Gov: Communication key to second year success
Alaskans should expect to see much more of Gov. Michael J. Dunleavy in 2020.
Following a turbulent first year in office during which he proposed unprecedented cuts to the state budget, regularly sparred with fellow Republicans in the Legislature and watched an effort to recall him from office materialize, Dunleavy said he will be making more appearances across the state to talk with residents about what they want their state to be.
“I could’ve done a much better job at communicating. I’ll be the first to admit that,” Dunleavy said during a Dec. 2 interview with the Journal at his Atwood Building office in Anchorage.
“Since I can’t go back in time I will be reaching out and we’ll be going to all the communities, communities that have been affected and meeting with any and every group there is and I fully expect some people not to be happy with what happened with the budget. But what I want to hear from these folks once they get done venting is what they want Alaska to look like. What are we willing to do to get to that point for Alaska to look like that?”
The governor and key members of his administration did conduct what they dubbed a “budget roadshow” last spring that consisted of five public events across the state to make the pitch for his budget proposal, which looked to close a $1.6 billion deficit through major spending cuts and diverting what has traditionally been local tax revenue to the state while paying Permanent Fund dividends according to the formula that is still in law.
However, those events were disrupted by protesters at times and dismissed by other skeptics because they were coordinated with and sponsored by the national conservative advocacy group Americans for Prosperity.
The upcoming legislative session, which starts Jan. 21, will undoubtedly be another contentious one but Dunleavy hopes it can be more constructive — and shorter.
Alaska’s regular 90-day session is scheduled to end in late April each year. Lawmakers have gradually extended their work time since 2015 as structural budget deficits that have at times put the state more than 50 percent in the red and correspondingly shrinking reserves have made reaching a yearly spending compromise increasingly difficult.
In 2019 the situation hit a new level with special sessions spent debating Dunleavy’s budget plan and subsequent $410 million worth of vetoes that bled into early August, more than a month after the start of the 2020 state fiscal year.
Dunleavy acknowledged the situation left many state programs and private enterprises such as social service providers in limbo. This year, he and members of his administration have been meeting with individual legislators regularly while crafting his latest budget proposal that must be released by Dec. 15 according to state law.
He said his administration also has “an idea of what Alaskans are willing to tolerate and what they aren’t,” which should help get the 2020 session off to a more productive start.
Last year also started with a nearly month-long leadership vacuum in the state House until a small bloc of Republicans joined with Democrats to form a bipartisan majority coalition primarily aimed at opposing fundamental elements of the governor’s budget plan.
Everyone has also had the luxury of hindsight this year to examine the ramifications of some of his budget cuts — the biggest to Medicaid, the University of Alaska and the state ferry system — and lawmakers can start working from there, according to Dunleavy.
He said last year’s budget process “was painful for a lot of people” and stressed that he took no enjoyment from the emotional toll it took on many Alaskans. At the same time, he also said it ended up proving the Alaska economy is more resilient than some of his naysayers insisted.
“I think one of the successes — and many people may say, ‘come on’ — is making the reductions and having the discussion of what Alaska would look like if we truly reduced $1.6 billion, what would Alaska look like if we reduce $600 million,” Dunleavy said.
The Legislature cut General Fund spending by about $200 million, which combined with Dunleavy’s final round of vetoes to reduce the overall state budget by roughly $600 million compared with a year prior.
He highlighted that employment and personal income in Alaska are on the upswing this year, counter to the predictions of some economists who said implementing his full suite of budget cuts would send the state back into a prolonged recession.
The elephant in the room
The elephant in the room during every budget debate last session was the PFD — the state had a revenue surplus without it — and the insistence of Dunleavy and a minority group of legislators in the Senate and House on paying it according to the statutory formula.
He wants it to be one of the first topics the Legislature addresses in 2020 because a proposed special session this fall to settle the matter was derailed by the sudden death of former Anchorage Sen. Chris Birch in August and the lengthy process of legislative appointments that followed including Senate Republicans rejecting Dunleavy’s first nominee, Rep. Laddie Shaw.
Dunleavy’s first budget appeared to put the PFD above all other spending, as it was the one area of spending that was not cut and instead, by following the formula, was nearly doubled under his plan from the previous year.
He emphasized that it was arbitrarily reduced over several years, first by former Gov. Bill Walker by veto in 2016 and then the Legislature in 2017 and 2018, and his aim was to see what programs Alaskans truly value.
“I don’t say the PFD is the most important thing. I think it’s important. It’s been a program, if you want to look at it as a program — some of us choose to look at it as a transfer although the courts have changed that dynamic with their (2017) ruling on appropriations — but it’s been around for almost 40 years and it touches more Alaskans than almost any other program we have,” Dunleavy said.
“You will have Alaskans that get a PFD that don’t necessarily take the ferry. You’ll have Alaskans that get a PFD that don’t necessarily go to the university. You’ll have Alaskans that get a PFD that may not partake in other state programs, so this is a program that touches about 660,000 Alaskans. The last time there was a major discussion on this in 1999 there was an advisory vote and from the vast majority of Alaskans the message was they prefer to leave the program as it was.”
He continued to stress that he wants another advisory vote to precede any changes to the PFD formula, but also said that it needs to be resolved one way or another.
“I don’t want to give anyone the impression that it’s the dividend or that’s it and nothing else matters, the state can fall apart,” he added.
“My preference is to keep as much money in the hands of people as possible but I know that we have a legislative process. I know that we have to solve this issue or nothing else gets done in the State of Alaska. I’m hoping that we can come up with an agreement, whatever that is, that we can all live with. It may not be something that we’re all excited about but that we can all live with.”
Lowering the state’s current but ineffectively high constitutional state spending cap has been another priority of the Dunleavy administration and is likely to receive more attention this year, legislative leaders have said.
Resolving all of the budget-related issues is likely to get just a little more difficult, as well. Dunleavy said there will likely be a slight downward revision in the state’s revenue forecast based on oil prices that at $63.69 per barrel are currently averaging 3.5 percent below the $66 per barrel price the Revenue Department forecasted for the 2020 fiscal year last spring.
An education year
One of Alaska’s major policy issues that was sidelined last year because of the prolonged budget drama, according to Dunleavy, was education reform.
A teacher and school administrator by trade, he said the administration wants to make 2020 “an education year” and will be introducing several bills to make that happen. His focus is on getting young Alaskans reading at proficient standards by third grade and proficient in algebra by eighth grade.
To do that, the administration will submit legislation to establish a pilot program to integrate a pre-kindergarten reading program into K-12 curricula, Dunleavy said. The Department of Education will pay for the new program, which will include reading coaches, advanced training for teachers and parental support, through a $20.7 million, five-year federal grant the department received in early October, according to a statement from the department.
The state will start by inviting five or six underperforming schools to participate in the program and hopefully grow it from there, Dunleavy said. After the grant funding is depleted it will be up to the Legislature to decide if the program should continue with state funding.
“I think Alaskans will be more apt to want to pay for that because they’ll see the results and the outcomes,” he said, adding similar programs have been successful in Florida and Mississippi.
Alaska has long had poor education outcomes. Standardized test results from the 2018-19 school year indicate more than 63 percent of Alaska third-graders were not proficient in English and language arts skills and nearly three-quarters of eighth-graders were not proficient in math.
Dunleavy has repeatedly called algebra a “gatekeeper course” that provides students with the math skills necessary for more advanced study in science, engineering and technology fields. He said the Education Department will be making regulatory changes and possibly introduce bills to require that students are proficient in algebra before they leave eighth grade.
“If we can get our students reading at grade level by third grade, and kids are proficient in algebra by eighth grade, we just laid the fundamentals for them to be able to do almost anything,” he said.
According to Dunleavy, based on initial conversations, the reading concept has support from stakeholders while there has been concern about how small rural schools can focus on algebra when there are often just a handful of students in a given grade. He said he wants to utilize more distance learning classes to remedy those situations and also partner with Alaska Tribes through a formal education compact with the state.
He said Tribes can provide a valuable cultural component to education that historically was ignored when Alaska Natives and other indigenous youth were forcibly relocated to boarding schools.
“We are probably seeing the results of that inter-generationally, in terms of some trauma that occurred to some folks,” Dunleavy said. “Having the Tribes now oversee in the cases that they wish to oversee education — they’re a part of it. They’re not doing it to their young people, they’re doing it with their young people and supporting their children so I think it’s a different approach for education to be viewed differently in many parts of Alaska.”
Editor's note: This story has been amended to provide an updated timeframe for when Gov. Dunleavy's 2021 fiscal year budget proposal will be released. The governor originally indicated it would be Dec. 13; however, a spokesman for the governor's office later said it would the budget would not be released Dec. 13, but it would be before the Dec. 15 deadline.
Elwood Brehmer can be reached at [email protected].