One of the biggest storylines from the rollout of Gov. Mike Dunleavy’s budget was his conspicuous exit, leaving the news conference with a half-hearted wave about 10 minutes in after answering just four questions from Alaska reporters.
“He had another obligation,” spokesman Jeff Turner said when asked what meeting could have been more important to the governor than communicating his budget to Alaskans.
Rumor got out the following day that the governor had departed Alaska and was on his way to a mystery location, which was later to be revealed to be a speaking engagement in front of conservative Heritage Foundation, a conservative think tank with close ties to the Trump administration, in Washington, D.C. this morning.
Five days later and nearly 3,000 miles between him and Alaska’s capital, Dunleavy found the time for an extended rollout of his budget to the D.C. audience, spending a solid 35 minutes on stage. He also took twice as many questions during his appearance, fielding questions from conservative media outlets, Heritage Foundation members and a woman who said she was from the Russian embassy.
Talk of the budget began with heaping blame on the Legislature and previous administrations and blaming Twitter for the state’s alleged care-free attitude toward debt, casting his first year in office as an unmitigated success to bring more transparency to the budget process.
“Exaggerated revenue estimates and clever budgeting gimmicks became commonplace, allowing appropriations to hide the true extent of crisis from the public. This policy of inaction and deception proved to be an unmitigated disaster,” he said, later adding that his administrations’ budget was focused on, “No more deception, no more disinformation, no more time to stall. And when some of our state’s big-spending politicians decided to ignore these warnings, I utilized my veto pen to cut spending by $650 million.”
What was left out was that amid furious pushback by legislators and the recall effort that much of the cuts delivered by veto were reversed and that even many of the cuts that did stick were ultimately reversed, like the recent reversal on adult dental benefits.
Legislators are bracing for a record-breaking supplemental budget to cover more than $100 million in cuts that Dunleavy said would be achievable but ultimately weren’t.
Dunleavy explained that his flat-funded budget has a $1.5 billion deficit, arguing that it’s due to the slumping price of oil and formula-driven spending on Medicaid and K-12, but left out that $2 billion in spending will go to a nearly $3,200 dividend.
He also left out that his proposal seeks to cover that deficit by drawing down savings.
Gone was his administration’s admission that new taxes could be on the table to help balance the budget. Instead, Dunleavy said that his upcoming budget presentations will be a discussion with Alaskans about changes to the PFD, cuts to formula-driven programs and a constitutional spending limit.
The focus on formula-driven programs like Medicaid and K-12 education were particularly interesting given that members of his administration said they don’t plan on introducing any legislation that would overhaul how those programs are run. However, Dunleavy told the Heritage Foundation audience that he does, in fact, plan to change those formulas.
“Over half of Alaska’s budget consists of formulas and obligations embedded in statute,” he said, later adding, “I’ll be doing my best to change laws that are crippling our budget. As I alluded to a few minutes ago, 55 percent of Alaska’s operating budget is now on autopilot spending. In other words: Statutes and laws are driving this spending and unless those laws are changed spending will continue.”
Dunleavy said the solution to the state’s problems rests in development of the state’s resources whether it be oil development, mining or logging. He also boasted about the state’s place as a strategic economic hub with its airport, ports and location.
“Alaska is America and so much more. It’s a place where you can open business complete with all the benefits and protections of a First-world system of governance, America, yet at the same time have the access to vast untapped natural resources that simply don’t exist outside the Third-world,” he said.
He talked at length about mining and logging, even slipping in a reference to resource development when asked about the unfunded obligations in the state’s public retirement system.
“We still have obligations and we still have debt. Alaska was allowed into the Union based upon its ability to develop its vast natural resources,” he said. “We need to continue to develop our resources. More and more, we’re being hamstrung by entities and groups outside of Alaska to try to turn the entire state into a park. In order to provide new wealth, we need to develop our resources. With that new wealth, we’ll be able to more effectively pay down these pension obligations.”
Dunleavy also spoke at some length about other economic opportunities for Alaska in the tech space, including data farming and bitcoin mining.
This caught a lot of attention on social media with some pointing out that server farms in Arctic regions have succeeded in part because of affordable renewable energies as well as established, well-funded universities that facilitated increased bandwidth and trained workforces.
During questions, Dunleavy was asked about the strength of his election, regulations on the timber industry, on the public pension system, about trade relations with Russia, about the Jones Act that requires goods shipped between U.S. ports to be done with U.S.-made and -owned ships (“There is a negative for Alaskans on costs”), cutting Medicaid and his ability to translate the national debt problem into layman’s terms.
Why it matters
It’s yet another example of the governor giving different messages depending on the audience. While he’s preached collaboration to Alaska audiences under the guise of a moderation, he’s continued to trot out a far more partisan message to national audiences.
What’s particularly interesting about his speech to the conservative Heritage Foundation audience is the omission of several key pieces of his budget proposal: The reliance on savings and his seeming openness to new revenues. Instead, Dunleavy chose to focus on cuts to Medicaid and K-12 funding formulas.
To Alaska audiences, Dunleavy and his administration have touted an open-ended, everything’s on the table approach to the budget. To the Heritage Foundation audience, it’s far more about resource development and continued cuts to spending.
The differing messages ought to leave Alaskans with uncertainty about what his ultimate goal is with the budget. If only he could spare the time to clear it up with Alaskans.