Gov. Dunleavy defends full PFD, vetoes & calls on legislature to compromise

Gov. Mike Dunleavy defended his budget vetoes and his insistence on a full statutory PFD in an interview with Channel 2 that took place on Thursday afternoon.

“I’m not giving up on the dividend -- the people of Alaska don’t want me to give up on a dividend,” he said. Dunleavy insisted that the $3,000 figure was a matter of legality, not political posturing.

“I know people are saying, ‘oh, he wants $3,000.’ I want to follow the law -- if the law said $1000, if the law said $800, we would follow the law,” said Dunleavy.

But when pressed about the possibility of compromising on the PFD amount, Dunleavy left little room for negotiation.

“It’s difficult for me to negotiate on the law and the constitution,” he said, adding that if the Legislature wants to change the statutory formula, it is within its power to do so.

So far that hasn’t happened, but an idea floating around the Capitol Building would see a $1,600 dividend paid by the Legislature now, followed by another session at which a further $1,400 payment would be debated along with the statutory formula. The governor said he would have to see the bill before he would decide whether or not to sign it.

But could a compromise with the Legislature include a reduced dividend figure?

“It could be, but I would hope that they would all agree that we should support the law and the constitution,” he said.

The formula for payments of Permanent Fund dividends is determined by state statutes, the governor has said if the statute is to change it should be with a vote of the people.

As for a bill passed by the House that restores 75% of the governor's vetoes, Dunleavy said he would have to wait for the final bill before deciding to support it.

Dunleavy said staff at the Office of Management and Budget was looking at the bill but the focus remained on reducing the budget.

The governor also defended the large cuts to the social services, as well as to the University of Alaska. Dunleavy vetoed about 40 percent of state funding to the university, or about 17 percent of the total funding. He acknowledged that it is a difficult cut to deal with, but said there is a path forward.

“We've been in constant conversation with the university in these past few weeks on coming up with a plan that would be a step-down plan. We've been working with university officials, their CFO and others, with our OMB folks,” he said. “We're trying to come up with ways to lessen the impact and spread it out over time.”

He said his office would be presenting ways spread out the impacts over time to the university president and Board of Regents on Tuesday. Dunleavy also emphasized his goal of reducing administrative overhead at the university while offering a better product.

“If we do things the right way, we might be able to get better outcomes in systems such as the university,” he said.

When asked whether creating a “better outcomes” with fewer resources was realistic, Dunleavy said, “that depends on how the university approaches the reduction in funding.”

“We’ve offered our help. We’ve extended our hand to the university -- let’s sit down, let’s come to the table, let’s work on a plan that would be a multi-year plan,” he said.

The governor pointed to economic investment as a way out of the fiscal shortfall.

“We're anticipating $5 to 6 billion in new investment in the state from the oil patch, another billion -- this year -- another billion if we can get the capital budget dealt with for this federal match for highways and safe water,” he said.

He added that if oil prices had held at $85 per barrel, the reductions could have been much more minimal, though it is unclear which parts of the vetoed funding were out of necessity, and which were out of a desire to improve efficiency and determine the proper role of state funding for services.

In a follow-up, Matt Shuckerow, the governor's press secretary, explained in the future as revenues increase, conversations about what social services are provided for can be had between the governor and the legislature as revenues become available, instead of relying on state savings to pay for services that are unsustainable.

With more oil flowing through the pipeline, Shuckerow said, some services can be gradually restored in a way that would be sustainable in the long-term.

The governor did acknowledge that many people are facing difficult loss of services, but said that that is something that the whole state will have to deal with.

“Do I feel for the people who are impacted by these budget reductions? Absolutely,” he said, adding that he and his two daughters attended the University of Alaska.

But he laid the majority of the blame on lawmakers in Juneau. “The Legislature itself has to compromise with itself, and that seems to be the part that’s not being discussed,” he said.

Dunleavy said he hopes that the special session will resolve soon, so that his administration and the Legislature can have more prolonged talks to discuss which items are on the table for cuts and avoid the last-minute vetoes of this year.

“We’ll look at a whole bunch of items to see how we can reduce this budget,” he said, adding that the state has about around $2 billion left in the Constitutional Budget Reserve.

“Unless we curb our spending and reduce the size of government, we’re gonna have some serious issues,” he said, “We’re gonna leave an Alaska to our children that won’t be as robust and as healthy as we received it.”