Deficit spending is no joke. Inflationary spending is widely considered to be the reason Joe Biden lost the election. It was also kind of messed up when Trump added $8.4 trillion to the debt during his first term. Now we’re seeing this careless attitude levied at the state level by a self-purported “conservative.”
At The Northern Independent, we believe that spending more than you have is bad. Very bad. Especially at the state level. Someone has to pay up, and it’s not going to be the rich California elites (nor should it be).
The Problem: Governor Mike Dunleavy released his proposed state budget, and it’s a doozy. At $16.7 billion, the headline is a glaring $1.5 billion deficit, paid for out of Alaska’s Constitutional Budget Reserve (CBR). That means more than half of the state’s savings would evaporate to cover this year’s spending—and the outlook only gets worse. If nothing changes, the state’s entire savings account could be empty in a few years.
Why? Dunleavy wants to stick to the “old formula” for the Permanent Fund Dividend (PFD), handing out roughly $3,800 per Alaskan. That’s a $2.5 billion expense. It’s nice to get a big check, but at what cost? While Alaskan families tighten their belts, big corporations continue to enjoy massive tax subsidies. Ending these handouts to the wealthiest could easily cover the $1.5 billion deficit, preserving a full PFD and balancing the budget.
Where’s the Money Coming From? Here’s the thing—the budget doesn’t add up. Dunleavy claims future revenue from resource development will save the day. That includes carbon sequestration, timber, and (of course) oil and gas. In his own words:
“The resource production in the state can more than pay for our way if we consummate great policy as we move forward.”
That’s a lot of ifs. And while we’re waiting for those speculative bets to (maybe) pay off, we’re burning through savings at record speed.
To be clear, this isn’t just about numbers—it’s about Alaska’s priorities. Education funding is on the chopping block. Dunleavy’s budget doesn’t include education funding passed last year, which means schools face a $175 million shortfall unless the Legislature steps in. That’s a deficit Alaska’s kids can’t afford.
The Reality Check Democratic Rep. Andy Josephson, co-chair of the House Finance Committee, called out Dunleavy’s lack of leadership on the budget.
“The governor, ultimately, with his budget, is saying, ‘I can’t figure this out. You do it,’” Josephson said.
Josephson’s not wrong. Instead of proposing real solutions, Dunleavy punts responsibility to the Legislature. And with no new revenue streams in sight—like taxes or alternative funding—lawmakers will have to make tough choices. Cuts to essential services? Smaller PFDs? Higher costs for Alaskan families? Take your pick.
Our Verdict: Bad for Alaska.
Deficit spending at this scale doesn’t just disappear. It’s going to cost future Alaskans dearly, whether through empty savings accounts, crumbling schools, or smaller dividends. Dunleavy’s speculative budget is a gamble Alaska can’t afford.