Gov. Mike Dunleavy’s proposed budget presents Alaskans with a tough question: whether they want to slash spending on education, health care and other programs to pay for larger Permanent Fund dividends.
How people answer that question depends a lot on how they make their living, and their views about the size of government. And in the Mat-Su, north of Anchorage, you can find Alaskans on both sides of the budget debate.
One person who’s alarmed about Dunleavy’s proposed cuts is Amy Pettit, who runs an organization that conserves farmland, the Alaska Farmland Trust.
On a driving tour near the town of Palmer, Pettit pointed out prime glacial soil that’s covered by snow now, but that by September would be filled with Alaska-grown produce.
“It will be beautifully straight, impeccably straight rows of different colors of cabbages, and broccoli, cauliflower,” she said. “And there will likely be a tractor in it every single day, doing some harvesting or weeding, cultivating around all those beautiful vegetables.”
While agriculture is a tiny industry in Alaska, its supporters are adamant about its benefits — which is why Pettit is worried right now.
Dunleavy, in his budget released earlier this month, proposed to eliminate an array of government programs that support the industry. No more state marketing of Alaska-grown vegetables and meat. No more state-sponsored loans for buying land or livestock, or for financing yearly purchases of seed and fertilizer.
As she drove past one of the state’s only commercial dairy farms, Pettit said the budget could be a big hit to the industry.
“Farming is a difficult enough endeavor as it is. Farming in Alaska is, like, ten-fold that. And then you wipe out these support programs that the Division of Agriculture provides,” she said. “It would be a lot easier, a lot cheaper, to go produce food somewhere else.”
It’s not just farmers who would be affected. Dunleavy’s budget, as proposed, would eliminate more than 20 state agricultural jobs from Palmer, most of them full time. That’s just one way the plan would affect the town of 7,000 — teachers are also likely to lose jobs if Dunleavy’s proposed schools cuts are enacted, as would healthcare workers.
But there’s also a silver lining — a $1.9 billion silver lining, to be specific. That’s how much money Dunleavy wants to inject back into the state’s economy through a larger PFD, and a big chunk of that money would go to people in the Mat-Su.
The cash would boost business for people like Joe Hand, who owns a small used car dealership near Wasilla called Harvest Motors. (The “harvest” is a biblical reference.)
Hand voted for Dunleavy and said he supports the direction the governor is moving, though he said it might be better if the changes were phased in over time, rather than in one fell swoop.
For Hand’s business, he said, there’s a real difference between a $1,000 PFD, like in 2016 and 2017, and one that’s double that — or even triple, which is what this year’s could be. He put it in the context of a family of four.
“If it comes out at three thousand bucks, like what we’re hearing, $12,000 is huge,” he said. “Especially for used cars.”
The cost of that larger dividend, at least in the context of Dunleavy’s budget proposal, is sharp reductions in government services. But Hand said he isn’t sure whether Alaska is spending its money as efficiently as it could be.
When it comes to the state’s agricultural programs, he said, he appreciates the history and culture that’s grown up around farming in the Mat-Su. But, Hand added, it’s not like his car dealership gets the same type of support from the state.
“Nobody helps me. I had one car when I started and now I have 50,” he said. “At some point in time, we as a community have to say, ‘The money needs to go to the greatest need.'”
One big question looming over the debate is about the broader economy — whether the larger PFD boosts businesses like Hand’s enough to make up for the lost state jobs and programs that would come from a smaller budget.
The answer depends in part on how you measure those effects. A 2016 study by the University of Alaska Anchorage’s Institute for Social and Economic Research said boosting the PFD produces more income than more spending on state government. But you get more jobs by raising government spending than by raising dividends, the study said.
The study only covers the short-term — there’s relatively little scholarly work that can help make long-term economic projections.
Plus, economic data can only guide politicians so far, said Mouhcine Guettabi, one of the study’s authors.
“Is that the only dimension that people should be considering in making these decisions? Probably not,” he said. “It’s a question of values. It’s a question of what they think matters most, and what their constituents value. And I’m not qualified to speak to any of those things.”
It’s the state Legislature, working with Dunleavy, that will determine whose values win out.
