Opinion: Gov. Dunleavy has a choice — continue down his PFD path or work on a long-term solution

Gov. Mike Dunleavy has a choice for his final two years on the job: He can continue talking about how state law requires him to include an outrageously large Permanent Fund dividend in his spending plan — even though it would dig a deep budget hole, which thankfully, most legislators will never step into — or he can help solve the problem.

It looks like he is sticking with the irresponsible approach. Consistency is a virtue, I suppose, though it’s far from virtuous.

The governor has proposed a budget for the state fiscal year starting July 1 that may be politically popular with his supporters but that he acknowledges the state cannot afford without drawing down its remaining reserves. Draining the account is as dangerous as stepping on thin ice.

He says the Legislature needs to do something about it. So much for leadership.

Dunleavy offers no specific solutions other than hoping for more oil wells in the years ahead, far too late to solve the problem for the next budget year or the one after that or the one after that. Besides, future oil revenues are as bankable as political promises, which is to say they’re not.

Driven by the almighty PFD, the governor’s proposed budget for next year shows a $1.5 billion deficit — and that’s before lawmakers consider an increase in state aid to local school districts, which communities desperately need.

Yes, five years ago, Dunleavy tossed out several proposed constitutional amendments that he packaged as a murky long-range fiscal plan to balance state finances. They wouldn’t have solved the problem, but at least it was an effort. No surprise, but the poorly crafted and flawed package went nowhere in the Legislature.

Since then, nothing. No proposed legislation from the governor to revise the dividend calculation, no constitutional amendments, no realistic fiscal plan, nothing but talk. And, unlike education funding, talk is cheap. It’s like he gave up and decided legislators could take the public heat for what needs to get done and he could retire as a champion of the PFD.

And while talk is cheap, a chart on the governor’s budget page is misleading. The cost of the governor’s proposed $3,800 dividend is nowhere to be seen on his spending chart, as if it magically doesn’t exist as the single-largest expenditure by far in his proposed budget. Hiding the truth is worse than cheap talk — it’s dishonest.

The honest truth is that the state could pay a $1,200 dividend, provide a reasonable increase in funding to education and balance the budget — without drawing down savings. That assumes stable oil prices. The governor could take the lead in proposing and pushing for a responsible and affordable change in the dividend formula in law to help solve the spending problem for the long term.

But Dunleavy didn’t propose any of that in his budget. Instead, he did nothing but the minimum that state law requires, which is to present a bunch of numbers and words on paper for lawmakers to start editing when they convene in Juneau on Jan. 21. Minimum effort and a maximum dividend — not a responsible combination.

Larry Persily is a longtime Alaska journalist, with breaks for federal, state and municipal public policy work in Alaska and Washington, D.C. He lives in Anchorage and is publisher of the Wrangell Sentinel weekly newspaper.

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