Too little, too late. State of the State recap

Gov. Mike Dunleavy waves to legislators after delivering his second State of the State address on Monday, Jan. 27, 2020. (Photo by Governor's Office/Flickr)

Gov. Mike Dunleavy delivered his second state of the state address to a less-than-enthused Alaska Legislature on Monday night, speaking fondly about resource development and constitutional amendments with a sprinkling of calls for bipartisanship and effusive praise for President Trump.

The speech clocked in at about 31 minutes. Thanks to coverage by KTOO’s Gavel Alaska, you can watch the whole thing here:

But here’s the key takeaways.

What’s already introduced is new again

There were two key policy initiatives proposed by the governor on Monday night: A new state lottery and a plan to allow people to use their PFDs to buy state land at half price. And if they sound familiar, there’s a reason.

Dunleavy has given the Legislature mixed messages when it comes to new revenue. At the budget roll-out, his administration (because Dunleavy left by the time that these questions came up) indicated that all options for new revenue would be on the table. But the governor later put a lid on that when his office said he was, in fact, opposed to new taxes “without a vote of the people” and wouldn’t be proposing anything of his own.

He reiterated that message on Monday night, calling for legislators to trust the public. Still, he has apparently had a change of heart and will, in fact, be introducing his own form of new revenue:

“I’ll soon be introducing legislation to create a statewide lottery,” he said. “45 states have lotteries in place, and its past time for Alaskans and visitors to have the option to individually contribute to fixing Alaska’s fiscal issue.”

The idea isn’t particularly novel. It was one of the multitude of revenue options considered by former Gov. Bill Walker and it has traction with House Majority Leader Rep. Steve Thompson, R-Fairbanks. Thompson spoke positively about the measure at the House Majority’s news conference response to the address, noting that he had already been working on his own proposal.

Thompson warned, though, that the revenue options being considered by the administration and Legislature will fall far short of resolving the proposed budget’s $1.5 billion deficit.

“A lot of these revenue sources that we’re talking about aren’t going to save us. The doubling of the gasoline tax that’s in the other body is only going to bring in about $30 million. This lottery bill, after a year when it gets established, we’re talking about only $10 million,” he said. “So, those aren’t enough to solve our problems, but they are a start. … They aren’t going to save us.”

That the governor’s lottery proposal is borrowing from an established idea also holds true for his PFD-for-land proposal.

Rep. George Rauscher, R-Sutton, has proposed a land sale in House Bill 3 though his bill only proposes a discount for veterans. That bill is currently in the House Rules Committee.

The fact that both policy initiatives already have at least some traction in the Legislature is a good strategy by an administration that had little success with the Legislature during its first year. Both proposals will face scrutiny—especially the lottery, which can be seen as a particularly regressive form of revenue—but starting with some legislative buy-in is better than nothing.

Less-than-sustainable budgeting

Dunleavy gushed about developing Alaska’s resources, particularly mining and logging, but also gave a few shout-outs to the development of renewable and sustainable forms of energy like hydro. That got some appreciation from House Finance Committee Co-Chair Rep. Neal Foster, D-Nome, who was quick to point out that the ideals of sustainability did not extend to the governor’s budget.

“He spoke about having a sustainable, long-term plan. However, the budget he introduced has a $1.5 billion deficit. How do you cover something like that?” he said. “I know a lot of folks out there want to see cuts, but you can’t cover a $1.5 billion hole with spending cuts alone. You’ve got to eliminate 16 of our 18 agencies. Everything from the courts, public safety, corrections.”

While the governor spoke in broad platitudes about resolving Alaska’s fiscal future, Foster and his colleagues cut through to the underlying issues at their news conference.

Finance Committee Co-Chair Rep. Jennifer Johnston, R-Anchorage, also pointed out that without a PFD the state budget would actually run a surplus this year. She made it clear that the Legislature will prioritize protecting its savings accounts this year rather than drain them as the governor’s proposed budget would.

“I’d rather be part of a movement to build the fund to $100 billion than be robbing from the fund,” she said.

While the governor renewed his call to enshrine the PFD in the Alaska Constitution, House Majority legislators said something needs to be done to put the issue to rest. House Rules Committee Chair Rep. Chuck Kopp, R-Anchorage, laid out the problem clearly:

“Our target as a caucus is to pay the dividend we can afford and not go into savings,” he said. “We know as a caucus that to have a fair discussion about revenue, if we don’t solve the dividend problem it will always muddy the water on what exactly we’re looking at for a deficit. How much revenue do we need? If you leave the dividend question open, the deficit can be $100 million if you pay a $700-$800 dividend or it can be $1.5 billion if you pay a $3,000 dividend plus back payments.”

A call for unity

Dunleavy closed his speech with a call for everyone to work together for the best of Alaska that was honestly pretty inspiring… at least when judged in a vacuum:

“North to the Future is not just a motto, it’s who we are and how we live. We are proud to be Alaskans, a people and a state like no other. This is Alaska. We are Alaska. We are the envy of the world for our beauty, natural resources and strategic location. We are America and so much more. We’re given this one moment in time to do what’s best for our great state, let’s take advantage of it.”

In a year that has been marked by division driven by the governor’s budget and policies and with little significant vision for the road ahead, it simply felt like too little, too late.

Despite some admissions that his first year in office cause pain, there was little sign of significant changes in Monday night’s address and even less that would quell the recall effort.

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