Former Dunleavy budget hawk Donna Arduin returns to work in the Alaska Capitol

JUNEAU — After an almost four-year absence, budget hawk Donna Arduin has returned to work in the Alaska Capitol.

Arduin was Gov. Mike Dunleavy’s first budget director, becoming the face of his plan to cut more than $1 billion from the budget to pay for a statutory Permanent Fund dividend. She was sacked in 2019 after a recall effort was launched against Dunleavy, and most of his proposed cuts were rejected by the Legislature.

Nikiski Republican Rep. Ben Carpenter stayed in touch with Arduin and hired her to work as a policy adviser for the legislative session in Juneau. He serves on several committees but is chair of the House Ways and Means Committee, which has been charged with creating a long-term fiscal plan for Alaska.

“She’s considered a subject matter expert in long-term planning from a fiscally conservative point of view,” Carpenter said. “I brought her on to bring some of that experience to the team.”

Arduin, who is working in the Capitol under her married name Donna Kauranen, has decades of experience in conservative fiscal policy. She comes with a resume of managing budgets in Illinois, Florida and California.

Conservatives have applauded her for her pursuit of balancing budgets without new revenues, but she has drawn criticism for an apparent indifference to the impacts that deep cuts would make to social services. The budget plans she authored in Illinois and California were largely rejected or watered down after heated debates.

In Alaska, she has been a symbol for right-wing legislators who want the largest Permanent Fund dividend possible, paid for with vast budget cuts and no new taxes.

But not everyone has warmly welcomed her return. Carpenter said he had heard apprehension from some of his colleagues, but he has tried to reassure them.

“I am the one who is calling the shots,” he said.

Budget fights

Still, some legislators harbor bad memories. Sitka Republican Sen. Bert Stedman was co-chair of the Senate Finance Committee in 2019 during the most volatile budget fights with the Dunleavy administration. The University of Alaska and the Alaska Marine Highway System saw some of the largest reductions that year.

Stedman said there was no analysis by Arduin about the impacts of the cuts being proposed by the governor. He said Arduin wasn’t the right fit for Alaska.

“The economic damage that was left behind — we’re still cleaning it up,” Stedman said.

Carpenter serves as chair of the Joint Legislative Budget and Audit Committee, with Stedman as vice chair. Stedman said Arduin didn’t have the right “skill set” to work as an aide for that joint committee, but he declined to say whether he protested her working there.

Stedman, who has served as a state senator since 2003, said it would be fine for her to work for Ways and Means.

“It’s a House committee,” he said.

Since her ouster from Dunleavy’s office, Arduin has kept in touch with Alaska politics while living in Michigan. She has periodically called into right-leaning Alaska radio shows and has continued to advocate for large dividends, spending cuts and no new taxes.

In the past three years, Michael Chambers, former chair of the Alaska Libertarian Party, has twice brought her to Alaska to host budget seminars for legislators and legislative candidates.

“I felt very honored that Donna Arduin could come to Alaska,” Chambers said.

Several attendees said the seminars were a good networking opportunity. Others said they had learned more about the level of state spending in Alaska.

Chambers said it was “fantastic” that Arduin had returned to state politics.

Back to Alaska

Since 2019, Dunleavy has moderated some of his most hard-line fiscal policies. His recent budget proposals have been mostly flat and his fights with the Legislature have been far less combustible than during his first year in office. But he has proposed a full statutory dividend again this year and a budget with a roughly $300 million deficit.

[From 2019: As Alaska’s budget uproar rolls on, a top Dunleavy adviser has seen it before]

Arduin has been less than complimentary about Dunleavy’s economic performance since leaving his administration. She helped prepare a report for the American Legislative Exchange Council that graded governors in 2021 according to free-market economic principles that prioritize limited government.

Dunleavy was the second-lowest-ranked Republican governor overall, garnering two out of five stars. The governor’s office declined to comment on Arduin’s new role.

Across the Capitol, many have questioned why she would return to Alaska to work as a legislative aide. She had managed budgets in Florida for former Gov. Jeb Bush and in California for former Gov. Arnold Schwarzenegger.

The Legislative Affairs Agency said her salary as an aide would be roughly $88,000 per year, excluding benefits — far short of the $195,000 salary she was earning as Dunleavy’s budget director.

Arduin politely declined an interview request from the Daily News and referred further questions to Carpenter. He said that she had worked for some “heavy hitters” and he hoped her decision to return to Alaska reflected well on him and the work he was planning to do.

“I just took a chance, and she said yes,” Carpenter said.

‘We have to find a solution’

The House Ways and Means Committee will not be focused on this year’s budget. Instead, it will take a look at making systemic changes to the budget and policies to reduce state spending in the long term.

Carpenter, a member of the new Republican-dominated House majority, said the goal is to implement a long-elusive fiscal plan. He said it wouldn’t necessarily look like Dunleavy’s 2019 budget, which was balanced with deep cuts and tax revenue diverted from local governments.

“I don’t envision that we will have what public would like to say is a ‘drastic solution,’” he said. “If anything, I am looking for something that’s elegant. We have to find a solution, and it’s going to take 60 of us.”

The committee held its first introductory hearing Wednesday evening. Meetings have been scheduled to start at 6 p.m. so more legislators and the public can watch.

The starting point was a report written by a bipartisan and bicameral fiscal policy working group in 2021.

It called for a new and reduced dividend formula to be put into the Alaska Constitution, sustainable draws from the Permanent Fund, some budget cuts, a tighter legislative spending cap and new revenue measures that would raise hundreds of millions of dollars each year.

That framework was written as recommendations in broad brushstrokes, but accompanying legislation did not advance far. Current and former legislators said the group’s work was still relevant. Both conservatives and progressives had compromised — maybe that could be a roadmap for a new set of fiscal policies for the Legislature to debate.

Arduin helped set up the committee room earlier in the day, but she didn’t speak during the committee hearing and she wasn’t the subject of any discussion. She sat in the audience, listening.