State of the State: Paying for State government may include lottery


Gov. Mike Dunleavy, in his second State of the State speech, touched on some well-traveled themes of crime reduction, the economy, and natural resource development. He emphasized the economy turning around, unemployment at the lowest point in state history, and a renaissance on the North Slope for oil development.

In a speech that galloped through 25 minutes, Dunleavy also spoke about budget challenges and the need for the Legislature and the governor to work together.

“We are given this one moment in time to do what’s best for Alaska. Let’s take advantage of it,” Dunleavy told the House and Senate.

But the governor appeared to be mainly speaking to the people of Alaska directly during most of his time at the podium.

Dunleavy, who had been escorted to the podium by policy opponents Sen. John Coghill and Rep. Gary Knopp, did not offer the House and Senate members present an opportunity to applaud during the meat of his remarks. Although he offered many new ideas to the Legislature and to Alaskans, applause was only granted for the five guests who were introduced, as well as for his wife Rose Dunleavy, and his Cabinet members who were present.

[Read: State of State guest list includes heroes and champions]

Some of his themes of the night:

Letting the people vote: Dunleavy asked the Legislature to allow the people of Alaska to vote on a spending cap, any new taxes, and the structure of the Permanent Fund dividend.

“We must also include the people in these decisions. We must give the people an opportunity to weigh in on items that impact their lives directly,” he said. 

“They must be allowed to vote on constitutional amendments, including a spending cap, any proposed PFD changes, and new broad-based taxes. Because just as I said last year, if we are to gain the people’s trust, we must trust the people. It’s the people who placed us here. It’s the people we serve – we work for them,” he said. 

He had introduced bills last year that would have moved these questions to the voters, but the Democrat-controlled House and Republican-controlled Senate never allowed the bills to be heard. Tonight, he beseeched them to let the people vote on taxes and a spending cap.

Lottery: Dunleavy will introduce a bill to begin a state lottery. He will create a state inspector general for Alaska to investigate fraud and abuse.

Human Trafficking: Dunleavy will introduce legislation to combat human trafficking.

Land for the people: The governor will offer a bill to put in place initiatives to transfer land to private hands for home sites, agricultural sites, and recreation sites. Alaskans who qualify for a Permanent Fund dividend will have a choice to get a certificate for land, rather than a dividend. A land certificate gives the treasury the benefit of the money, and individuals would get a land certificate at twice the value of the dividend, he said.

Alaska Reads Act: More funds will be directed toward reading initiatives to get students reading at grade level. The Alaska Reads Act has been introduced and appears to have support in the Legislature.

Budget grand discussion: “Last year’s budget was a shock to many Alaskans. But it did demonstrate we can’t continue to spend what we don’t have. Alaskans learned how unsustainable spending levels had become. We recognize this – all of us in this room – together, we supported significant reductions. 

“The budget was not crafted with the intent to hurt Alaskans. But pulling back the reins on spending certainly caused many Alaskans discomfort – I recognize that.

“I didn’t run for governor to hurt the state that I love, and the people I care about. No governor wishes to do that. But with that said, we still have a significant fiscal issue that needs to be addressed for the long term,” he said.

Dunleavy said the conversation led to a recognition by Alaskans that the State of Alaska has a fiscal imbalance, and “the state is running out of time.”

He said that the flat budget he introduced this year should allow legislators to focus on a sustainable long-term plan that includes controlling spending, deciding the future of the Permanent Fund and the dividend.

“This initial budget, absent the large reductions introduced last year, should allow us the ability to focus on a sustainable long-term plan. This must include controlling our spending and deciding the future of the permanent fund and the PFD.

House Speaker Bryce Edgmon, in his response to them said he appreciated the tone of the speech but “the devil is in the details.”

The opposition response from the Legislature included Rep. Neal Foster, Rep. Jennifer Johnston, Rep. Louise Stutes, Rep. Steve Thompson and Rep. Chuck Kopp.

Foster said the governor’s budget will require revenue.

Johnston said this isn’t the time for new revenue, but in the governor’s proposal, she saw costs, and is not sure how the governor’s programs will be paid for.

Kopp said he was glad to see the positive outlook and that the governor was going to focus on tribes.

Rep. Steve Thompson said he was hoping the governor would have more about new revenues, and he said he has been working on a state lottery as well.

Rep. Louise Stutes used her time at the microphone to lecture the governor about the need for ferries. Only one of 11 ferries is operational, she said. The cost to repair the current broken-down ferries is in the hundreds of millions of dollars but she didn’t mention how those repairs would be paid.

The governor’s entire speech, as provided to the media:


  1. 1. Yes to land option instead of PFD: never to be taxed, though!
    2. Yes to one yearly lottery right after PFD WITH a 50% of federal state income tax on all who earn over $10M/yr: one person gets rich & the state gets back ~25% of all those PFDs squandered on a lottery…win-win.?
    PS. Tongue-in-cheek satire: I think lotteries & ALL taxes are terrible ideas, but if one…

  2. A very very important initiative that the governor announced in this state of the state speech is is legislation to create the office of Inspector General to fight fraud waste and abuse. Kudos to governor Dunleavy for being the Very first Alaska governor to make this long overdue move to be responsible stewards of the people’s money.

    • Isn’t that what they are all supposed to be doing already? Do we need more government offices or more involved and active voters that hold politicians accountable. Upon reflection, you are right, more government.

  3. Well I don’t expect to be paying any taxes, but the people who can least afford it will. This probably opens the door to legalized gambling which will be an absolute social disaster for this state (unless it’s restricted to cruise ships).

    • Governor, all you need to do is fully fund the Pioneer’s Home lockdown wing, and backdown the rate hikes. Giessel will be your best buddy and retire. She’s on the wait list.

    • El, taxes are forced, with the threat of garnished wages and/or imprisonment if you fail to pay them. Buying a lottery ticket is a choice and no consequence if you don’t buy one. Big difference.

  4. “He had introduced bills last year that would have moved these questions to the voters, but the Democrat-controlled House and Republican-controlled Senate never allowed the bills to be heard.”
    This sentence speaks volumes on the dysfunction in our Legislature.
    I read where Senator Begich does not think it is the job of the voters to decide whether or not we should implement a small income tax.
    He feels these issues should not be brought before the general public as he believes it is only the Legislature’s job to decide these issues…
    Problem is “their” only solution is to garnish the people’s dividend while continuing to toss nearly a $billion dollars a year at our failing university system?
    Good words by the Governor, now hopefully he can help move things in that direction and find a way to prevent the Legislature from only maintaining the status quo.

    • Great Comment Steve Stine!
      And never forget the UAA scandal involving accreditation! Looks alot like Fraud! Where is accountability?

  5. The reason fraud waste and abuse has not been addressed is simple, too many people are in on it at all levels of our society.
    For example does anyone really think that the hover-board dentist is the only dentist screwing Alaska’s Medicaid?
    Why do the flights for medical services from the Bush to the big city increase 10-fold during the PFD and Black Friday times? This is a yearly pattern easily trackable.

    Why do Bush medical administrative clerks get billed out at a doctors rate to the State Medicaid?

    These are just a few examples, there are plenty more.

    When all of this documented information is provided to the State of Alaska, there is no political will to make changes.
    An independent inspector general needs to expose to the light of day the dark workings of HHS.

    • Joe,
      The answer to most of your questions is one word. “Money”. The more the merrier. There is no political will to make changes because most of those recipients of the “free ride” are the same ones voting to keep the leftists in charge. Kind of like payola (remember the payoff for radio stations playing ‘profitable’ songs?).
      The Governor has a tough ‘swim against the current’ to change those policies. If anyone can accomplish it, it’s him, with conservative support. As for a lottery, at least people have a very remote chance to get their money back. Look how popular the Nenana Ice Classic is every year.
      I applaud Governor Dunleavy’s proposals. And the ferry system, as currently configured, is simply another “hole in the water that you pour money into”.

  6. I hope the IG is made up of rotating positions from department finance for financial audits. This could be a rotation that certain level specialist could fill from different departments with like functions for review. Additionally the IG should be able to call in independent Audit firms like a KPMG one of the Big three. I only mention this as an option for independent looks in to the budgets and what they do. Additionally my son has been working with them for 3 years and just over 1 year as a full time auditor. Ryan was a national merit scholar from Wasilla High School and he would be a good Alaska connection young auditor. He is 27 but to avoid quid pro quos. I would say that any of the big three would work for independent audits of financial records and account balances to show value of all assets assigned to an agency and the government.

    33 states and the district of Columbia have it IG programs for fraud waste and abuse. An example of an audit program independent of state programs.
    Periodically we need independent audits from accounting firms like KPMG especially on our reserve accounts and the permanent fund.

    At the end of FY 2018, Audit had 580 staff on-board, an increase of 59 from FY 2017. The increased staffing allowed Audit to ensure the successful completion of the DoD’s first full financial statement audit, and increase cyber security, healthcare, acquisitions, strategic force readiness challenges, and contracting oversight. In FY 2020, Audit will increase oversight of the Department’s financial management and business reforms, space and cyber operations, and health care. In FY 2018, Audit:
    • Issued 110 reports, a 23% increase from FY 2017, that identified $1.8 billion in questioned costs, and $293 million in funds that could be better used. With the corrective actions that the DoD implemented as a result of the DoD OIG’s audit recommendations, the Department realized savings of $637 million, an $963 thousand return on investment per Audit staff member.
    • Provided oversight of and completed the DoD’s first full financial statement and systems audits. Since the Department’s assets total more than $2 trillion, this was likely the largest financial statement audit ever undertaken. The DoD OIG, working in conjunction with contracted Independent Public Accounting firms, provided over 2,000 Notices of Findings and Recommendations to DoD Components.
    • Based on actions provided by the Department in response to our initial FY 2017 Compendium of Open Office of Inspector General Recommendations, Audit closed 421 of 1,298 open recommendations and updated the Compendium for FY 2018, identifying 1,558 open recommendations that contained potential monetary benefits of $2.3 billion.
    • Increased oversight of cybersecurity and cyber operations audits that addressed critical DoD issues such as Unmanned Aerial Vehicles, the DoD’s Secret Internet Protocol Router Network, and the Air Force

  7. The state inspector-general initiative may be a great idea if modeled on the federal IG, with no state-funded organization exempt from IG audit.
    The challenges are: (a) Alaska has no RICO law, and (b) Co-Governor Giessel, or Assistant Co-Governor Edgmon, or both, can eliminate IG authority or funding any time.
    Along with the lottery, the state IG act should include, say, a 10% “qui-tam” bounty awarded to whistleblowers following successful waste, fraud, and mismanagement prosecution.
    Finding someone with integrity, competency, and audit credentials to do the work might be a challenge, too.

  8. The problem in getting land instead of a P.F.D is, just read one of the State Land Patents. The so-called owner gets absolutely nothing, but the State of Alaska gets everything in the State Land Patent. Everyone needs to just read one State Land Patent to fully understand our Communist land system. Seymour Marvin Mills Jr. sui juris

  9. Governor Dunleavy gave a great state of the state address, especially considering the circumstances and the contentious legislative political environment, much of the body has demonstrated toward our governor in the past session. I believe the Governor addressed the issues, as clearly as he could, knowing most in the body were not supportive of his ideas, but mean while knowing most of us who, I believe, are the (silent majority) do in fact support our governor, and the real conservative legislators in the legislature taking a stand.
    He stated it well, elections are important and Alaskan should be in the conversation.
    That stating, I agree with everything the governor stated in his speech, except for the lottery; I am disappointed in that, but hope to voice my disagreement with the governor and his staff to choose a different direction for Alaska in that regard.
    We have a great Governor, and I will continue to support him, just not that particular policy. I hope he reconsiders his approach and continues fighting on, as I am confident he will!

  10. I don’t know why people are so opposed to a lottery. Currently 45 of the states have a lottery in place. The lottery brings in a tremendous amount of revenue for the states and can help fund budget deficits. There are those that say the lottery will hurt the poorest people the most. Not true. It doesn’t matter what your economic background is (poor, middle class or rich). If they are going to squander their money on booze, drugs, bingo, pulltabs or anything else they are going to do it. You can’t control people’s lives, and you can’t force them to spend their money the way you want them too. They are either financially responsible, or not. Therefore a lottery would go a long way in bringing in income from all people (residents and tourists alike) and help to lessen the burden on those of us that live, work and pay taxes here.

    • Agree 100%. Lottery is optional for residence to participate and states like Georgia and Florida use the funding to cover their states’ educational systems. Lotteries bring in a lot of money and no one is forced to buy a lottery ticket. I’d take that over being forced to pay a state income tax.

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