Dunleavy's continued budget fantasy puts Alaska at risk

"No knee-jerk reactions, it's not the end of the world,” he said.

That was Gov. Mike Dunleavy on Monday, talking about why he intended to make no changes to his proposed budget for the next fiscal year, a “plan” that would spend all state savings except for the Permanent Fund earnings reserve.

He’s right. It’s not the end of the world. But his budget would mean the end of the Constitutional Budget Reserve and the beginning of the end of the Permanent Fund earnings reserve.

Alaska oil was $33.47 a barrel Thursday, down from $55 a barrel in mid-February. The state predicted in December that oil would be $59 a barrel in the next fiscal year.

If oil averages $40 in the next fiscal year, state revenue would decline by a half-billion dollars.

Dunleavy needs to say what services he would cut, what taxes he would support and how big of a cut has to be made in the dividend. He refuses to deal with any of those because he thinks that is how he can survive a recall election.

This is a budget fantasy that is even worse than his campaign claims that he had discovered 2,000 funded but unfilled jobs that could be cut to save $200 million. Alaska news organizations never held him accountable for the ghost job claim and they are not holding him accountable for the fraud that underlies his proposed budget.

The Dunleavy budget, with lower oil prices, means the state would have to withdraw far more than a sustainable amount from the Permanent Fund. Establish that precedent and the easiest thing to do in the future will be more of the same.

The fund still has nearly $60 billion, down about $6 billion in the past week. And that should last a while, though it will not be permanent.

At that same press conference Monday, Dunleavy predicted that the coronavirus, the stock market collapse and the problems of the cruise ship industry would be momentary.

"So first of all, it's not the end of the world. I see these things as a momentary glitch. I see this virus as a momentary glitch. I see oil prices, the drop in oil prices as a momentary issue.”

Dunleavy predicted the stock market will rise, oil prices will rise and things will get better sooner rather than later.

He launched into his standard spiel that an increase of 200,000 to 300,000 barrels of oil will take place in “the next several years.”

“I would say this is a momentary, a momentary bump in the road for Alaska. Again, our oil patch is in it for the long haul. With regard to the stock market, I too believe that the underlying fundamentals of the U.S. economy is pretty strong. And you know it’s being impacted now by the coronavirus, there’s an impact on the economies worldwide at that point, but that’s a momentary issue. That’s going to be temporary as well,” he said.

Everything is temporary, including the Dunleavy administration.

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