Republican Gov. Mike Dunleavy’s controversial pick for state budget director — who was at the helm helping Dunleavy deliver his original promise to cut more than a billion dollars from the state’s operating budget, plus hundreds of state jobs, earlier this year — is out.
Office of Management and Budget Director Donna Arduin will be stepping down from her role, effective immediately, according to Dunleavy’s Chief of Staff Ben Stevens. She is being moved into an advisor position instead.
Stevens told reporters in a teleconference Monday morning that OMB Deputy Director Laura Cramer will be filling Arduin’s role in the interim. A new director will likely be named “probably later this week,” Stevens said.
Arduin was named OMB director in 2018 and has served as an advisor to several other Republican governors. Her history of slashing state budgets raised concerns from the public and Alaska lawmakers when she was hired.
After much back-and-forth with the Legislature and public outcry that resulted in a recall effort, Dunleavy signed a final budget in mid-August that eliminated $650 million from state spending — a roughly 8 percent spending decrease — to the state’s budget for the coming fiscal year and allocating a $1,600 Permanent Fund Dividend.
On Monday, Stevens said that Arduin had been “instrumental in developing tactics and finding inefficiencies within the government,” but that her services as director were no longer necessary.
“We have 13 experienced commissioners, the governor and the commissioners want to have input into development of the budget,” Stevens said.
Arduin, who is currently out of state on personal business, will move to contract status effective Oct. 1, at which point she will be offered an advisor role at reduced compensation, according to Stevens.
“We’ll put together a contract and we’ll work together to try and find a mutual agreement,” Stevens said, saying it was not yet clear if Arduin would remain with the state.
According to a Freedom of Information Act request submitted by the Empire last year, Arduin was the highest paid member of the governor’s staff at $195,000 a year. When she was working as a consultant for the state of Illinois in 2015, her fee was $30,000 a month, according to the Chicago Tribune.
Deep cuts
Arduin’s tenure at OMB was met with deep skepticism from the very beginning.
In February, eight lawmakers, all Democrats, sent a letter to the governor raising concerns over Arduin’s business connections to private prisons.
“According to the Department of Corrections — whose budget is directly controlled by Ms. Arduin — the state is examining prison privatization. Although evidence from other states indicate prison privatization does not reduce costs, it does transfer wealth to firms such as those that retained Ms. Arduin to advocate for prison privatization in other states such as Florida and California,” the letter read.
In an opinion piece for the Empire, former vice-chair of the House Finance Committee, Les Gara, said Arduin, “knows less about Alaska than anyone who’s ever written an Alaska budget, claims it’s not her responsibility to know her budget’s impact on elders, students or the economy of a state where she doesn’t live.”
Indeed, Arduin has said herself that, “I joined government to shrink it.”
In an article in Governing magazine from June of this year, Arduin said moving from state to state has helped her cut state budgets.
“If you plan to spend your career in one state government system,” she told the magazine, “it makes it hard to do things that are unpopular, especially within the walls of the capitol.”
But that philosophy doesn’t quite fit well with Alaska, according to Rep. Sara Hannan, D-Juneau.
“I think it is beneficial to have someone in charge of OMB who knows Alaska, which is unique,” she told the Empire Monday. “We’re made up of a lot of unorganized local governments, so the state has a bigger role.”
Furthermore, Hannan said, Arduin has only one method for balancing a budget: cuts.
“This OMB director made decisions that all we should do is cut, not where should we invest or how we can bring in more revenue,” Hannan said.
However, it’s that very mentality that has attracted so many governors to her.
In a 2006 profile for Duke magazine, Duke University’s alumni magazine (Arduin is an alumna), then-Florida governor Jeb Bush extolled Arduin’s skills as a budget manager.
“What state improved to a triple-A bond rating during these tough times? What state ran an $8.6-billion surplus? She’s the budget king,” Bush told Duke.
Her advising cut $300 million from Florida’s state budget and $800 million from California’s Medicaid program.
Arduin’s cut-first approach to balancing the budget will have adverse impacts for Juneau, according to Sen. Jesse Kiehl, D-Juneau.
“Cuts to government are never helpful to our local economy,” Kiehl told the Empire by phone Monday afternoon. “We do feel an extra impact because we’re the capital.”
Kiehl said it remains to be seen how much the University of Alaska Southeast suffers and that cuts to the ferry system were likely to hurt the region.
“While Juneau may see a smaller reduction in ferry service than outlying communities, damage to their economies hurts our economies, because we’re a hub,” he said.
• Contact reporter Peter Segall at 523-2228 or psegall@juneauempire.com.
