Dunleavy wants spending limit, but refuses to say what services he wants to cut

“Kicking the can down the road for years, wiping out billions from savings, and then taxing the PFD, all the while just hoping for another oil boom — it simply doesn’t work,” Gov. Mike Dunleavy said two years ago in the his State of the State address.

“My first budget is going to be an honest budget. As I promised the people, we must start from the standpoint that expenditures must equal revenue. We can’t go on forever using savings to plug the budget gap,” Dunleavy said at the start of 2019.

Dunleavy mishandled the budget that year and tried massive cuts that the public and the Legislature opposed. He used his veto power to cut $444 million.

“We can’t kick the can down the road, because we’re running out of road,” he said when he announced his vetoes on June 28, 2019, standing next to temporary budget director Donna Arduin.

A month later, he insisted he was right. “Are we going to reduce the budget to close the gap or are we going to take the PFD and tax ourselves, or possibly a combination of? We won’t get there if I continue to try and kick the can down the road by using our savings and acting as if everything is OK,” he said. "We’ve got to fix this now. We’ve got to fix this on my watch. I’m willing to do it.”

But the recall swept across the state in August and he went into punt formation, getting rid of Tuckerman Babcock and Arduin. He reversed almost everything in his so-called “honest budget.”

In 2020 and again in the budget Dunleavy has proposed for the 2021 Legislature, Dunleavy decided that he really wants to keep kicking the can, spending out of savings, opposing taxes and calling for a spending limit to cut programs without being specific.

That’s where we are today, with Dunleavy proposing to withdraw $3 billion more than is sustainable from the Permanent Fund without proposing taxes or major service cuts, while claiming that $1.2 billion in new revenue will appear by magic in July 2022. The Dunleavy plan is to pay $3 billion in dividends and use about the same amount from the fund to help pay for government.

Dunleavy has become the champion of the passive budget approach he attacked two years ago as unacceptable. That approach is to “avoid fixing the problem by making unsustainable draws” from the Permanent Fund, which would lead to a steady decline in the value of the fund.

“It uses the remaining accessible savings accounts to maintain existing levels of state spending, while paying the full statutory PFD. This approach eventually fails, absent a dramatic rise in oil prices. In short, this scenario can be described as the ‘kick the can down the road’ approach, as the same problems being debated today would exist again in the future, except future Alaskans would have fewer options to address them,” the administration said in an accurate 2019 analysis of passivity by the former temporary budget director.

Budget passivity is the Dunleavy watchword. It will eventually fail. Limiting options is the goal and the ultimate result.

And his fallback position now is what it was two years ago—his claim that the “foundation of a fiscal plan” consists of constitutional amendments.

One of them would be a new spending cap.

“We can no longer kick the can down the road,” Dunleavy said Friday on Facebook.

“I’m again proposing a constitutional spending cap that puts a meaningful limit on the growth of government. 2020 forced Alaskans to tighten their belts like never before; it’s time their government did the same,” said Dunleavy.

Everybody loves a spending limit, as long as there is no discussion of cutting road maintenance, education, dividends, public safety, grants to local governments, emergency services, airports, ferries, courts, health care or anything else.

When he was running for office, Dunleavy said “I do not have a specific program I would like to reduce or eliminate.”

What Dunleavy never wants to say is exactly what services he wants to cut. He tried that once under the reign of former temporary budget director Donna Arduin and he would have been tossed out of office if his attorney general had not illegally blocked the recall process.

Dunleavy reverted to his old line—he wants to enact a stringent spending cap first. Once it is in place, then the state can deal with the unpopular part—deciding what services to cut. Anyone who complains about cutting services can be told, “We have to follow the spending cap.”

When he was in the Legislature, Dunleavy said he wanted people to stop asking him, “What do you want to cut?” because it made him uncomfortable and he couldn’t answer the question.

He said the first thing to do was to figure out how much Alaskans wanted to spend, instead of dealing with all the controversy that comes with announcing cuts and getting attacked. Settle that spending number and the cuts would follow, he said.

"It's a lockbox. And then you kind of duke it out, if you need to . . . inside that lockbox," said Dunleavy.

In other words, keep kicking the can.

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