WASILLA, ALASKA — This small suburb, nestled in the Mat-Su Valley north of Anchorage, is best known as Sarah Palin’s hometown. By this time next year, however, it could be known as the launching pad for a much more consequential conservative hero: Alaska Gov. Mike Dunleavy (R).
The PFD, as it’s known, is a big deal here. It’s a government check that every Alaska resident receives, reaped from the state’s oil bonanza. According to the statutory formula, that check had grown to roughly $3,000 a year for every man, woman and child. Starting in 2015, however, the state had reduced that amount to help balance the budget. Dunleavy’s promise to restore the payments made many families hope that their annual bounty would flow unimpeded by politicians in the state capital of Juneau.
But Dunleavy’s attempt to make that happen almost cost him his job. His first budget was a small-government conservative’s dream, proposing a nearly 25 percent cut in state spending. The legislature, controlled by a coalition of Democrats, independents and a few Republicans, resisted the cuts, but Dunleavy persevered. He vetoed hundreds of millions of dollars in the state budget, sustained with the support of a conservative Republican minority.
Opponents of the cuts launched an instantly successful petition to recall Dunleavy from office. “All parts of the political spectrum came together from all over the state” to support the recall, says Claire Pywell, executive director of Recall Dunleavy. Polling showed Dunleavy’s job approval ratings were underwater and sinking. He tried to pull back on cuts in his second budget, but the recall looked likely to qualify for the ballot.
That is, until the novel coronavirus hit. Now, even Dunleavy’s opponents acknowledge that he acted quickly to protect Alaskans, following the advice of the state’s chief medical officer, Anne Zink. His poll ratings started to rise just as recall advocates struggled to obtain signatures due to the pandemic. As of today, the recall campaign is still in the field (there’s no time limit to collect signatures), and everyone is waiting to see how Dunleavy proceeds.
Dunleavy’s next budget will determine his fate, and will show national conservatives if dramatically cutting government spending is possible. “This is the year where the rubber meets the road,” says Suzanne Downing, a conservative who runs the political blog Must Read Alaska. The numbers are indeed dire. The state faces an estimated $270 million shortfall next year if the PFD is entirely eliminated and a $2.3 billion shortfall if it is fully funded. The budget won’t balance unless the price of oil rises to about $68 a barrel; Alaska’s oil currently trades at about $41 a barrel and hasn’t been close to $68 in more than a year.
Dunleavy’s critics nevertheless expect him to plow forward with budget cuts. They note that five moderate Republican incumbents, including state Senate President Cathy Giessel, lost their primaries this August to more conservative challengers. Jim Lottsfeldt, owner of the liberal political blog the Midnight Sun, expects this will embolden Dunleavy to try to satisfy his party’s base. “The GOP won’t just take the car out for a drive,” he predicts. “They’ll drive it over the cliff like Thelma and Louise.”
Recall backers are waiting for this to happen. “The recall is coiled like a snake,” says the AFL-CIO’s Joelle Hall, a member of the recall’s steering committee. They know that something has to give this year: drastic spending cuts, further cuts to the PFD or maybe even the first direct statewide taxes in decades (Alaska has no personal income or sales tax). Someone’s going to be unhappy, and they think they can turn that quickly to their advantage.
Even some of Dunleavy’s supporters know deep cuts will be hard to pass. “The proposed cuts were difficult to execute because they were part of Alaska culture,” Downing says. Dunleavy proposed drastically cutting programs such as the Marine Highway System, which provides affordable transportation for rural Alaska areas that cannot be served by roads. His proposed 41 percent cut to the University of Alaska would have pummeled Fairbanks, the state’s third-largest city, and his mooted Medicaid cuts would have hit poor residents especially hard.
The only clear winners would have been the residents of the Mat-Su Valley, who tend to have larger families and thus would welcome the increased PFD. I saw stark evidence of this during my visit, when I passed a sign with a large family pictured alongside the slogan “Politicians stole $28,000 from this family.”
Dunleavy, however, knows all of this. He told me that he was wrong to assume that “the average Alaskan knew what the real fiscal picture is.” This time, he expects to “let people know what the real income and expense picture is” and “have options for folks to take a look at.” He believes the ultimate budget will “probably have a combination of approaches that include reductions,” but that “everything has to be on the table.”
This doesn’t mean he’s jumping off the fiscally conservative ship. “My philosophy is to try to reduce the size of government to the extent possible,” he says. “We spend too much.” But he’s well aware that massive spending cuts and a full PFD are politically problematic. In our discussion, he spoke about launching a conversation with the legislature and the people of Alaska to find a stable, long-term solution. “We can’t get investment to come to Alaska without a stable fiscal situation,” he says.
That will inevitably cause friction with his base, but that’s what political leadership is about. Ronald Reagan faced a similar crisis in his first year as California’s governor. The budget deficit he inherited was so large that he backed what was then the state’s largest tax increase, along with significant budget cuts. His base didn’t like it, but they trusted the judgment of someone who clearly shared their values. As we all know, Reagan not only survived, he flourished.
Dunleavy isn’t going to get everything he asked for, and perhaps he won’t even get most of it. But if he can broker a deal that limits government spending growth, cuts the current level of spending and enshrines a permanent, reduced PFD in the state’s constitution, he will have successfully drained part of the big government swamp — something no other conservative has done in years. He also will have resurrected Reagan’s playbook of principled compromise, which has been anathema to many on the right recently. Those achievements could propel him to national prominence overnight.
Conservatives will be looking for heroes after November. A tall, winning gunslinger out of the West might just fit the bill.
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