Recall effort harms Alaska's ability to right its fiscal ship - Must Read Alaska
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Friday, November 22, 2019
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Recall effort harms Alaska’s ability to right its fiscal ship

By CRAIG RICHARDS

I have been retained to represent a group that opposes the recall of Gov. Mike Dunleavy.

I was surprised when reading the recall application. The stated grounds for recall are a hodgepodge of accusations, none of which appear legally sufficient nor honestly reflect the reasons behind the effort. They are not really attempting to unseat the governor because he appointed a judge 27 days late or over the nuances of how he used the line-item veto.

Instead, the energy around recall appears twofold. First, a group of partisans began organizing a recall in early February, just after Gov. Dunleavy took office, because they were dissatisfied with the election results. Second, and more meaningful, Gov. Dunleavy aggressively tried to cut government spending, which displeased those affected by the cuts. The latter passion is real and translates at a visceral level among voters. But for the sake of all of us, it does not justify a recall.

Since the drop in oil prices in 2014, the state has been careening toward a monumental fiscal cliff. Repeated multibillion-dollar deficits — the fiscal year 2020 deficit is about $1.6 billion — have been funded by spending savings.

When Gov. Bill Walker took office, state savings were more than $10 billion. At their highest point, in fiscal year 2013 under Gov. Sean Parnell, savings were more than $16 billion. Today that number is shy of $2 billion, or about one year of savings left at current oil prices.

The five-year luxury of kicking the can down the road and burning through savings in lieu of hard decisions is over. We have to close the fiscal gap.

Practically, there are only four available actions that can be taken to balance the state budget: spending cuts, increased oil taxation, adoption of broad-based taxes (sales or income) and a different dividend formula that, in the medium-term, reduces the dividend. The magnitude of the fiscal gap is such that only implementing one or two of these options is insufficient; likely, it will need to be some combination of three or all four.

But each of these options is unpopular and has motivated constituencies protecting the status quo.

I was Gov. Walker’s attorney general when he first considered vetoing part of the dividend in 2016. He made a hard decision, quickly became one of the least popular governors in the country, and a group formed to recall him.

Gov. Dunleavy chose to focus on spending cuts first. Same outcome — affected constituencies are upset and have moved to toss him out. Had Mark Begich won and implemented an income tax, others would be beating the recall drum. And state policy makers who advocate for increased oil taxes will no doubt be targeted politically (I know, I’ve been there).

We all have our preferred fix to balance the budget. But the fiscal decisions required to keep the state from going over the cliff will not be what I — or anyone else — wants. It will be a compromise, and it will be hard. Individual Alaskans, government agencies, and businesses large and small will be significantly affected.

Yet the cost of inaction is greater than the cost of any particular solution. If we close the deficit we can always adjust the “how” over time; if we run out of savings before we balance the budget the damage to our state and economy will be catastrophic.

It is self-destructive to spend a year plus fighting over a potential recall because the order and magnitude of actions taken on the deficit differ from what some prefer. No governor could make meaningful yet popular decisions that address our fiscal challenges — the problem is too large.

When Gov. Walker faced recall for vetoing part of the dividend he said, “I respect these Alaskans’ right to voice their objections over my budget vetoes. However that does not sway my decision on how to address the state’s fiscal challenges.”

Gov. Dunleavy is likewise in the unenviable position of having to make difficult decisions that will negatively affect Alaskans. But leadership requires difficult decisions, and we are out of time and our elected officials must make them.

That is why I will work in the coming months to stop the recall effort. It is a misguided distraction from the hard work of governance necessary to right our fiscal ship.

Craig Richards is an attorney in private practice in Anchorage. He represents Stand Tall With Mike, a group that opposes the recall of Gov. Dunleavy.


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  • Craig,

    Well drafted! You have framed the scope and the depth of the magnitude of the problem. The math does not add up as against the ongoing operational costs. There are however steps that must be taken immediately.

    1. Reorganize Health & Social Services employing accountability in spending, fraud, and overall structure of driving costs lower and efficiencies higher through competition.

    2. Employ the management oversight through structuring of “nice to have vs.. Need to have.

    The price of oil is certainly a major issue. However, Alaska’s credibility took a major hit with the trade when we chose to not make good on the tax credits. We truly need to reestablish business relationships with smaller 50,000 barrell a day producers that left but are still viable partners. The approach might be a program of a production tax discount at the well head that would accrue to the amount that we promised to pay. We basicially pay the tax credits back through oil. Moreover, they must produce oil in order to get paid back through production. Simply put, the State does not come out of pocket to pay the tax credits back.

    R. Bieling

    • The oil tax credit buyout scheme using bonded indebtedness first proposed by Governor Walker and perpetuated by Governor Dunleavy was challenged as being unconstitutional. A decision in the constitutionality is pending.
      The is about constitutionality, not so much in terms of credibility other than perhaps the credibility of the attorneys for the State of Alaska who cooked up the borrowing scheme with the bankers holding the oil exploration tax credits.

      • It does have kinda the same feel as the creation of a market for mortgage loan derivatives. And that worked out so well…

  • If the average signer of the “Recall Dunleavey” petition were asked why they signed, I am afraid their ignorance would be exposed.
    Personally, I think a “man-on-the-street” interview after each person signs asking why would expose the self-aggrandizement feeling the signer feels he or she now possesses. It won’t be the legal or technical reason why a recall needs to be implemented. To sign makes the signer powerful.
    If anything, he or she can claim she is a victim of _______ because Dunleavy. Victimhood seems to be in vogue these days like calling someone who disagrees with you, Hitler. Thus, the person signing will likely feel no technical argument will actually need to be personally made because their personal feelings trump all else.
    Thanks for speaking up, Craig, and sharing the facts.

  • Clear, concise and accurate article by Richards…

    Alaska needs to get its budget balanced ASAP. We are balancing our State budget on Permanent Fund earnings, which just happen to be outstanding due to the stock markets amazing performance since Trump took office. Markets are cyclical, so expect a retracement to occur in the next year or two. The State of Alaska won’t be able to depend on Permanent Fund earnings to pay for governmental operations much longer.

  • A very well written piece, however logical arguments are lost on the fanatical; witness the scene at last month’s AFN convention in Fairbanks. We are in for some rough sledding ahead.

  • I agree totally with Craig….and will do what i can as well to end this divisive recall effort…we all need to get on the same end of the wagon and get it up this hill…Alaska has a great future if we all work at it together. The tide has turned and it will take a little longer but we can all do something about the State we are in.

  • Yes the recall effort is nothing more then a coup d’etat to strip away the power of the vote. Sore losers and people who disagree with the current policy and fiscal responsibility have no respect for the election process if they don’t get their way, much like a spoiled child didn’t get the candy bar in the aisle at Walmart and throws themselves on the ground and kicks and screams until they get their way. Shame on all of you involved in the recall effort. You will not succeed because your claim does not match Governor Dunleavy’s actions.

    • Exactly! We Alaskans all have been enabled by no income tax and free money every year that we did nothing to earn. Children who have been given and given without contributing some sweat equity end up hating who ever is in authority. Half of the State voters are like dogs who have had their free bone taken away and don’t know how they will ever get another one! Now they have decided to run in a pack. Kinda scary! Time to stand tall with our Governor!

      • Do you have any idea what a “dividend” is?
        .
        Do you own stock, do you collect a rent or royalty check?
        .
        Is not paying an income tax equivalent to some sort of sin in your world?
        .
        No right or wrong answer… just curious.

  • Who made this decision?
    Craig Richards was a dud as Bill Walker’s Attorney General, never should have been appointed to that position and quit when he couldn’t handle the job.
    He was also appointed to the Permanent Fund Board where he has been ineffective.
    Richards has demonstrated a pattern of pandering to people in power but no real ability to deliver.
    This is a bad selection for the Governor and a windfall for those seeking to recall Mike Dunleavy.
    Oh well ………

    • Maybe bring on “The Mooch?”

    • Wow, Joe I lean in concert with you on Richards on all points, but his message about our present governor is factual and compelling — the truth. Governor Dunleavy’s nemesis are the Walker leftovers that he can’t seem to control, being chief executive, or get rid of! This will haunt him until he gets control and audits all departments!

  • Can you hear the echo in Alaska, from D.C.? The exact same “recall” BS in both. One against the only President who intends to and will be able to, save America. The other against a man of like character and ambitions/plans to save Alaska, our Governor. The socialist/lib/dim playbook against our leaders is as similar as the dim “talking points”. Identical in both scenarios. Lies abound, rules are for thee, not me attitude, secrecy and covering up/manipulating the testimony of any who disagree. The illegal antics of the dims are so blatant, even a true communist would probably shy away.
    Here again, it looks like it’s up to citizen voters to fix the mess that dims/socialists have made of American/Alaskan laws, traditions, and the work they are getting paid to perform. Their only goal is trying to overthrow both duly elected governments. Alaska’s and America’s. If that doesn’t work, disrupt everything in gov’t, no matter if it’s a great idea or not. Spite. I’m not ready for the “socialist/dim” utopia. How about you other conservatives? Ready to vote? If you’re not ready, take a good look at what’s happening in Anchorage. That’s what the dims want for Alaska and America.

    • Ben Colder: Get a medium sized brown paper bag. Fold down the opening about a inch, all the way around.
      Narrow down the opening and place over your mouth
      Breath in and out of the bag.
      Keep going.
      Breath in the same air from the bag for about 5 minutes.
      Feeling faint?
      Feeling lightheaded?
      Feeling calm?
      Good.
      You are now in a state where you might make a slightly more coherent statement about the matters you are addressing above instead of the trivial non-sensible crap you are spewing.

    • Communism would be preferable to your disassociated and wholly inaccurate rants. The people you call the socialists are the only ones telling the truth right now. The rich need to pay more and you need to shut up and watch something other than FoxNews!

  • Hmm. Interesting that my comment still hasn’t posted even though I put it in as soon as the story came up. Only underlines that this a blog an not a news site.

    • Adam – I am not sure what comment you are referring to. Try again. – sd

      • So either a technical glitch or a mistake on my end. Thanks for letting me know!
        .
        It was a long and the moment has passed. But I’m sure the opportunity to make those points will come again 🙂

        • Adam – I try to approve comments quickly, but sometimes get caught up in my work for hours at a time. The delay is not ideal, but it allows me to filter out language, and trolls. You never seem to go over the line, so if you don’t see a comment show up, do alert me via email. – sd

    • I disagree with your assessment. Susan works hard to put up a no nonsense accounting of the truth and facts and no one can dispute that because the stuff really does happen. now you might have run into a technical lag in your posting what just happened to me on different occasions but before you make accusations, make sure you’ve done everything right and actually pushed the send button.

      • Yeah. Either my mistake or a just a flub. Now I know.

  • Rescind SB 21 of its date of enactment, which should automatically re-instate ACES from that same date. Its been voted upon and approved. No further discussion necessary. Collect back taxes due thereunder. Continue to cut the budget as already planned. Privatise everything possible, including UAA. Quit charging Local Municipal rent and calling it Property tax. Such strong arm Mafia thugs need to serve time inside. for life.

  • Dear Guv,
    .
    What the hell is “Recall effort harms Alaska’s ability to right its fiscal ship” but a ransom note?
    .
    You want to drive off the political cliff, that’s your business, but hiring Walker’s Wunderkind to brainwash your supporters into going along for the ride… that’s rude.
    .
    Yes, a ransom note. Pay sales tax and income tax, we might save our governor from recall. Or not, but we’ll still pay sales tax and income tax because we annoyed our Ruling Class!
    .
    Walker’s pal did you no favor. His essay could have fired up your supporters with something like: Wake up! These (expl del) want to overthrow our duly elected governor and spend all the money they can get. Problem is our governor won’t let them get away with their deep-state rottenness. They can’t stop his re-election, so they have to recall him. They have to use mainstream media to overwhelm otherwise sane folk with crap arguments and push polls to “prove” Dunleavy has to be recalled.
    .
    Richards’ essay could have laid out for all to see how the party of Hillary Clinton and its Republican menials rat-hole billions of dollars out of taxpayers’ reach, then have the incredible gall to regurgitate garbage about an imaginary fiscal crisis.
    .
    His essay could have mentioned the Denali Commission, a virtual money pipeline straight from Washington D.C. to Alaska, talk about throughput and nobody knows, or cares, where it winds up! And the Alaska Municipal League Investment Pool, with its $656,099,844.55 of taxpayers’ money stashed safely out of productive Alaskans’ reach… And Jim Crawford’s articles on the billions of dollars cities and boroughs stash away in “rainy-day” funds safely out of taxpayers’ reach while complaining about revenue sharing!… And profligate waste and mismanagement that seems to pervade public-sector union-management partnerships. And billions wasted on the pitiful wreck that passes for public education in Alaska at every level! And the explosion in the number of state lobbyists since the beginning of 2019, who and what they buy… And legislative sessions tucked away in the Holy City of Juneau, accomplishing nothing, wasting millions on overtime, accomplishing nothing… etc., etc. etc.
    .
    No, your boychik sallies forth, not firing away at the vermin trying to disenfranchise us by overturning our election, but dribbling dimwitted drivel about Getting More Money, apparently because all six feet, seven inches of you got taken hostage by a recall and we can’t get you back unless we pay sales tax and income tax, a ransom in perpetuity!
    .
    Guv, we elected you because we’re done with getting walker’d, giessel’d, edgmon’d, and now richards’d.
    .
    We hired you because we wanted the place de-Walker’d… so your bunch invites a Walkerite right back in! You do remember how the trojan horse thing went down, right?
    .
    Your “supporters” couldn’t seem to hire an aggressive, competent, conservative, Jay Sekulow-like lawyer who has no blatant conflict of interest with his former employer, your political opponent?
    .
    Says a lot about your so-called supporters, all they could find was a Walker hack who seemed really quiet while Walker was doing secret deals with Communist China. This is the ultimate job saver, hiring the Ruling Class to get out of trouble with… the Ruling Class?
    .
    We should give up our PFD’s, quite worrying about the Permanent Fund, because, wouldn’t you know it, building an LNG for (or by) Communist China is gonna cost just about as much as what’s in the Permanent Fund and commies don’t take IOU’s?
    .
    We should give up our PFD’s and quietly accept the Ruling Class won’t give our mineral rights back either, which is why we get PFD’s in the first place?
    .
    Guv, to hell with tying your political rescue to productive Alaskans paying sales tax and income tax! We hired you to fight hard, like President Trump. Instead of hiring Walker’s Wunderkind to brainwash your supporters into paying a ransom to the Ruling Class, we want you to dig up the dirt on them, find out who they are, who bankrolls them, splash details all over the non mainstream media, of which effective outlets thrive right here in AK.
    .
    Your boychik’s premise of paying sales and income tax to reward Alaska’s Ruling Class with more money to waste, to feed the hog-trough divers who populate Alaska’s 2019 Lobbyist Directory in ever increasing numbers, to bankroll Alaska’s public-sector union management teams with whatever they want, whenever they want it… does not fly on a good day.
    .
    The premise is you’re Guv, we depend on you to lead, to do what the law says, to demolish Alaska’s very own deep state. You’ve plenty of good advisors like Art Chance. Chance’s book should be your operating manual, indeed the manual for every public servant worthy of the title. You read it yet?
    .
    Tell us you’re up to this work… Do regular fireside chats. Hire a conservative public-relations firm to help you fight back. Make the rounds again and again to visit with people. Don’t write off AFN, visit with them, they were as embarrassed as you over that asinine display. And for God’s sake, if your supporters must have a lawyer, tell them to get an aggressive, competent, conservative, Jay Sekulow-like lawyer who has no blatant conflict of interest with his former employer, your political opponent!
    .
    Hang in there, Guv.

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