Dermot Cole

Dermot Cole

The long-winded press releases and court filings from the Dunleavy administration claim that the Dunleavy decision to shut down the Power Cost Equalization program on July 1 had nothing to do with politics and everything to do with the law.

Don’t be fooled. Gov. Mike Dunleavy created this crisis on his own, an outgrowth of his failed attempt to remake state government in 2019 with the help of former temporary budget director Donna Arduin and Attorney General Kevin Clarkson.

It was Dunleavy’s call this summer to cut off the funds that subsidize rural electric rates in areas with costs three to five times higher than urban areas.

Political lackeys who owe their jobs to him—led by Julie Anderson and Curtis Thayer—are busy whining that Dunleavy had no choice, and having their subordinates generate deceptive press releases that Alaska newspapers are running with no questions asked. 

Notably absent from the blather that this isn’t Dunleavy’s fault is the clear political origin of the policy created by Dunleavy, Arduin and Clarkson in 2019.

Arduin was the central character in the 2019 Dunleavy budget debacle in which he and she tried to do away with the $1 billion PCE endowment and a host of other funds. 

“We began on Day 1 of the administration. We started with eliminating budget silos, tearing down those silos,” Arduin told legislators on Jan. 23, 2019.

One of the budget “silos” that Arduin and Dunleavy sought to tear down was the $1 billion Power Cost Equalization endowment, created by the Legislature to provide a regular revenue source to pay for the rural electric subsidies, estimated at $32 million a year.

“All spending is state spending so all programs should compete for available dollars. So let’s scrutinize those programs that are funded with designated general funds—cuz all money is green,” Arduin said in one of her lectures.

Arduin falsely testified that day that the Alaska Constitution prohibited “designated funds.” The PCE endowment is a designated fund, held by the Alaska Energy Authority.

The Alaska Constitution prohibits “dedicated funds.” She didn’t know the difference and had to be corrected by Sen. Bert Stedman. A dedicated fund is far more restrictive and there are few in Alaska, other than the Permanent Fund. There are  dozens of designated funds.

Three months after Arduin declared that all money is green, Dunleavy proposed a bill to get rid of the PCE endowment, which was the prime target of their green campaign.

The Legislature refused to comply, but when Dunleavy’s Republican allies in the Legislature blocked the budget move known as the “reverse sweep,” the governor’s crew tried a new tactic.

The political argument morphed overnight into a flimsy legal theory in which Clarkson and Arduin claimed the endowment had to be ended to follow the Alaska Constitution.

Clarkson had a habit during his pompous tenure as AG of trying to disguise political gamesmanship with a veneer of legal analysis, losing time after time.

Under the logic Clarkson claimed to be following, all of the savings or investment accounts held by state corporations should be transferred to the Constitutional Budget Reserve, along with the earnings reserve of the Permanent Fund. 

Clarkson’s bogus claims have now been recycled by Attorney General Treg Taylor, who is asking the courts to defer to the legal wisdom of Clarkson, who texted himself out of a job last year.

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