Welcome to the latest belated edition of Friday in the Sun, our weekly column that’s doing its best right now. As always, speculating and prognosticating on Alaska politics is best treated as a recreational activity akin dunking on now-former Anchorage Health Director Dave Morgan on #ANCGov Twitter.
You can get ahold of me with tips, tricks, unsolicited copy editing and general grousing at [email protected]. I might not respond to everything, but just know that you’ll be living rent-free in my head all day regardless of what you write.
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.
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Anchorage Mayor Dave Bronson’s pick to run the city’s health department, David Morgan, has resigned. Morgan faced increasingly tough opposition as skeletons in his closet—ranging from largely run-of-the-mill far-right Facebook posts that suggested that covid-19 was a hoax to undermine Trump to far-more-consequential accusations that he had not only mismanaged a non-profit but harassed some employees along the way—that made his confirmation with the Anchorage Assembly next week look like an incredibly long shot. And that’s not to mention that he tapped far-right agitator Dr. Michael Savitt, a guy with apparently an even weaker understanding of pandemic metrics than we thought, to replace the two widely respected public health folks that the Bronson administration has forced out.
In his resignation letter, Morgan cites a “political witch hunt” (questioning about legitimate concerns about his behavior in recent years) as his reason for ditching out before he was likely to be voted down. That’s all pretty rich following everything that the Anchorage Assembly, former mayors and city workers have had to endure during the last year, which included Bronson’s current chief of staff suggesting that Assemblymember Forrest Dunbar be removed from the National Guard. Also, for all excellent dunking out there, this one takes the cake:
AFN v. the State of Alaska (Dunleavy)
The lawsuit challenging the Dunleavy administration’s sweeping reinterpretation of the Constitutional Budget Reserve’s sweep rules to include the Power Cost Equalization program had its day in court this morning. The lawsuit was brought by the Alaska Federation of Natives and a dozen other groups that included local governments, utilities and other tribal groups that challenged the latest sweep by the governor that saw the program’s endowment and thus its operating funds canceled following the failure of the reverse sweep.
As per usual, it’s always hard to try to divine what way a judge might be leaning based on oral arguments alone but it seemed like former Attorney General Jahna Lindemuth, who was arguing on behalf of AFN and the other plaintiffs, seemed to have the stronger case. Her case largely revolved around the argument that the framers intended for the Legislature to be able to set up accounts separate from the general fund and likened the Power Cost Equalization endowment fund to any other investment in a tangible object.
“It’s the same if they invested it into a hydro dam for urban Alaska,” she said, calling it a “terminal appropriation.”
The metrics for whether or not something is subject to the sweep is, according to existing laws and precedent, whether or not the money is in the general fund AND available for appropriation. In the 2019 memo from former Attorney General Kevin Clarkson, he wrote that Power Cost Equalization money is like the general fund and therefore should be treated as such. While his memo featured heavily in Lindemuth’s arguments, which she said showed how hollow the state’s case was, it was rarely if ever mentioned in the state’s case.
Instead, the state’s attorney Katherine Demarest (who, side note, worked with Lindemuth on the Fairbanks Four innocence case) largely focused in on the Alaska Constitution’s prohibition on dedicated funds (which Lindemuth said didn’t apply because the fund could still be altered at any point by the Legislature) and the expectation that funds be repaid to the Constitutional Budget Reserve.
She said all the Legislature would have to do to keep money out of the sweep would be to pass a law or budget that transfers the funds into a separate account, akin to “a little sticky note that says it’s a separate fund.” She also argued that the status of the Power Cost Equalization program could simply be fixed by the Legislature achieving the three-quarter vote needed to access the Constitutional Budget Reserve or they could “It could reevaluate its policy priorities and pay for it out of ordinary funding options.” (Which would be the far-right talking point on the program, that it should compete with all other programs every year.)
Superior Court Judge Josie Garton said she’d have a ruling out “quickly,” which seems to mean sometime next week. The case is likely to be ultimately decided in the Alaska Supreme Court, but the state has said it does not plan to seek an injunction in the event the court rules that PCE should not be swept and the program should, in fact, be funded.
Why it matters: Hooooooo boy, this case matters more than just about any other case that the Dunleavy administration has brought (and for the most part lost) to the courts. With the special session soon approaching, one of the significant pieces of leverage that Dunleavy and his legislative allies hold over the rest of the Legislature is the fate of the Power Cost Equalization program. The program, which helps lower the costs of energy in communities where the large-scale infrastructure projects that much of the rest of urban Alaska has enjoyed aren’t feasible, is particularly dear to many legislators. Dunleavy and his allies hope to be able to turn that leverage into a litany of ever-more-expensive asks that range from constitutional amendments to anti-abortion language to massive overspends to pay out dividends.
If Judge Garton rules that the fund is not, in fact, subject to the sweep, then it takes away one of the biggest and most impactful pieces of leverage just as the Legislature is set to head in for the fall special session. The long-term impacts of the Legislature being able to squirrel away money into different accounts for specific purposes would also, potentially, become cleared, but with the state quickly running out of money, it’s not likely to have much significant impact in the near term.
If Garton rules that the state is right (and the Alaska Supreme Court upholds her ruling), then things also get pretty interesting. While a previous ruling says the Alaska Permanent Fund’s earnings reserve account is spared from the sweep, that account was only held up as an example. A more thorough ruling on the issue may potentially find otherwise, especially if Clarkson’s memo of “If it’s like the general fund then it is the general fund” holds up. That would be, well, interesting.
Speaking of interesting things and Gov. Mike Dunleavy, the administration was in front of the Legislature’s special committee working group on a plan for a fiscal future on Thursday with some actual, honest-to-God progress compared to the earlier this summer when they were telling legislators to, please, not look behind the curtain of his fiscal plan. The plan has been updated to remove the assumptions that the unattainable—big, durable cuts and new taxes—will somehow magically happen over the next five years and are a bit more frank about the $700 million to $800 million deficits that his proposal to pay out a dividend with 50% of the spendable earnings of the Alaska Permanent Fund. The whole plan still relies on a lot of rosy forecasts, but it now notably includes revenue options.
Of course, there’s the whole caveat that he’d support the following IF they’re supported by the Legislature (an ask so monumental, it’d be like saying I’d support giving my dogs whatever dinner they want as long as they pay for it themselves), but here’s the list:
- Reduce the per-barrel credit on oil from $8 to $5 (which still falls short of what many folks have been calling for and would not likely make all that much difference if prices fall below $60 a barrel)
- Require oil and gas companies that are set up as pass-through entities (S-Corps) to pay corporate income taxes (this would primarily affect Hilcorp)
- Implement a broad-based
incomesales tax (which is what Sen. Mike Shower has proposed right down to it being modeled on the Wyoming or South Dakota, which is essentially a small sales tax with some to nearly no exemptions)
- Legalized gambling! (Still at it)
- Update the corporate income tax so it includes digital businesses (which seemed to mostly be about taxing Netflix)
- Monetize Alaska’s carbon offsets (basically, if cap-and-trade is gonna become a widespread thing then maybe Alaska could perhaps sell some of its land as carbon sinks)
- Increase the motor fuel tax (which is not new)
- Use federal funds for revenue replacement (which is not new)
- Overspend the earnings reserve account (which is like calling overdrawing your savings account as a new job)
The presentation got cut off early so we didn’t get all the way through the list, but we did hear quite a bit of enthusiasm around the whole carbon offset idea and legalized gambling from Revenue Commissioner Lucinda Mahoney so take that for what it’s worth.
Why it matters: Sure, the governor is finally kinda, sorta putting some support out there new revenue measures but with some very significant caveats involved. Specifically, he’s really only supporting what the Legislature can get passed, which is a significant task on its own and that’s not to mention the potential for a referendum or something else to monkey up the works. The more and more the fiscal working group progresses, the more and more it seems to me that there’s a need to tie the solution together into an all-or-nothing package akin to what the Senate did when it tied its larger PFD (contained in the operating budget it passed before all the shenanigans around the conference committee budget) directly to an account that would have to be filled with a corresponding vote on the overdraw. A piecemeal approach as the governor still seems to be pushing opens far too many doors for the popular pieces to stay in place (big PFDs) while leaving the unpopular decisions (paying for the gap created by those big PFDs) to another time.
Arguing with the refs
Of course, the biggest hitch in the governor’s “I suddenly could consider possibly, maybe thinking about supporting revenues if the Legislature passes them” is the “if the Legislature passes them part.” The Legislature Joint Fiscal Plan Work Group has—against my expectations—been making some progress and it seems like the odd tidbit about the budget is actually getting through to folks who’ve been living in Dunleavy’s fiscal fantasy land. While there’s still a lot of dispute about how to fill the budget gaps created by paying out pretty much anything but the most basic of dividends, it seems like there’s at least some general agreement that they need to fill those budget gaps… which is, remarkably, an improvement (the bar is low).
The big issue that I see coming together, though, is some folks’ (the conservatives) insistence on relying on anecdotal data in making their decisions. The research and studies would show that income taxes—the more progressive approach to balancing the budget—are not on their own going to make people pack up and leave en masse, but since someone told Sen. Shelly Hughes, R-Palmer, that they’d move away because of one then it seems like it’s already off the table. As long as that kind of reasoning is going to be driving Alaska’s handling of the fiscal crisis, I would be skeptical that whatever resolution this group can cobble together (which comes with a big if) will be particularly fair and equitable.
This week’s presentation from ISER Director Ralph Townsend was particularly illuminating about the state’s financial situation and the potential impacts of the different approaches. Basically put, there’s really no single magic number, magic revenue format or magic cut that will make everything work. The key question is—and always has been—who pays?
I think it’s that question that is going to make it particularly difficult to get something like a sales tax, especially if they go the next-to-no-deductions route that seems to be getting the most attention from the conservatives. As long as the solution effectively takes a larger proportional chunk out of lower-income families (though, a lot of it is kinda negated by the PFD), it’ll have some staunch opponents. Still, however, there’s going to be quite a lot of appeal for any solution.
That’s the date the U.S. Census Bureau will be releasing the information from the 2020 census following months of delays. The data will allow states to finally get underway with
gerrymandering redistricting election districts in all sorts of “fun” and anxiety-inducing ways (also known as gerrymandering). The plan that debuted in 2012 (and was rewritten as ordered by the courts for the 2014 election) saw plenty of hijinks with pairings of incumbents, attempted pairings of incumbents and some plain weird stuff that was, really, all aimed as dismantling the Senate’s bipartisan coalition (and it worked).
So, anyways, that’s all to say expect this to become another big ol’ wrinkle on the 2022 election in terms of legislative races along with open primaries, ranked choice voting and unlimited contributions to candidates. All to say, who really knows what’ll happen when everything pans out.
So this is the…
Last week, in a bit of fantasy booking for the 2022 election, I reported rumors that Gov. Mike Dunleavy may be thinking of hanging up good ol’ inoffensive Lt. Gov. Kevin Meyer for someone with a little more true believer in their eyes for his 2022 running mate (which would be Anchorage Republican Sen. Mia Costello by most accounts). While I also threw out the completely unsupported possibility that Meyer might throw in the race as a moderate Republican alternative (a space that would kinda be occupied by a potential Bill Walker entrance because, let’s be real, he was a moderate, pro-business-y Republican in most ways), it sounds like it may not be meant to be.
Meyer was apparently spotted on his flight from Fairbanks to Anchorage “intensely reading a printed out guide to retirement financial planning as you near retirement.”
A far-right challenger?
Well, we might not get that milquetoast melee between Meyer and Dunleavy BUT if you’ve been skimming through the comment sections of far-right “news” websites’ write-ups on Dunleavy this week suggesting folks maybe think about getting a vaccine if they want (a great way to both cheer you Dunleavy opponents up while simultaneously cementing the fact that we are doomed) then you’ll find quite a bit of dissatisfaction with the governor, a surprising amount of recall support and, oh, is that Sen. Lora “We must stand up against tyranny and also this plastic face shield really chafes my chin” Reinbold’s music!?!?
As I’ve written before, there’s certainly some juice to the rumor that Reinbold may throw in for the governor’s race. Whether there’s much substance to it or folks are trying to manifest it into reality is hard to say, but it would certainly make the whole race for governor particularly interesting under ranked choice voting. It’s probably not the most strategic move if you keep the governor’s office in at-least-as-conservative-as-Dunleavy hands, but there’s certainly the support out there for some kind of conservative challenger.
Isn’t Democracy neat?
Is apparently the license plate of Anchorage Mayor Dave Bronon’s anesthesiologist-turned-homelessness-coordinator Dr. John Morris, according to one particularly nerdy politico. If you, like me look at that, squint and go “Huh, HERO ARK?” then you’ve apparently not gone through your “I’m a shitty 20-year-old male going through my libertarian phase because Ron Paul seems cool and, hey, have you heard about Ayn Rand?” phase.
HROARK is, of course (of course!), a reference to Howard Roark, the protagonist of “The Fountainhead.” And if we’re going down college literary course route anyways Wikipedia describes Roark “is an intransigent young architect, who battles against conventional standards and refuses to compromise with an architectural establishment unwilling to accept innovation. Roark embodies what Rand believed to be the ideal man, and his struggle reflects Rand’s belief that individualism is superior to collectivism.”
Barf. Also, explains a lot. Explains a heckuva lot.
Alright, I gotta get packed up and on the road for what might hopefully be another week of productive fishing, but before I leave I wanted to give a shoutout to former Fairbanks Rep. David Guttenberg, who announced this week that he’s running for the Fairbanks North Star Borough Assembly. As a reporter who got into the game covering Fairbanks and the assembly there, I’ve got a soft spot for Guttenberg and the assembly. Best of luck.
And have an excellent weekend, y’all.