Dunleavy has fingers crossed

Governor Mike Dunleavy says he wants a supersized Permanent Fund dividend this year but he seems to have his fingers crossed.

He is almost certainly counting on the fact that the Legislature will not go along with the idea. Dunleavy is proposing that the state send out checks of $1,304 to add to the 2019 payments of $1,600 authorized by the Legislature and paid out last fall.

That would bring last year’s dividends up to the level established under the traditional formula. In addition he says he wants to pay a full dividend this year of approximately $3,100.

Dunleavy campaigned on paying full dividends even though budgetary realities have kept the checks substantially lower in recent years. And he does have an obligation to those who voted for him based on the PFD promise. He has to make the argument.

But he is the guy who slashed the state budget last year to deal with the reality of sinking oil prices and declining oil royalties and tax revenues. It would be insane to be eliminating degrees and programs at the University of Alaska and shutting down the ferry system for the winter while sending out those dividend checks. And such generous checks would require an unacceptably deep dip into the critical Earnings Reserve Account of the Alaska Permanent Fund.

Idling the ferry system is enabling some much-needed maintenance on the ferries but it is virtually isolating many small communities throughout Southeastern Alaska. And the latest problem to come to light is that many of the community sewage systems depend on the ferries hauling away the sewage.

Unlike larger communities like Anchorage which treat their own waste, many smaller towns rely primarily on septic tanks. And those must be pumped out occasionally into tank trucks.

The trucks visit the towns via the ferries and then haul it away for treatment in Juneau, which has a substantial treatment system. When the trucks don’t come the poop piles up.

Governor Dunleavy has a rough-handed style that involves making drastic proposals like slashing budgets and then working with the affected people to come up with acceptable, though still painful, cuts to their final budgets.

The state is spending roughly $5.4 billion per year from state revenues and last year’s outlay included PFD checks totaling a little over $1 billion. A $3,000 dividend check would cost the treasury about $2.2 billion. Those $1,304 supplements to the 2019 dividends would add nearly another billion.

As I’ve mentioned before, I’m just an English major and my knowledge of high finance is about what you would figure. But there is just no way we could dip into the Earnings Reserve for that amount and still meet our other obligations without an unacceptable drop in the account’s balance. And that balance stands today at $18.1 billion.

I’m one of Governor Dunleavy’s admirers and think he is doing a good job overall. I am opposed to the petitions calling for his recall and hope my words here don’t increase the number of people signing.

But I think we all need to face reality and forget about getting $4,400 in pfd checks this year. It ain’t going to happen.