'Right now it's going to be difficult for all Alaskans'—Gov. Dunleavy defends his massive budget cuts

 Gov. Mike Dunleavy sits down with Channel 2 to defend his massive budget cuts (KTUU)
Gov. Mike Dunleavy sits down with Channel 2 to defend his massive budget cuts (KTUU) (KTUU)
Published: Feb. 26, 2019 at 3:52 PM AKST
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Channel 2 interviewed Gov. Mike Dunleavy about his proposed budget Tuesday afternoon, which would cut $1.6 billion in state spending.

For 15 minutes, he defended his proposed cuts and said Alaskans need to decide what are needs and what are wants.

"Right now it's going to be difficult for all Alaskans," Dunleavy said. "It's going to be difficult, it doesn't mater where you live in Alaska, doesn't matter what group you're associated with, this...deficit of such magnitude, it's going to impact all of us."

Economists analyzing the governor's budget have said that


"If the size of the cut is indeed $1.6 billion dollars you would lose about 17,000 jobs from that," said Dr. Mouhcine Guettabi, an economics professor at the Institute of Social and Economic Research.

Anchorage School Board President Starr Marsett says the governor's proposed budget would also mean about 1,200 teacher jobs might be cut from the Anchorage School District.

"I almost wanted to cry," Marsett said about seeing the proposed budget for the first time, "because it's just devastating. It's just devastating that someone could have that level of disrespect for education."

Dunleavy said student enrollment has gone down and school districts will have to look internally about spending, specifically mentioning travel and administration expenses.

He also said his budget shouldn't be a surprise to anyone.

"I think what people are surprised about is that we actually did what we said we were going to do," Dunleavy said.

Dunleavy said there's no proof that by increasing spending, or not making massive cuts, the economy will improve.

"Where's the proof that more spending will result in more jobs? The evidence shows the contrary. We've lost population in the state of Alaska. We've lost jobs," Dunleavy said.

Spending on capital projects and the statewide operating budget peaked in FY2013, and

until flattening out near current levels in FY2017.

He admits that more jobs will be lost, but says that private industry will invest in the state if it's fiscal situation is stable.

"Do I think that a $1.6 billion deficit will result in job losses? Sure. Definitely. Absolutely," Dunleavy said. "However, if we don't fix this this year we're going to have the same conversation next year, maybe the year after, but after that, when we're out of savings, we're going to have to close this gap through a massive re-organization in terms of reductions."

While proposing cuts Dunleavy has also released a proposal that would pay out money cut from the previous three Permanent Fund Dividend checks over a period of three years.

If adopted, Senate Bill 24 and Senate Bill 23, filed by the Senate Rules Committee at the request of the governor, would see payments added to the annual dividend checks of each eligible Alaskan of $1,061 in 2019, $1,289 in 2020 and $1,328 in 2021.

In a previous interview, Dept. of Revenue Commissioner Bruce Tangenan has said the 2019 PFD would be seen separately from the $1.6 billion deficit projected for the state.

He said there was $60.4 billion in the Permanent Fund and $16.6 billion in the Earnings Reserve Account available to be used for dividend payouts.

Guettabi says research, which hasn't been released yet, will show that the PFD only stimulates the economy for three months. He also says there is no study that shows what Alaskans spend their PFD checks on, or if that spending happens mostly in the state.

"Basically, the stimulus from the PFD lasts around three months," Guettabi said, "which means the types of jobs that get created are jobs that last October, November and December."

Impassioned debates about the budget and the PFD payouts are happening across the state from the halls of Juneau to Utqiagvik.

"I think the role out has gone as expected," Dunleavy said. "Did we expect some pretty vigorous discussions? Absolutely, because this is a different way of doing things."

Sean Maguire contributed to this report.