Dunleavy budget official should drop the rope-a-dope diversion, hiding the lack of a fiscal plan

The biggest scam at the heart of the so-called Dunleavy “fiscal plan” is that $1 billion in new revenue is going to appear on July 1, 2022 to solve Alaska’s financial problems.

Gov. Mike Dunleavy opposes any new taxes. And the Legislature is not going to approve $1 billion in new taxes.

It appears that the governor is counting on finding $1 billion worth of magic beans.

When the magic beans fail to appear, the state’s options will be even more limited than they are today and Dunleavy will find it easier to defend the reductions in state services that the governor and his staff refuse to talk about now.

Neil Steininger, the Dunleavy director of the Office of Management and Budget, is still outperforming his predecessor, former temporary budget director Donna Arduin.

But Steininger is on the wrong track with his lack of candor to legislators and the public. He is hiding the lack of a Dunleavy fiscal plan, which is perhaps the price he pays to keep his job.

In a Senate Finance Committee hearing Friday, he didn’t want to talk about the dream of finding $1 billion in magic beans in less than a year-and-a-half and he appeared to be unwilling or unable to give straight answers to simple questions.

For instance, Dunleavy wants the Legislature to ask the voters to approve borrowing $350 million for construction projects across the state that have yet to be identified. Dunleavy says, “this package will target roads to resources, energy upgrades, and critical infrastructure projects.”

If you borrow money, you have to repay it.

Anchorage Sen. Natasha von Imhof asked how the Dunleavy administration intends to pay back the $350 million in borrowed money when there is no money to pay it back.

Steininger gave a long-winded reply, in which he covered a lot of ground and never got close to an answer.

He said that the state has existing debts that will be paid off in future years, meaning that the payments no longer going toward the old debt could go to the new debt.

“Debt payments will be coming off the table and tapering down in the near future. So that creates some capacity to pay for the debt. It doesn’t fully cover the total cost of debt on $350 million. However, it is that tradeoff in that decision making—the money now during the time when the state needs this money on the street and the low cost of financing—vs. paying interest on that over time, is definitely a decision that has to be weighed in this.

“And we think it’s a decision that’s worthwhile based on the situation the state faces. Going forward this debt would be part of our general fund obligation going forward, which is something that has to be considered in future budget discussions.

“It is how we, how we manage them, how we pay for it. But those decisions would have to happen in the light of circumstances during those years as we develop those budgets.”

Say what?

When the hearing resumes Monday, von Imhof should ask Steininger again how the $350 million will be paid back under the Dunleavy plan when there is no money to pay it back. The question deserves more than a rope-a-dope diversion.

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