Dunleavy’s deficit of honesty: The 50-50 plan is half-baked

Gov. Michael J. Dunleavy recently announced his “plan” for the State of Alaska’s finances. Dubbed the “50-50 plan,” it promised stable budgets and “the largest Permanent Fund dividend in history” in perpetuity. Dunleavy used his bully pulpit to push this plan and continued his ethically challenged habit of spending public money to pressure legislators with political ads.

Yet the plan was met with bipartisan skepticism, and when he didn’t get his way, Dunleavy brought Alaska to the doorstep of its first-ever government shutdown — all because he wanted a bigger PFD. Once the Legislature fixed its budget’s purportedly “defective” effective date clause, the governor lashed out again — imposing vetoes to damage rural Alaskans and his political opponents, while inconceivably reducing the $1,100 PFD they passed to $0.

So why is Alaska at this impasse, and why has the governor’s plan so utterly failed? Because it’s a fraud.

First, the plan’s PFDs wouldn’t be the largest; that distinction belongs to the $3,269 checks sent by Gov. Sarah Palin in 2008, when the oil price boom was at its apex.

The second, bigger problem, is that the 50-50 plan doesn’t stabilize or balance our finances — it makes them worse. As documented in these pages by others, Alaska cannot constitutionalize PFDs of the size Dunleavy proposes without committing fiscal suicide.

To understand more fully, a history lesson is needed — because Dunleavy’s plan has already been indicted as a fraud by his own numbers.

In 2018, Dunleavy the candidate promised invisible, painless cuts that would allow full PFDs. However, he revised that sentiment in early 2019 when he presented what he dubbed “An Honest Budget: where expenditures equal revenues.”

That budget was indeed “honest” in the sense that the numbers balanced. As Donna Arduin and Dunleavy demonstrated, his large PFDs would require Alaska to impose $1.8 billion in cuts, plus taking approximately $500 million in tax revenue from local governments such as the North Slope Borough. By his own math, a $2.3 billion gap stood between Dunleavy and his campaign promises.

Fortunately, Alaskans saw that while this “honest” budget would comply with the PFD statute, it would violate dozens of other statutes, utterly devastating core services and Alaskans’ way of life. Facing public outrage and heroic legislative resistance, Dunleavy reverted to budgets little different than that of his predecessor.

Sadly, 2019 was the last time Dunleavy was honest with Alaskans about the true cost of his PFD promise. Since then, Gov. Dunleavy has been replaced by “candidate Dunleavy,” who will say anything to keep his political career alive.

Given the concession that large cuts are impossible, Dunleavy now backs down from supersized PFDs, and proposes to constitutionalize merely “jumbo” PFDs, that are approximately $1,000 smaller. Here’s the problem: These 50-50 PFDs result in a “savings” of only about $800 million per year. Therefore, the result of his plan is a constitutionalized deficit between $1 billion and $1.5 billion.

What is Dunleavy’s bold plan to fill this gap — cuts? Revenue? A combination of both? Nope.

As we will continue to see, Dunleavy’s staff is now tasked with peddling rainbows and unicorns — just raid the Permanent Fund by overdrawing $3 billion and pretend his giant deficit doesn’t exist. To their credit, legislators are having none of it, and have largely panned this “plan” as a work of fiction.

As for industry and business leaders — those who should be clamoring loudest for a durable fiscal plan — their silence is deafening. They won’t support Dunleavy’s plan in public, and in private they deride it. There’s no clearer way to kill economic growth than the permanent fiscal chaos his plan would impose.

It appears the 50-50 plan is destined for Alaska’s graveyard of discarded fiscal gimmicks. But despite his ineffectiveness in pushing his agenda, one aspect to Dunleavy’s “facts optional” approach to leadership is frightening. It’s cynically calculated to bring out the worst in Alaskans. Dunleavy got elected by stoking false grievances and making impossible promises. But those who rise to power by embracing ignorance and fear, only make their supporters more ignorant and afraid.

Now is the time for Alaskans to reject those impulses — to embrace fact-based leadership and optimism for the future. Those were the values at work in 2018, when I was proud to work with bipartisan legislators in passing SB26, the legislation cementing a percent-of-market-value approach to use of the Permanent Fund. SB26 was an important first step in Alaska turning the corner from crisis to prosperity. But we must not go backward, and we must finish the job of enacting a full, reality-based fiscal plan, whether this August or in the future.

With the vacuum of leadership in the governor’s office, it’s clear Alaskans must seek real solutions directly from the Legislature or from a new governor in 2022.

Scott Kendall served as chief of staff under Gov. Bill Walker. He is now an attorney in private practice.

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