s “rainy day” reserve accounts, leaving them dangerously low if oil prices crash.
Pulling out $1 billion from an ATM, living the good life as a happy politician and hoping nothing goes wrong is not a plan — it’s an avoidance strategy.
The governor says he is following the dividend formula in state law, even if governors and legislators have not followed the unaffordable formula since 2015. Yet rather than propose a workable change, something Alaska can afford, he says to the Legislature: You come up with an answer, so I don’t have to take the blame.
To his credit, Dunleavy is proposing a budget increase to hire more village public safety officers, more staff to process the monthslong backlog of food stamp applications, and new investigators to focus on crimes against children and missing and murdered Indigenous people. He wants to build a safer and better Alaska.
He also proposes that the state distribute an extra $5 million to food banks across the state, which is ironic for an administration that can’t seem to process applications for food stamp benefits in a timely manner.
And in a particularly visible bit of irony, the governor’s office created a colorful online grid of individual squares, depicting for Alaskans each major component of the proposed budget. The graphic breakdown, which is posted to the state website, shows Medicaid as the single biggest spending category. The second- and third-largest boxes in the grid are K-12 public education and the university system.
The grid misleadingly portrays a governor who puts health care and education above all else.
But missing from the grid is the biggest appropriation of them all: almost $2.4 billion for the dividends.
If the governor feels so righteous about the big PFD, he should own up to it and not shy away from giving it the biggest box in the spending graphic.
Larry Persily is a longtime Alaska journalist, with breaks for federal, state and municipal public policy work in Alaska and Washington, D.C. He lives in Anchorage and is publisher of the Wrangell Sentinel weekly newspaper.
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