Gov. Mike Dunleavy, in the final year of his 2,918-day, two-term career in the job, is picking at the plate of a long-term fiscal plan for the state, much like a kid skips the broccoli and wants to move straight to the dessert.
The governor talks about a full menu of legislation to build a balanced budget for years to come, with enough revenue to meet expenses — a goal which has eluded Alaska for much of the past decade as the state has burned through its savings.
It’s a goal which the governor pretty much ignored in his first seven years on the job. His latest 10-year budget outline released last month shows the state short more than $1.5 billion a year to match his projected spending, which he says will be covered by unknown “new revenues.”
Though he talks about a tray of fiscal plan offerings to close that gap, his first course of legislative proposals, introduced last week, was far from a balanced diet. To his credit, he followed that with a 56-page second course on Monday to change the state’s oil and gas taxes, corporate income taxes and to impose the first-ever state sales tax. But that complex dish is like the frozen turkey you neglected to pull out of the fridge in time to cook for the holiday. It’s too late to make the dinner table this legislative session.
Meanwhile, the first course of his kitchen work last week was high in political fat. He served up a constitutional amendment with two ingredients: The healthy one would change the Permanent Fund into a true endowment managed for the long term, eliminating the arbitrary line between principal and realized investment gains and protecting the entire fund from inflation and overspending.
The unhealthy second ingredient would put the Permanent Fund dividend into the constitution. And not a small helping either. Dunleavy proposes that half of the annual draw from the Permanent Fund must go out as dividends to Alaskans. That would come out of his magic oven as a super well-done $3,300 PFD in 2028 — triple the size of last year.
And not wanting the Legislature to even think about ever messing with his political cake, the governor’s constitutional amendment would direct that the dividend money is not subject to legislative appropriation. He would set the PFD on a pedestal far above schools, roads, troopers and fisheries management, all of which have to come to legislators every year to justify their spending.
Leading the meal with a constitutionally guaranteed triple-size dividend is about as fiscally unhealthy as you can get, though certainly politically salivating to many. Proposing a constitutional amendment to boost and guarantee the dividend before any revenue measures to cover the budget gap even get a hearing is promoting overeating.
It’s similar to 2002, when a citizens initiative asked voters if the state should build, own and operate a North Slope natural gas pipeline from Prudhoe Bay to Valdez, supposedly creating jobs, providing cheap energy and making the state rich. No surprise, it passed with 62% voting hell yes.
But the ballot proposal never said how the state would pay for the multibillion-dollar project; it merely misleadingly promoted the prospect of never-ending wealth. Of course, after spending millions of dollars, nothing happened and the Alaska Natural Gas Development Authority closed down.
Dunleavy is doing the same thing in 2026: Dangle the prospect of fat dividends and downplay the cost. Instead of leading with dessert, the governor should first make sure the state has the money to cover the bills.
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.
