Commentary: Alaska newspapers fail to correct biggest financial distortion in state history

Editor’s note: This column is in response to a commentary by Gov. Mike Dunleavy headlined ‘We must chart a path forward’ published in the Dec. 18 edition of The Cordova Times and several other newspapers in Alaska.

By Dermot Cole
For The Cordova Times

Nearly every newspaper in Alaska printed a press release in December from Gov. Mike Dunleavy that contains the biggest financial distortion in the history of Alaska.

He overstated the 2020 earnings of the Alaska Permanent Fund by $7 billion for self-serving and short-term political purposes, the kind of thinking that will lead to a dissipation of the fund’s assets.

The Anchorage Daily News, the Fairbanks Daily News-Miner, the Peninsula Clarion, the Delta Discovery, the Arctic Sounder, the Bristol Bay Times, the Cordova Times, the Mat-Su Frontiersman and the Ketchikan Daily News printed the Dunleavy opinion piece without blinking.

Those organizations have not informed their readers that the Permanent Fund has not posted gains anywhere near the $11 billion claimed by Dunleavy in 2020. He used this fictitious number in their pages to try to claim that the state can easily afford to take $6.3 billion from the Permanent Fund in 2021.

“I am proposing we utilize just over half of this year’s growth to address the 100-year crisis before us,” Dunleavy told the readers of Alaska newspapers.

“This will allow for distribution of the remaining portion of the 2020 PFD along with a full PFD in 2021, providing nearly $5,000 in relief to every qualified Alaskan.”

The truth is that $6.3 billion is a great deal more than “just over half of this year’s growth.” Dunleavy overstated “this year’s growth” by $7 billion and hasn’t been called on it.

“This year’s growth” is actually about $3 billion. The Dunleavy plan would consume all of that, plus $2 billion.

Nearly every Alaska newspaper printed his handout without checking the facts on the growth of the Permanent Fund in 2020. He made similar false claims in a 39-second video that boasted about pandemic stock market gains, while ignoring billions in pandemic stock market losses.

I know that this is a hard time for newspapers, where staffs are shrinking, underpaid and overworked. Editors are desperate for material.

They are prone to treat anything emanating from the governor’s office or any state or federal official or any powerful institution as scripture.

But that shouldn’t stop editors from correcting errors of real magnitude once they realized they’ve been conned. So far, the newspapers have not acknowledged their part in spreading the $7 billion exaggeration or called out the governor for his deception.

The only news coverage has been this piece in the Anchorage Daily News, which refers to “exaggerated information” produced by Dunleavy and includes an obligatory denial by his public relations man.

If the Permanent Fund is to survive, which it may not, Alaska’s politicians and those in the communications business have to insist on accuracy in describing its performance and make it clear that short-term results cannot be used to decide annual spending totals. The Dunleavy record of misrepresentation and pandering is a temporary effort to preserve his political hide.

What Dunleavy is promoting as sound policy—that earnings have been solid from April to December so we can spend $6 billion without blinking—is a political and financial scam.

Trying to sell the scam with videos worthy of an elementary school audience is a disgrace.

The Permanent Fund ended 2019 with a market value of $68.4 billion. The Permanent Fund, as of Nov. 30 this year, had a market value of $72 billion. On Dec. 29, it had a market value of $72.8 billion.

In this year of great disruption, the market value of the fund dropped by $8.5 billion when the worldwide panic hit in early March, a sudden short-term decline that rivaled the loss during the 2008 financial collapse. The March meltdown distorts the truth on 2020 performance.

Only a charlatan would exclude it to cook the books, which is what happened, with the assistance of Alaska news organizations.

Veteran investigative journalist Dermot Cole writes “Reporting From Alaska” from Fairbanks.

This Dec. 30 column is reprinted with his permission. Read more of his columns at dermotcole.com.