Friday in the Sun (May 14): The Down, But Not Out edition

Welcome to the latest edition of Friday in the Sun, the weekly column attempting to make sense of the week that was in Alaska politics. As always, treat this stuff like the idle speculation that it is and take it with a grain of salt. But most importantly, have yourself a nice weekend.

Also, hey, if you’re a subscriber to the The Midnight Sun Memo (and, if not, why?!? It’s so easy to sign up!) you may have noticed the increasing overlap between this column and the newsletter. Here’s a handy way to jump past the reheated newsletter to the new and/or fleshed out stuff for anyone who’s already done the reading: Too long; already read.

The view from Anchorage

Things aren’t looking great for Anchorage Assemblymember Forrest Dunbar in the mayoral run-off. He currently lags extreme-right candidate Dave “I may be a bit of a bigot and covid denier but I’m not Forrest Dunbar!” Bronson by more than 600 votes. While it’s certainly mathematically possible for Dunbar to make a comeback with the remaining votes, it’s not likely, and he conceded as much in a Facebook post Thursday: 

“For those who have been tracking the election results, you know that we are currently trailing my opponent. Given the size of the deficit and the number of votes we believe are outstanding, it appears unlikely that we will make up the difference.” 

At moments like this, I’m reminded about how a lot of us felt in the immediate aftermath of the 2016 election. After a long and exhausting battle, it feels a bit like the sky is falling because They won. Especially when the They, then, like now, have been so thoroughly debunked by our own individualized echo chambers that you find yourself asking how anyone could have possibly voted for them. You might rethink those neighbors who have a Bronson sign in their yard that you thought were nice people.

To that, I say take a deep breath. And look, I get it. I get the despair and disappointment I’ve seen about the results. I’m not going to tell you that everything is fine with Bronson in office, but I’m also not—at this moment—going to fixate on everything that there is to worry about. 

But regardless, the election of someone like Bronson is also not the end of the things. Elections reflect a moment in time, not who we are as a community forever. 

The election of one person has also never been reason to rest easy and trust that things will get better in our lives and in our community, nor should it be reason to give up on your community or your neighbors. As for dealing with things, after the 2016 election, I found myself questioning that baseline assumption I had that things will just somehow get better. It’s part of why I made the move from a traditional newspaper job to one where I can weave my opinion into my reporting because, for me, it felt like a way of making the change I wanted to see. 

So on that end, if you’re feeling blue about the election, then I’d suggest exploring ways that you can help others and how you can make your little part of the world a little better. We’ve all been through a miserable year, and there’s much to be thankful for regardless of who has the title of Anchorage Mayor. Things are turning green, the vaccine is making it safe to spend times with old friends and new, and porches and dogs are nicer than ever.

The special session

Gov. Mike Dunleavy announced on Thursday that he’ll be calling a pair of 30-day special sessions this year. The first starts immediately following the expiration of the regular session next week and is aimed at giving legislators time to finish up on the operating budget while pushing them to pass his PFD plan. The second, tapped for later in the summer, would be focused on “potential measures to increase state revenues” as well as his constitutional amendment requiring that any new taxes be approved by both the Legislature and voters (thereby making it near-impossible to actually enact any new revenues). 

On one hand: It makes complete sense given the difficulty the Legislature would have in reaching the 40 total votes needed to call themselves back into a special session. The Legislature floundered late in 2020 because Dunleavy-aligned Republicans (surprise) refused to sign onto a special session, thereby keeping much of the power over appropriations and appointments in the governor’s hands. A similar scenario was again looking likely, which would leave the state in the uncertain territory of not having a budget or a way to pass a budget. While leadership still hopes to have the budget hashed out by next Wednesday, the 121st day of session, they’ll have an additional 30 days to get things done. The governor-called special will also limit the agenda to what he wants, meaning there won’t be much for legislators to distract themselves with. 

On the other: Despite not having accomplished a heckuva lot in the 115 days they’ve been in session, legislators and staffers are exhausted and things have become particularly tense over the past few weeks. I could see them taking a week or two to pass the operating budget and then adjourn with Dunleavy’s dividend proposal unresolved. The proposal is a massive step in a direction that not everyone—certainly not 14 in the Senate and 27 in the House—is on board with. 

The big picture: The biggest problem I see with reaching a resolution on the dividend is the same problem we have when it comes to new revenue or new cuts: That there’s very little trust between the varying stakeholder groups that their worst case scenario won’t come to pass. The anti-tax conservatives from wealthier districts have largely favored cuts to the dividend because it’s better to them and their constituents than taxes or the economic uncertainty of deep spending cuts (we’ve been hearing some variation of “I will not support an income tax to pay for dividends” for a while from Anchorage Republicans). The progressives who’ve favored taxes such as an income tax to maintain some stable spending on state services while continuing to pay a dividend see that as a more equitable approach, which is why it’d be hard for most of them to support a ostensibly middle-ground option like a sales tax. 

Dunleavy’s plan is more in line with a third group—the PFD-over-everything conservatives—and would effectively push the dividend to the front of the line (from the back) in the state’s budget. Constitutionalizing the dividend at 50% of the draw from the Alaska Permanent Fund would considerably shrink the available resources to pay for government, leaving no options other than taxes that are by and large unacceptable to the anti-tax conservatives or cuts that are unacceptable to the pro-tax progressives to balance the budget. 

It seems that the breakdown between these three broad groups can really only be solved in an all-at-once plan that combines a little bit from everything. While the idea of protecting the Alaska Permanent Fund from overdraws and preserving the dividend may be broadly popular, legislators are likely to be reluctant if they cannot get a handle on what the next step might be.

On that front: The House Ways and Means Committee featured two alternative proposals at its Thursday hearing that serve as more balanced attempts at addressing the push and pull between spending, taxes and dividends.

There’s Rep. Kelly Merrick’s House Bill 202 that takes the anti-tax conservative approach, linking the dividend to resource royalties, paying out a roughly $500 PFD without the need for significant cuts or any new broad-based taxes. The main goal of this plan is to avoid the need for taxes with the knock-on effect of tying the payout to the health of the state’s resource development economy.

On the other end of the spectrum is Rep. Adam Wool’s House Bill 37, which would put 20% of the draw from the Alaska Permanent Fund to dividends (about $1,000) and implement a 2.5% income tax that would scrape much of the dividend back from wealthier Alaskans while leaving lower-income Alaskans less impacted. As his staffer, Ken Alper, pointed out during the presentation, such a plan is far more equitable across the board and the vast majority of Alaskans would pay less than when compared to a sales tax. 

That was fast

Hot off the heels of the CDC’s guidance that vaccinated folks can go maskless, Anchorage Acting Mayor Austin Quinn-Davidson announced today that the city’s masking mandate will expire at 8 a.m. on May 21, just in time to deprive Bronson the satisfaction of repealing it himself. 

But, wait! The Anchorage Assembly went and did it themselves. As I was writing this, the Anchorage Assembly voted to end the city’s mask mandate effective immediately. Of course, businesses can still require it and people are free to continue wearing masks as they please. 

Down in Juneau, the Legislative Council voted to end the masking requirement in the Alaska Legislature to much celebration by all—and a healthy dose of grievance from Sen. Lora Reinbold. We did appreciate the very over it Senate President Peter Micciche, who called a particularly pedantic part of the debate a “non-issue” before casting a “It’s fine” vote.

Thumb, meet working class

While different regions of Alaska have certainly been experiencing different levels of economic impacts, the influx of relief checks, the dividend and unemployment assistance has meant that household income and buying power remained surprisingly unfazed throughout the pandemic. Economists have by and large praised the effort in helping avoid the very worst of the pandemic’s hits to the economy, like mass evictions and bankruptcies. But, then again,some businesses are having a very hard time staffing up at near-minimum or minimum wages at the very same time a bunch of other businesses are staffing up with living wages.

So, it’s in that light that the Dunleavy administration announced today the early end of the federal boost to unemployment in a very “Get back to work, ya poors” move. Never mind that economists have largely pointed out that the labor shortage is more complicated than the unemployment benefits with some amount of lack of child care, concerns about safety and the fact that everyone’s trying to hire at the same time. 

“Anecdotes aren’t data,” wrote Nolan Klouda, the director of the Center for Economic Development at the UAA Business Enterprise Institut, on Twitter, “and we’ve all heard about someone’s cousin’s roommate who’s collecting a check and turning down work. I don’t completely disregard these widespread anecdotes, in fact. They are too widespread to ignore. But we also can’t quantify them. Assume the stories are true, and many unemployed folks are cheating the system. Are we talking about 20% of them, or 50%, or 1%? We don’t know have the answers about what’s going on right now, but one factor is that job openings have spiked. If employers (esp in hospitality) are all hiring for the same jobs all at once, it will amplify the sense of a worker shortage.”

It’s sparked growing pushback from labor-friendly legislators like Sen. Bill Wielechowski, who took to social media to point out the differing attitudes on boosted unemployment (paid for by the federal government) and tax credits (paid for by the state). 

“Alaska’s unemployment benefits are among the lowest in the nation. Yet while tens of thousands of Alaskans remain out of work, there is a sad irony to the Governor unilaterally ending the $300 weekly supplemental unemployment benefit—which is paid for by the federal government—just weeks after asking for an additional $114 million in state funds for oil tax credits, on top of the $1 billion in deductible state oil tax credits he continues to support, the $100+ million in state checks his administration continues to write for corporate income tax refunds, and the tens of millions in state tax breaks for a Texas oil company on the North Slope that currently pays zero corporate income taxes,” he wrote. “It’s long past time to stop putting the interests of Outside multinational corporations over the interests of struggling Alaskans.” 

(Also, hey, progressives, if you want to win an election again, this isn’t a bad place to start.)