With Dunleavy standing in the way, what can the Legislature expect to get done on the budget?

Gov. Mike Dunleavy. (Photo by Matt Buxton/TMS)

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As a friend of the newsletter/blog often reminds me: Former Ruby Republican Sen. John Sackett once said of the Legislature, “How you organize determines the outcome.” He was specifically talking about impeaching Gov. Bill Sheffield, but it’s a worthy point. Just what a Legislature will accomplish largely comes down to who controls the majority of votes on Day 1 of session. It still holds up nearly 40 years later, but perhaps in ways that I hadn’t considered. While I had been applying that thinking to the kind of policy decisions we’ll see by the end of session, it also applies to whether those decisions will be made at all. With the Legislature about as evenly divided as it’s ever been, reaching a resolution on the state’s budget and structural deficit was always going to be a tough ask, but with Gov. Mike Dunleavy wielding the strongest-in-the-nation veto power it’s near-impossible.

The size and scale of the numbers depend on who’s asking and when, but most agree that the resolution to ongoing budget deficit will require some amount of cuts, new revenues and resolution to the question of the dividend.

This year, it means the veto pen is almost certainly aimed at any and all revenue measures that the Legislature, which is already as evenly divided as possible, can manage to scrape together. Dunleavy demands the Legislature first put to the voters a slate of constitutional amendments (that’d also conveniently be on the ballot alongside him) that would box in the Legislature—requiring taxes be approved by both the voters and legislators, constitutionalizing the dividend and implementing a strict spending limit. While there’s more interest in digging into the Legislature’s financial situation and structural deficit than in recent years, there’s gotta be a point where legislators ask themselves: What’s the point?

On budget items, the Legislature needs a whopping three-quarter majority to override the governor’s veto (45 of the 60) and a two-thirds majority to override non-budget vetoes (40 of 60). Anything that emerges from the Legislature will fall far short of those hurdles.

So, what’s the point of expending the political capital in pushing an incredibly divisive measure like an income tax or sales tax that’s destined to be vetoed? It’s one thing to expend the political capital doing the right thing and another to expend that political capital teeing up your chief political opponent’s re-election strategy. I’ve been hearing more and more thinking along that line, a mixture of frustration and resignation that legislators’ hands are effectively tied on the solution and that the state is bumbling its way into yet another several years of deficit spending.

Gov. Dunleavy has effectively taken many options off the table and, as much as legislators are loathe to admit it, it’ll have an impact on how things move forward for the rest of session. Not what should be done, but what’s doable? Legislators will likely once again find themselves in the unenviable place of playing defense. Defending the state’s dwindling reserves, defending the Alaska Permanent Fund’s health and defending what state services are left after years of cuts (that mostly happened before Dunleavy took office). The influx of the American Rescue Plan’s relief dollars helps take the pressure off the near-term, potentially giving the state some cushion in the budget for several years, but it’s not a solution.

What legislators can do this year is continue to lay out a convincing case for something to be done. They can start doing the work to understand how new revenues can be generated equitably, fairly and with minimized economic impact. Even if Gov. Dunleavy wasn’t standing in the way of solutions to the state’s budget, we don’t really have a great understanding of how new revenue would impact Alaska. To that end, the House Ways and Means Committee is set to hold its first hearings this week—overviews with state revenue and spending, the 10-year fiscal plan, revenue projections and the Alaska Permanent Fund—as it gets to work on its job of focusing in on the state’s financial picture, but that’s a larger discussion and one that may not begin paying dividends for this year’s budget process.

As long as Dunleavy stands in the way to durable solutions, Alaska’s financial woes will continue.

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