Dunleavy backs off plan to confiscate $470 million from local governments

When he communicates to right-wing organizations both in Alaska and Outside, Gov. Mike Dunleavy strikes a combative tone and blames the budget uproar he created this year on left-wing special interests in Alaska who “want government to be big.”

“Cutting government spending while holding the line on taxes is no small feat given the growing power of special interests in Alaska,” Dunleavy wrote in a column published in the Washington Examiner on Oct. 16.

He sends a different message to Alaskans he is trying to win over, at times approaching an apology, but stopping short of admitting that he was wrong.

“We all know the budget discussions were very difficult and at times contentious this past year,” he told the Alaska Federation of Natives convention the day after his Washington Examiner column appeared attacking special interests.

“I will be the first to say as governor I must take responsibility for my part in this process and I will work hard to ensure the budget process goes much more smoothly this year. I will make every effort to incorporate the perspective of all Alaskans,” Dunleavy told AFN.

On Nov. 14, he said on Facebook that his next budget will be different.

“I’m gonna be personally be getting out to all corners of the state to sit down and talk with Alaskans. We’re gonna have town hall meetings, we’re going to be doing ‘Facebook Lives,’ as to what you want to see done with the budget and the future fiscal issues for the state of Alaska,” he said.

The budget cuts this year “caused some concern amongst many Alaskans. Some Alaskans felt that we had gone too far. Some Alaskans felt we didn’t go far enough. And as we’ve said Alaska is a diverse state. But this year we have time. And I want to make sure that as we go through this process that we get it right, that we get it right with Alaskans. How much do we want to reduce? Are Alaskans willing to look at revenue measures? We still have a large fiscal gap that needs to be closed.”

He’s right that there is a fiscal gap, one that won’t be closed with the fiscal fantasy that marked his campaign or with a replay of his efforts this year to shut down the ferry system, dismantle the University of Alaska, cut education by 25 percent and cut health care spending by $700 million.

One thing we already know will not be in his next budget is a repeat of the failed effort to confiscate nearly a half-billion dollars from local governments, money generated by an oil and gas property tax and fish taxes. That was a big element in the Dunleavy fiscal plan.

Dunleavy said in February that his bill to take $437 million in property taxes away from local governments, SB 57, was needed because the “system is inefficient for both taxpayers and the state.”

The Dunleavy administration claimed that this would be “new revenue,” as in new to the state. There was similar talk about taking $30 million in fish taxes from local governments under SB 63.

Revenue Commissioner Bruce Tangeman said the fish tax confiscation plan was a priority for the governor, but the revenue department had done no economic analysis on the idea.

Dunleavy informed the Alaska Municipal League the other day that he has dropped the plan to try to take the property tax or fish tax funds away from local governments. KTUU reports that Dunleavy told the statewide organization of local governments that he is backing off “due to your feedback.”

In reality, the Dunleavy plan had no chance in the Legislature, so announcing the death of the proposal is merely a formality.

At some point the governor has to move beyond the ambiguous discussion and inform Alaskans how he intends to close the fiscal gap without abandoning education, health care, public safety, etc. The next Dunleavy budget is due Dec. 15, so if there is an extensive statewide communication effort, it will be after he puts a plan on the table.

If the plan is realistic, it will include new taxes, a limit on the dividend and the continuation of statewide services.