Governor Mike Dunleavy's proposed budget prioritizes a large Permanent Fund dividend, despite acknowledging the state's inability to afford it without depleting its reserves. The plan lacks concrete solutions beyond hoping for increased oil revenues in the future, leaving a $1.5 billion deficit. Critics argue that Dunleavy's focus on the PFD ignores the state's pressing fiscal needs, particularly funding for local school districts.
Gov. Mike Dunleavy has a choice for his final two years on the job: He can continue talking about how state law requires him to include an outrageously large Permanent Fund dividend in his spending plan — even though it would dig a deep budget hole, which thankfully, most legislators will never step into — or he can help solve the problem.
The governor has proposed a budget for the state fiscal year starting July 1 that may be politically popular with his supporters but that he acknowledges the state cannot afford without drawing down its remaining reserves. Draining the account is as dangerous as stepping on thin ice.Dunleavy offers no specific solutions other than hoping for more oil wells in the years ahead, far too late to solve the problem for the next budget year or the one after that or the one after that.
Yes, five years ago, Dunleavy tossed out several proposed constitutional amendments that he packaged as a murky long-range fiscal plan to balance state finances. They wouldn’t have solved the problem, but at least it was an effort. No surprise, but the poorly crafted and flawed package went nowhere in the Legislature.Since then, nothing. No proposed legislation from the governor to revise the dividend calculation, no constitutional amendments, no realistic fiscal plan, nothing but talk.
The honest truth is that the state could pay a $1,200 dividend, provide a reasonable increase in funding to education and balance the budget — without drawing down savings. That assumes stable oil prices. The governor could take the lead in proposing and pushing for a responsible and affordable change in the dividend formula in law to help solve the spending problem for the long term.
Alaska Politics Budget Permanent Fund Dividend Fiscal Responsibility
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