Dunleavy’s budget is built on ideas and cherry-picked statistics that deepen the divide between rich and poor

Protestors unfurl a banner in front of Gov. Michael J. Dunleavy at the budget roadshow hosted in Anchorage by Americans for Prosperity on March 26, 2019. (Photo by Matt Buxton/TMS)

ANCHORAGE—From the back of a pickup truck outside 49th State Brewing, Anchorage Mayor Ethan Berkowitz spoke to a crowd of protestors demonstrating against Gov. Michael J. Dunleavy’s budget.

He reminded them of former Gov. Wally Hickel’s words to a 2006 legislative committee on natural gas development: “If it’s good for Alaska, do it; if it’s bad for Alaska, screw it!”

“What do we do with this budget?” he asked the crowd that easily outsized the audience assembling inside.

“Screw it!” the crowd roared back.

The scene inside was almost a polar opposite.

With a crew of private security between him and hundreds of angry Alaskans, Gov. Michael J. Dunleavy laid out the vision for his budget to an audience that seemed generally predisposed to supporting his budget. The opponents in attendance were tight-lipped, lest they fell astray of the rules laid out by the event’s Americans for Prosperity host.

[RELATED: Protester confronting Dunleavy arrested at Nome airport before local budget event]

His characterization of his opponents outside the building, as special interests hungry to tax the audience, was met with knowing nods, and his promises to reject any and all taxes were met with whoops and whistles.

What was striking, though, wasthe gulf between the boogeyman Dunleavy warned of and the reality of what’s going on in the Legislature right now, as is the gulf between the statistics the administration is using to paint Alaska’s government as a failure and the complicated story they really tell.

In Dunleavy’s view, there’s a choice only between extremes: Either Alaska continues on a path he claims will lead to financial ruin and taxes or everyone needs to sign on with his Americans for Prosperity-approved plan to throttle state spending and stifle taxes.

There was no nuance, no complexity and no honest assessment of alternatives. In that bubble, it’d almost be easy to see his proposal as a compelling and sensible approach to Alaska’s future.

There’s a lot to unpack, but today I want to focus on three main points that stuck out from the meeting: The claims that Alaska’s education system is a complete failure deserving of cuts, the misrepresentation of an income tax and the characterization of proposed constitutional amendments as a panacea for Alaska’s financial woes.

Education rates

Alaska’s schools are failing! Just look at how the state ranks dead-last in standardized tests! “We don’t believe we’re getting our bang for the buck,” said Office of Management and Budget Director Donna Arduin.

The presentation highlighted the recently released results of the standardized tests conducted under the  National Assessment of Educational Progress. The topline results, that Alaska lands dead last in the nation in reading and math proficiency for students, are all that appear to matter to the administration as it proposes deep cuts to education and the elimination of a variety of education-related programs.

It’s a point that got plenty of nods from the audience. You wouldn’t want even more of your hard-earned PFDs going to a failing system, right?

The problem is that looking at those topline numbers don’t reflect the complexity of Alaska’s educational system, spread out over so many hundreds of miles, branching cultural and language divides, and administered locally by more than 50 independent districts.

If you were to examine the numbers with any depth, as columnist Dermot Cole did, you’d see that Alaska’s education system isn’t failing everyone. It’s failing Alaska’s low-income students and Alaska’s minority students. Students who fall into either category perform, on average, far below the national average on these tests.

White students and students who are not eligible for free or reduced lunches perform slightly above the national NAEP average. For them, the education system is working.

There’s a very real and very alarming gap in Alaska’s education system, but this gap didn’t warrant a mention during the presentation. These are gaps that the Legislature has attempted to bridge with funding programs like Pre-K, Parents as Teachers and others, all which the governor has proposed cutting.

Dunleavy’s proposal? Get the state’s financial house in order then address education reform. At the meeting he said he’d be rolling out some kind of education reform package in the next few weeks, but he said his focuses will be:

  • Focusing on K-3 reading proficiency
  • Focusing on making sure 8th grade students are proficient at algebra
  • And a renewed focus on vocational training, including coding camps

On the campaign trail, Dunleavy suggested an optional return to boarding schools for rural students, a plan that we’ve yet to see materialize.

The horrors of an income tax

How about all these alternative forms of revenue that all the not-real Alaskans have been asking for, like an income tax or a sales tax? Dunleavy claims those not-real Alaskans can’t come up with the details of what such an income tax would look like, so he asked his Department of Revenue Commissioner Bruce Tangeman to crunch the numbers.

More than $2,200 on every man, woman, child and infant.

It appears that “calculation” is no more than taking the deficit of $1.6 billion and dividing it across Alaska’s PFD recipients. You’d think he’d know better.

It’s a shocking calculation, suggesting that the not-real Alaskans are proposing to take money away from hard-working infants or, as Dunleavy suggested, as much as $10,000 from a working couple. But like so much else at this meeting, this is a straw man argument.

No one is proposing such an income tax. An income tax also wouldn’t only hit Alaska residents, but non-resident workers, too.

Even the 6 percent flat tax suggested by budget commentator Brad Keithley of Alaskans for Sustainable Budgets to cover a status quo deficit doesn’t even come close to anything suggested by the administration’s straw man.

Here’s his numbers show how a 6 percent flat tax compares to a reduction in PFDs.

(Source: Alaskans for Sustainable Budgets/Facebook)

And because no one’s really suggesting a status quo budget at this point, he also broke down what it would look like with a budget that reduces some spending and pulls revenue by reducing the PFD to $1,600. Under this scenario, he argues a 3.6 percent flat tax would cover it.

(Source: Alaskans for Sustainable Budgets/Facebook)

Under both of these scenarios, the only people would feel more of a crunch from the flat tax than reduced PFDs would be the wealthy.

Colorado and Washington are perfect utopias

The meeting ended with a pitch for Dunleavy’s proposed constitutional amendments: Enshrine the PFD, set a strict spending cap and require all taxes passed by the Legislature or by public initiative to be approved by the other.

The last one is often compared to Colorado’s Taxpayer Bill of Rights, which requires any taxes be put to a vote of the people (and surprisingly very few of them pass).

It just so happened that Colorado-based regional director of Americans for Prosperity Jeff Crank was on hand, and it just so happened that a question from the audience gave him an opportunity to espouse the utopia of economic activity created by the state’s taxpayer bill of rights, just as he was asked the previous night in Kenai.

What he left out in his glowing assessment of it—with an applause line of “We just think it’s polite that we ask before taking money out of your pocket”—is the rampant fees legislators have used to get around taxes, or a recent report titled “In a booming state, public schools grapple with asbestos, leaks and four-day weeks” that examines how “across the increasingly affluent state, which boasts powerful job growth and one of the highest percentages of college graduates in the country, public K-12 systems are in deep trouble.”

The governor also pointed out Washington state, where taxes are similarly limited, as another example of state where a booming economy is driven by low taxes.

There, he failed to mention that Washington has a particularly high sales tax, making the state the 13th best state for the wealthy and the absolute worst state for the poor in a Wallethub study (which happened to rank Alaska at the very best state in terms of taxes already).

And perhaps it’s there that we understand why the Dunleavy administration is so game to partner with the anti-tax Americans for Prosperity, a group that’s funded by the wealthy Koch Brothers and spent nearly $900 million influencing the 2016 national elections. And why the administration has refused to consider moving the meetings elsewhere.

Americans for Prosperity organizers said they planned to campaign in support of the measures, which still need approval of the Legislature to reach the ballot.

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4 Comments on "Dunleavy’s budget is built on ideas and cherry-picked statistics that deepen the divide between rich and poor"

  1. DEBORAH L HOLLAND | March 28, 2019 at 9:33 am | Reply

    What a crock. Alaskans are not falling for this ridiculous “The sky is falling” mentality put out by the dems/libs. We do not buy you slanted and biased assessment of what Governor Dunleavy has planned. The wailing and gnashing of teeth by parasitic citizen groups is just background noise to real Alaskans.

  2. Deborah – Do you have statistic or anything besides your opinion (which, in my opinion, is quite uneducated) to back up what you’re saying. I doubt it!

  3. You seem to think that this is a new issue and that past leadership was more effective at fixing. Really check, Walker, et.al. ignored the problem. Now we have a governor who, as a Senator and Chair of finance came up with a working budget. The magnitude of support he received for that budget outside of government encouraged him to leave the caucus and run for governor. Those who want to keep the deficits want to spend the people’s money (PFD) and ignore the fact that they have the legislature’s PF ERA. This effectively taking $1 billion out of the economy.

  4. We have known for years that oil production is falling. We know that oil provinces are volatile. We could have been lots better at diversifying our economy for many years. Do you remember the time when legislators would come to their districts looking to fund things no one had asked for? Also remember that the legislature has been almost entirely Republican dominated for decades. We waited too long to diversify our economy. Cuts as are proposed would destroy our economy.

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