Want to Slash Your State’s Budget? This Woman Can Help.

Donna Arduin has made a career out of consulting with governors on budget cuts.
by | June 2019
Donna Arduin.
Donna Arduin isn't afraid to slash a state's budget -- or several states' budgets. (Michael Penn/Juneau Empire)

People who work at top levels in state government change jobs about as often as anyone else, but they usually do it within the same state. Donna Arduin is an exception: a public executive itinerant. That has been both a help and hindrance in her current role as director of Alaska’s Office of Management and Budget.

Arduin came to the job after having worked as a top budget or finance official in Michigan, New York, Florida and California. She’s also served as a consultant to Republican governors, most recently in Gov. Bruce Rauner’s unsuccessful crusade to drastically cut spending in Illinois. She’s a name partner in a consulting firm with supply-side economics guru Arthur Laffer and Stephen Moore, President Trump’s withdrawn pick to sit on the Federal Reserve Board.

Arduin has earned a reputation as a slash-and-burn artist, seeking serious cuts to state budgets everywhere she has been. She believes her migrations have made her work easier, not harder, because being a permanent part of a state’s institutional culture renders it even more difficult to administer tough medicine. “If you plan to spend your career in one state government system,” she says, “it makes it hard to do things that are unpopular, especially within the walls of the capitol.”

But Arduin’s status as an outsider is helping to make her a particular target in Alaska. “She seems to have virtually no understanding of the state,” says Tom Begich, the Democratic leader in the state Senate. “She never once addressed the impact the cuts would have at the local level.”

Alaska is not the first place where Arduin has been accused of having a political tin ear when it comes to the ramifications of her proposed cuts. At one point, her recommendations to Michigan Gov. John Engler helped drive his approval rating down to 13 percent. Her $30,000-per-month consulting fee in Illinois drew negative attention and was sliced in half. Her current salary of $195,000 puts her at the top of the Alaska government pay scale.

There’s no doubt that Alaska’s fiscal house is in bad shape. Due to the decline in oil prices, the state is currently enduring its longest-ever recession. Last year, the legislature plugged holes by allowing part of the state’s permanent fund -- the proceeds from its oil reserves -- to be used to shore up the budget, while cutting the dividend payments statutorily owed to Alaska residents. Over the past six years, Arduin says, the state has spent $16 billion from its budget reserves. It faces a deficit in the coming fiscal year of $1.3 billion. Alaska is the only state that doesn’t impose sales taxes or individual income taxes. “When there was a lot of money, it was spent,” Arduin says. “In my opinion, they never had to review the benefits they’re getting for what they’re spending.”

Arduin has helped craft a budget for Gov. Mike Dunleavy that includes deep cuts to schools and universities. Two-thirds of the budget for the state ferry system would be cut, which would bring operations to a halt in October. During last year’s campaign, Dunleavy promised to keep all those programs intact. “You have bicameral, bipartisan disagreement with the governor’s budget,” Begich says. “He proposed a budget that has no support in a legislative body controlled by his own party.”

No matter how unpopular his budget cuts, the Republican governor may still get much of what he wants. It takes a three-quarters vote in the legislature to override an Alaska governor on line-item vetoes. Dunleavy could pick up the votes he needs by restoring some money to the ferry system. And he’s talked about giving ground on budget questions if legislators will approve a trio of constitutional amendments he’s proposed to impose fiscal discipline in the future -- for instance, by requiring voter approval of any tax increases.

In terms of imposing austerity, Alaska may yet end up being Arduin’s biggest success story. “I have been willing to go from state to state, not concerned about getting my next job in the state capitol,” she says. “I have much more willingness to do those things a governor knows he has to do, and take the heat for it.”