Alaska is the largest state in the union, bigger than Texas, California and Montana combined. And it’s in trouble: The state has been grappling with a budget crisis triggered by a drop in oil prices four years ago, leading to a decrease in population, a recession, and Alaskan politicians dipping into the state’s savings. The governor, a right-wing ideologue who dismisses climate change, is further jeopardizing the state’s economy by attempting to deliver on his promise of giving every Alaskan a bigger annual check in the mail.
Michael Dunleavy won the governor’s seat in November by promising a restoration of the PFD—an annual check distributed to Alaskans from a fund based on oil revenues, which are vital to the state economy. (Some years, oil revenue has contributed to 90% of the total budget.) The fund, called the Alaska Permanent Fund, began in 1976 to provide residents with a share in the wealth of oil profits. The last governor, Bill Walker, dealt with the shortfall in oil revenues by capping PFDs in 2016, 2017 and 2018, resulting in about $3,700 less in every Alaskan’s pocket over those three years. During the campaign, Dunleavy repeatedly pledged to pay that back to Alaskans over the next three years, in addition to the annual PFD.
On Monday, he heavily marked up a budget passed by the state legislature to free up money for the PFD. But that comes at the expense of a number of social safety nets that serve some of the most isolated people in the country. The austerity-focused cuts, which Dunleavy first proposed in February, would also prompt immediate layoffs in Alaska, which employs many federal workers.
“Unlike during the oil-driven recession, all the people who will lose jobs (university employees, etc) are Alaska residents who own homes and spend money in the economy,” said Mouhcine Guettabi, a regional economist at the Institute of Social and Economic Research at the University of Alaska Anchorage.
“Given the national market in academia, we will see a significant number of those affected leave the state, which will have consequences for housing prices.”
Dunleavy’s about-face is part of a larger push by other populist Republicans currently in power, as well as the Trump administration, to axe government-funded health and education programs that support low-income and isolated Americans to cut down deficits, even if they could have long-term human and financial cost. In just the past six months, the White House has announced plans to significantly curb funding for affordable housing, Medicaid, and the Environmental Protection Agency.
And while none of this might be a total surprise but the fallout is shocking. Some of the items in Dunleavy’s cuts include $130 million from the University of Alaska system, $50 million from Medicaid (atop a $70 million cut already approved by the legislature and an additional $27 million in dental), and the elimination of a $30 million funding boost for K-12 schools. He has completely cut the Senior Benefits Program and the Alaska Council of the Arts. In several gubernatorial debates last year, Dunleavy said he would not cut public education spending or the court system. Yet both are included in the line items in his budget vetoes. He even slashed funds to the state ferry, which provides transportation to many of Alaska’s far-flung islands.
Medicaid, which 184,000 Alaskans rely on, was especially hit hard; adults on Medicaid will no longer receive full dental benefits, only emergency care. In a letter urging legislatures to override the veto, the Alaska Governor's Council on Disabilities & Special Education wrote that cuts to Medicaid would be “devastating” for Alaskans with disabilities.
And the University of Alaska Fairbanks—where Dunleavy received his master’s in education—was also targeted. Guettabi said the $130 million veto to the University of Alaska budget alone would cut 1,300 jobs and return the state to a recession. “Once we account for the other cuts and their direct and indirect effects, the state will lose about 1,000 jobs for every $100 million of cuts,” he said.
This has wider implications for climate research. The university is home to the Alaska Center for Climate Assessment and Policy, the primary academic research center for the Arctic in the U.S. And there could be a strong ideological influence here since Dunleavy’s opinions echo that the current administration: He dismissed the state’s Climate Action for Alaska Leadership Team, which developed solutions for a rapidly changing climate.
“The issue of global warming, in many respects, it’s still being debated as to how to deal with it, what exactly is causing it,” Dunleavy told the Anchorage Daily News. “I know there’s a lot of folks and scientists who believe that man is contributing to this. But the question is, what is Alaska’s role in this? What is Alaska doing?”
Ironically, some of Dunleavy’s supporters rely on the funding he hopes to slash. The Kenai Peninsula Borough, which is home to nearly 60,000 people, could lose about 18% of its annual revenue thanks to the governor’s bill proposal to repeal oil and gas property taxes. The Peninsula voted strongly in favor of Dunleavy, by almost 70%.
These cuts were part of Dunleavy’s February budget proposal, which was catastrophically unpopular: In community meetings, residents were against it nearly five to one. Even though Dunleavy’s fellow Republicans controlled both the state house and senate, Alaska lawmakers approved a budget that reinstated many of the funds and programs that the governor had wanted to cut, and it did not fund a full PFD.
Apparently undaunted, Dunleavy hit the road in March to push his “Statewide Discussion for a Permanent Fiscal Plan,” a campaign promoting his budget cuts, organized and paid for by Americans for Prosperity, a conservative political advocacy group funded by the Koch Brothers. Residents grew increasingly frustrated about the governor’s roadshow, claiming that reservations were required and participants must comply with AFP’s conditions to attend, including a ban on recordings. After making the cuts, Dunleavy posted a video to Twitter explaining them,, saying, “These vetoes should not come as a surprise to Alaskans as they have been part of our proposal since February.”
Alaskans are putting up a fight; hundreds have protested on the Capitol steps in Juneau, and Alaskan band Portugal. The Man is hosting a rally against the governor's vetoes Tuesday.
“The fundamental question is now squarely before Alaskans,” Bryce Edgmon, Speaker of the House, wrote in a statement. “What’s more important: a healthy economy, our schools, university, and seniors, or doubling the Permanent Fund Dividend at the expense of essential state services? The governor has made his choice clear.”