In his latest budget gimmick, Dunleavy claims state can't afford not to borrow $325 million

Candidate Mike Dunleavy wants Alaskans to believe that the temporary increase in oil prices and record gains in state investments have solved all of Alaska’s fiscal problems and cleared the way to spend hundreds of millions more on the Permanent Fund Dividend from here to eternity.

The Dunleavy reelection campaign is shaping up as a repeat of the 2018 Dunleavy campaign, founded on the fiscal fantasy that there was no need to do anything unpopular.

In a campaign appearance on state property Thursday, Dunleavy said the state’s financial situation has changed dramatically in the past six months.

While proclaiming the prosperity gospel with one hand, Dunleavy is claiming with the other that interest rates are now so low that the state can’t afford not to borrow $325 million to pay for a small assortment of capital projects.

According to Dunleavy, the state will certainly save money by borrowing hundreds of millions instead of paying as we go.

“Low-interest rate borrowing allows the state to invest surplus revenue for better returns,” Dunleavy claims, a bit of wisdom that could have come from the late Cal Worthington or the Mattress Ranch.

Yes, that assumes the alleged surplus will exist and that it will be invested at rates at which the state can’t possibly lose.

There are at least $14 billion reasons why these assumptions are foolish.

But the record stock market returns of the recent past mean that we can count on all of this happening, according to Dunleavy.

The guy who claimed in 2018 he could save $200 million by eliminating nonexistent jobs has never heard that past performance is no guarantee of future results.

There are other points to consider.

First, the Legislature is not going to approve a $325 million bond issue.

The assortment of 14 projects proposed by Dunleavy is nowhere near enough to get voters statewide excited about taking on new debt.

That’s a good thing. When the Legislature gets into bond-issue mode, it always produces a Christmas Tree bill with something for everyone. The last thing Alaska needs this year is a statewide bond issue.

Second, no real conservative would ever say that we can’t afford not to borrow money.

Third, the added revenue from higher oil prices and investment returns should be used for capital projects instead of borrowed money. The statewide need for capital projects is immense. But Dunleavy is ignoring all of that because he wants to campaign this year on bigger dividends, just as he did in 2018, pretending that nothing else matters to Alaskans.

Fourth, and most importantly, the bond issue is a political scam. Trying to fund $325 million in projects with borrowed money—a bookkeeping move to keep $325 million out of the capital budget—is just one of the gimmicks Dunleavy is using to try to claim the budget has been decreased.

Your contributions help support independent analysis and political commentary by Alaska reporter and author Dermot Cole. Thank you for reading and for your support. Either click here to use PayPal or send checks to: Dermot Cole, Box 10673, Fairbanks, AK 99710-0673.