Dunleavy aims to delay big decisions on spending, services and deficit

There was a lot of self-congratulatory happy talk about leadership and tough decisions when Gov. Mike Dunleavy gathered more than 15 legislators for a press conference promoting a revised plan for the Permanent Fund and the dividend.

But leadership and tough decisions are missing from the ideas that Dunleavy and Co. rolled out Wednesday.

The biggest change would buy some votes in the Legislature from rural districts by putting the Power Cost Equalization plan in the Constitution, elevating it above all other state services.

The Dunleavy approach would delay the tough decisions—massive cuts in services and new taxes—and deal first with the easiest part—a 2022 constitutional amendment that would divide fund earnings between dividends and government.

Taking the debate on massive cuts in state and local services and new taxes out of this so-called plan is another chapter in the Dunleavy fiscal fantasy tour that began when he first ran for governor and continues now that he appears to be a candidate for re-election in 2022.

“What we’re doing today is rolling out the first part of what would be a comprehensive approach to our entire fiscal regime that we hope gets solved this spring, sooner than later, within this session, parts of it and then we solve the rest of it this summer,” Dunleavy said.

Only after dealing with the dividend will there be time to work state services and taxes into the discussion, according to Dunleavy and the assortment of legislators, most of them Republicans, who have signed onto this approach.

It is the cowardly way of dealing with the problem. It disguises the real points of contention that lie ahead and limits options in ways that the supporters won’t talk about.

“This is the first part of a comprehensive approach that we’re going to take,” Dunleavy said. “And we’ll immediately pivot to the other issues that need to be dealt with.”

What Alaska needs from its government and legislators is a comprehensive approach that deals with spending, taxes and dividends. They are related, though Dunleavy and his legislative backers pretend they are independent.

“Imagine a world where we’re not wrestling over the Permanent Fund again,” Dunleavy said. “Imagine a world where we’re not wrestling over the PFD or the earnings reserve or PCE. Imagine what that will do in terms of conversations moving forward. In my opinion, the sky’s, it’s unlimited what we can do, once we get these heavy lifts out of the way,” he said.

No need to stop there.

Imagine a world in which the state wrestles with doubling class sizes in schools and cutting hundreds of millions from education. Imagine a world in which road maintenance declines and the ferry system continues to fail. Imagine a world in which health care for poor Alaskans is cut by hundreds of millions. Imagine a world in which University of Alaska campuses close and opportunities are reduced.

Dunleavy spoke about his plan for nearly 50 minutes before mentioning that it would require taking an extra $3 billion out of the Permanent Fund to cover the deficit it would create. He said the $3 billion would cover the deficit for “several years,” but that requires a leap of imagination.

“To have a long term fiscal solution we have to look at everything and have that discussion. What kind of revenue? That’s gonna be a discussion. How much in terms of reducing current programs? That’s gonna be a discussion,” he said.

The time for that discussion is now, not later.

“We recognize that there’ll be a hole in the budget. This is one of the reasons why we’re also proposing that the Legislature contemplate moving $3 billion into the CBR to help pay for that hole over the next several years,” he said.

The excessive withdrawal is to create time to “complete these conversations as to how big a government we’re gonna to have, how small a government, what type of revenues are we’re going to be looking at, to what degree spending limits.”

“There’s no easy solution. There is a hole. We have, part of the plan we have a way to deal with that hole over the next several years,” he said. “Again, we want this to be one part, the first part of a comprehensive approach to solving this thing.”

The Dunleavy plan is the easy part, the only part. It shouldn’t move forward without giving Alaskans a full understanding of what this means for state and local government services, taxes and the multi-billion-dollar scale of the fiscal crisis that remains.

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