In 'fourth-quarter' State of the State address, Dunleavy paints optimistic picture

Yahoo

29-01-2025

Jan. 29—JUNEAU — In his seventh and penultimate State of the State address, Gov. Mike Dunleavy depicted an optimistic picture of Alaska's prospects during President Donald Trump's second presidency, even as his own budget analysts predict declining revenue in the coming decade.
"We can develop our way to prosperity if we're given the opportunity and we take advantage of it," Dunleavy said.
Battling a cold, Dunleavy coughed and cleared his throat through his 46-minute address. Guests included First Lady Rose Dunleavy, over a dozen members of Dunleavy's cabinet, Olympian Alev Kelter and others.
After four years in which Dunleavy repeatedly said that Alaska's resource development prospects were limited by the administration of former President Joe Biden, the governor predicted boosted oil and gas development in the coming years, including the construction of a liquefied natural gas pipeline long sought by Alaska political leaders.
"The decades-old dream of cheap plentiful natural gas may soon be a reality with signed agreements on the near horizon," he said.
Watch the speech:
Dunleavy said he would continue to seek policy changes in the state's education system that have been opposed by many lawmakers.
Majority leaders in the House and Senate said this year they want to increase the state's education budget — after years of flat funding that has strained school budgets across Alaska — without tying the funding increase to any policy changes.
But Dunleavy said he wanted funding increases to be coupled with policy changes, including expanding charter schools and publicly-funded homeschooling options, though he did not provide specifics on the policies he would seek.
"I'll talk to anyone about more money if the conversation is also about different approaches and better outcomes, and that's what my education initiatives will include this year," he said.
Leaders in the House and Senate said the speech was aspirational and hopeful, but lacked indications that the governor was willing to work with bipartisan coalitions governing both chambers.
House Speaker Bryce Edgmon said he hoped that the governor would show willingness to work across the aisle on education and other policies.
"Otherwise, we're in for a long and protracted session," he said.
'We have hope'
House and Senate leaders said they hoped Dunleavy would share his vision for boosting the state's revenue and solving a projected deficit, but Dunleavy's speech made no mention of the $1.5 billion deficit budget he introduced last month.
Senate Majority Leader Cathy Giessel, an Anchorage Republican, said it was "somewhat embarrassing" that Dunleavy did not mention the deficit in his budget.
Dunleavy said resource development projects could, in the future, boost the state's coffers. But many of the oil and gas projects he cited would only boost revenue several years in the future. Dunleavy said a "North Slope renaissance" was just beginning.
"Money doesn't grow on trees. If we want more money for programs, we need more resource plays to fund them," Dunleavy said.
Dunleavy touted executive actions taken by the Trump administration to remove restrictions on resource development in the Arctic National Wildlife Refuge and the National Petroleum Reserve-Alaska.
Dunleavy said he "couldn't be more excited" for the Trump term, again calling him "the most pro-Alaska President we've ever had."
The line got loud applause from a joint session of the Alaska Legislature. Rep. Frank Tomaszewski, R-Fairbanks, stood and applauded.
"We have a second chance at opportunities that looked like they slipped away just four years ago," said Dunleavy.
"Under the Trump administration, we have hope," he added.
Edgmon said he was disappointed that Dunleavy did not mention the expected challenges created by the freeze in federal funding announced by Trump earlier today.
"I think that's going to have potentially sweeping effects on all Alaskans, all sectors of the state," Edgmon said.
Dunleavy presented an upbeat vision of oil and gas projects broadly, including a costly natural gas pipeline that if constructed, would be the largest in the world.
Earlier in the month, Dunleavy and Frank Richards, president of the Alaska Gasline Development Corp., revealed that Glenfarne, a New York-based company, was pursuing plans to develop the state's long-planned $44 billion Alaska LNG project.
In Tuesday's address, Dunleavy again touted the project as a "game-changer" for Alaska, but he appeared to acknowledge the inevitability of importing gas to bridge a projected gas supply shortfall — at least in the near-term.
"We'll address the short-term shortage of natural gas for Southcentral, and we recognize that some of those solutions may be painful and certainly won't be popular, but they will be temporary," he said.
Giessel said she was glad that Dunleavy recognized the "desperate situation" created by the natural gas shortage. Sen. Bill Wielechwoski, an Anchorage Democrat, said that situation was due to "unfortunate, tremendous inaction" by the Dunleavy administration earlier in his tenure.
Wasilla Republican Sen. Mike Shower, the Senate minority leader, said nobody wants to import natural gas due to the anticipated extra costs. But getting Alaska's stranded supplies to market is not possible yet, he said.
"So until we can, we're gonna have to import it," he said in an interview.
Enstar, Southcentral Alaska's natural gas utility, recently announced that it was advancing plans to import gas through a converted facility in Nikiski.
Trump has appeared hostile to renewable energy since returning to the White House last week. On his first day in office, Trump signed an executive order to suspend new leases for wind projects.
Dunleavy, however, reiterated on Tuesday his openness to renewable energy projects and carbon capture. He previously said he is "agnostic as to the electron." and used Tuesday's address to again tout the need for expanded wind, solar and geothermal power generation in Alaska — alongside power from fossil fuels.
Dunleavy said he would introduce legislation "to ensure we have the most competitive licensing process that attracts professional talent." Dunleavy also said he would pursue permitting and regulatory reform.
Anchorage Republican Rep. Mia Costello, the House minority leader, described the speech overall as "optimistic."
She said "the horizon for oil and gas development is also very encouraging," and that work should be done in career and technical education to get Alaskans ready for those jobs.
Wielechowski said the contrast between Dunleavy's rosy projections for resource development and the current economic reality of Alaska reflect "a tale of two economies going on in this state."
"You have one group of people doing very well — the wealthy, the powerful, the privileged, the connected, the huge corporations — they're doing great. But the average Alaska, I think if you ask them on the street, 'How are you doing?' They're struggling to get by," Wielechowski said.
'Expand these opportunities'
Dunleavy touted early results from a bill he championed to improve reading instruction for Alaska students. That bill was adopted in a bipartisan vote in 2022.
"The early data is very encouraging," Dunleavy said. Some educators said it's too early to tell if the bill is achieving its intended purpose.
The governor also again referenced a national study conducted by a Harvard researcher that found Alaska's charter schools were outperforming those in other states. State researchers found the high performance of Alaska charter school students can be explained by demographic differences between charter school students and students in other public schools.
Senate President Gary Stevens, a Kodiak Republican, said he didn't think it was "legitimate" for the governor to keep mentioning the Harvard report "because it has been disproved by some of the experts."
Dunleavy also blasted a lawsuit backed by a union representing Alaska teachers asserting that the state's publicly-funding homeschooling program is violating the state constitution by funneling public education funding to private schools.
The Alaska Supreme Court sent the litigation back to the Superior Court after asking the plaintiffs to add specific school districts as defendants. The litigation is still active.
"Parents and students shouldn't be put on a waitlist to attend their schools of choice," said Dunleavy. "We should be working to expand these opportunities, not stopping them."
Stevens said Dunleavy's ideas on charter schools were "a non-starter for many of us who believe in public education and don't want to see those changes made."