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Gov. Mike Dunleavy/State of Alaska

 

If Alaska Gov. Mike Dunleavy is reading the New Yorker, he must now realize it’s time to resign, quit, thrown in the towel, run for cover, or otherwise disappear.

Reporter Dan Kaufman journeyed to the 49th state for the magazine and found it impossible to find a single Alaskan willing to make a case for the tall guy staying in office.

Even died-in-the-wool Republicans have had it with the governor if Kaufman is to be believed:

  • “One pro-labor Republican businessman who helped launch the recall was incredulous about the Dunleavy administration’s legal battle over” state employees being required to opt into unions instead of out of them.
  • “‘Getting elected is not a defense against recall,’ Scott Kendall, a Republican lawyer who used to work on campaigns for Senator Lisa Murkowski, told me.”
  • “A significant number of the recall proponents, however, had been Dunleavy supporters, including Joe Usibelli, Sr., the chairman of Alaska’s largest coal-mining company.”
  • “For some of Dunleavy’s opponents, the recall’s broad-based support in Republican Alaska is also a chance to prove that the allure of Trump’s right-wing populism is waning.”

It is unclear whether the double entendre in that last sentence is intentional or accidental.

Is support for the recall broad in a state perceived as a Republican stronghold even though the largest block of voters comprises those who register either undeclared or nonpartisan?

Or is support for the recall broad among Alaska Republicans, who make up about 26 percent of all voters?

As a whole, Alaskans are rather independent minded. Only 14 percent of them registered as Democrat, 3 percent as Alaska Independence Party (AIP), 1 percent as Libertarian, and less than 1 percent each for the Green Party, the Alaska Constitution Party, the Twelve Visions Party, the Veterans Party, and the UCE’S Clown Party.

Together those various parties comprise about 47 percent of Alaska votes, leaving those undeclared or declared nonpartisan in the majority. How Dunleavy fares with these voters is almost impossible to say.

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Gauging the north

Polls – inherently iffy in Alaska to begin with- show Dunleavy in trouble with a significant minority of Alaskans, but there is no indication of majority support for a recall as of yet.

A Morning Consult poll found Dunleavy’s approval rating at 49 percent in July with only 32 percent of Alaskans disapproving and 19 percent unwilling to voice an opinion.

Morning Consult tracking polls since then show Dunleavy’s support sliding and his disapproval rating growing. But with the two blocks now tied at 42 percent, his fate clearly remains in the hands of the undecided with that big pool of independents reportedly leaning Dunleavy’s way. 

That’s if polls can be trusted, and if the recall initiative actually ends up on the ballot.

The Alaska Supreme Court has yet to decide whether its backers have sufficient grounds for removal. Oral arguments in the case are set for March 25. The state’s chief justice has already recused himself from that hearing. He’d previously criticized Dunleavy for trimming the budget of the state court system.

Most of Dunleavy’s critics and opponents are likewise mad about his efforts to reduce spending in a shrinking state with ongoing budget problems. Dependent on oil taxes for most of its revenue, Alaska has suffered as the flow from the aging Prudhoe Bay oil field has slowed and  global oil prices have slipped downward.

Kaufman predicted the court will approve the recall initiative.

“Last month, the state Supreme Court…allowed Recall Dunleavy to begin gathering signatures,” he wrote. “The move confirmed a widely held expectation that the court will certify the recall.”

How “widely held” the expectation of court approval of the recall is actually unclear. The grounds for recall – funding cuts for the court system, Facebook ads urging Alaskans to contact legislators opposed to budget cuts and Dunleavy’s failure to appoint a Palmer Superior Court judge within the time dictated by law – have been questioned.

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The fundamental issues

The recall is overwhelmingly fueled by Dunleavy supporters madder than hell that he cut state spending too much or didn’t give them all the money he promised in the form of Permanent Fund Dividends, the annual cash payment to Alaskans as their part of the profits off investment of the state’s oil wealth.

The essence of the recall issue was well defined at the end of the New Yorker story. Kaufman first observed that “Dunleavy has been softening some of his positions” since the recall initiative started, and then wrote this:

“Kendall, of Recall Dunleavy, noted that the threat of a recall continues to have a moderating effect: Dunleavy’s most recent budget, announced in December, contains few spending cuts, and essentially punts the difficult decisions over the dividend to the legislature. ‘It was a huge capitulation,’ Kendall said, which he believes will only help fuel the recall movement. ‘If he only behaves when you’ve got your foot on his throat, why would you take your foot off his throat?'”

Some Alaska lawyers have questioned the Supreme Court’s willingness to politically weaponize a recall process statutorially intended to remove politicians who display “(1) lack of fitness, (2) incompetence, (3) neglect of duties, or (4) corruption.”

No one has presented any evidence of corruption on Dunleavy’s part, and it’s hard to make a case that his efforts to cut the budget were neglectful or incompetent. The cuts he proposed were huge, and the cuts eventually made large.

But the governor and his staff weren’t picking them by throwing darts at a dart board or spinning a bottle or pulling numbers out of a hat or in any other way acting incompetent or neglectful.

Ironically, Kaufman’s story actually makes the case for the opposite in diving deep into Dunleavy’s hiring of “Donna Arduin, a consultant based in Florida, as the director of the Office of Management and Budget. Arduin is a partner in Arduin, Laffer & Moore Econometrics, a consulting firm that specializes in advising governors and legislators on state budgets.”

Hiring an expert to lead the job is the opposite of incompetent or neglectful. Those words are not defined by outcomes that leave people unhappy.

“Lack of fitness”, meanwhile, is usually meant to mean a lack of physical or mental health. Dunleavy in 2018 had surgery to resolve a long-running problem that caused his heart to accelerate, but that appears over. The operation was judged successful.

And he had a carcinoma removed from his forehead this year, but in general there is no evidence he is in ill health physically or mentally.

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Lawbreaker

The strongest charge against Dunleavy is that he failed to appoint the aforementioned judge within the period of time stipulated by the law.

Some lawyers wonder if the High Court will sanction a recall vote on such grounds when everyone in the state knows the real issue is the budget cuts. Such a ruling could set a pretty low bar for recalling future governors or, for that matter, legislators.

Could a legislator convicted of speeding be recalled for breaking that law? What about a legislature with a record of regularly breaking speed limits?

A law, after all, is a law.

The big question the justices will face is whether this recall has anything at all to do with the law. And the editors of the New Yorker pretty well defined what the issue is truly about with their headlined conclusion on Kaufman’s story:

“Mike Dunleavy slashed public services in Alaska under the guise of populism. Now a statewide movement wants to remove him from office.”

Is “slashing” public services an impeachable offense? Does it meet the requirements of “(1) lack of fitness, (2) incompetence, (3) neglect of duties, or (4) corruption?”

As with so much of what passes for reporting today, Kaufman’s story doesn’t get down into the nitty-gritty of that issue. His work is the sports reporting – who is winning/who is losing – movie critiquing that so much political journalism has become.

In this case, the “good guys,” who want government to provide a safety net for everyone, are up against bad guy who put “many of the state’s most vulnerable residents…in crisis.

“In Anchorage, local media reported on a man named Michael Shelden, who had had sixteen teeth pulled, owing to chronic pain. He was told to come back in four weeks for his dentures. That same month, Dunleavy issued his vetoes. Because Shelden could no longer access Medicaid dental benefits, and could not afford to pay two thousand dollars for the dentures on his own, his dentist’s office told him that he could no longer get his teeth. ‘I cried,’ he told a local television station. ‘And I wake up crying at night.’

“In the town of Cordova, ferries took residents and their vehicles across the sound to Whittier, a ninety-minute drive from Anchorage, where they could stock up on groceries, see doctors, and visit family and friends. As a result of Dunleavy’s budget cuts to the Marine Highway System, the ferries have stopped running and residents are now trapped in Cordova until spring….”

The story did not mention how Cordova fought a connection to the state’s limited road system back in 1991 when the state was flush with oil money. Cordovans then teamed up with environmentalists opposed to the road to try to recall Gov. Walter  J. Hickel, a big road booster.

“The only way to get to this picturesque town is a six-hour ferry ride or a plane trip into the Merle K. (Mudhole) Smith Airport,” the Los Angeles Times reported at the time. “Many of the 2,600 residents like it that way, enjoying their isolation on the edge of Prince William Sound….”

The isolation isn’t looking as enjoyable since the end of the twice-weekly ferry service the state subsidized. Cordovans are, as Kaufman wrote, “trapped…until spring.”

At least they are not alone in this predicament.

About eight out of 10 communities in the state lack road connections and are, as the American Society of Civil Engineers puts it, dependent “on aviation for access to fresh foods, mail, and healthcare.”

Residents of many of those communities pay far more than Cordovans for a flight to Anchorage. A search for a cheap flight to the village of Hooper Bay in Western Alaska found a lowest cost of $730. The cheapest flight from the Arctic community of Kaktovik is $857.

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Northern differences

Alaska is a big, empty state with little in common with most of those in the Lower 48. The road system is small, the distance between communities large, and the cost of doing business – public or private – high.

When the state was rich with oil money, these realities were easy to overlook. Falling oil prices have forced Alaskans to face them. There are no easy solutions to the state’s budget crisis. Ignorant of the state’s fiscal situation, Kaufman quotes Sen. Bill Wielechowski, D-Anchorage, without question:

“I used to have these conversations with Dunleavy when we were both in the Senate. We both predicted this moment: he wanted to push the state in the direction where you were faced with making cuts or giving up the Permanent Fund, and he thought cuts would prevail. I wanted to push the state in the direction of increasing oil taxes, keeping the services, and keeping the full PFD.”

Increasing oil taxes is the magic solution. The problem is that global oil prices are low, and the U.S. Energy Information Administration predicts they will go lower this year.

Meanwhile, the costs of finding and producing oil in Alaska are high. BP – the fourth-largest, publicly traded oil company in the world –is bailing out of the state after 60 years, saying the numbers don’t pencil.

BP group chief executive Bob Dudley described the departure as part of a plan to move into markets “more competitive for our investment.Hilcorp bought BP’s assets for what some in the industry consider a bargain basement price of $5.3 billion, and ConocoPhillips, another oil major, remains bullish on the North Slope in the belief that its horizontal drilling program can reduce production costs to $30 to $40 per barrel – down from a state average over $50.

But how much more money the state can squeeze out of the companies without sparking a drop in production that would offset any increase in tax revenues is an unknown. And the state is still facing a budget shortfall of about $1.5 billion a year.

After the Tax Foundation, a right of center think tank, examined the issue in January, it concluded that any fix would “require a balanced approach, pairing new revenues with additional spending cuts and further reliance on the state’s reserves.”

State liberals are already enraged about the 2019 cuts, and conservatives are equally opposed to new taxes. Nobody seems to like the idea of boosting taxes on motor fuels, one of the Tax Foundation’s recommendations:

“Raising the state’s low motor fuel tax rate could also be a source of revenue, though its contribution would be insufficient on its own. Bringing back an individual income tax
or doubling down on oil and gas taxation would be more harmful economically, and, in the latter case, fails to diversify revenue streams to address the narrow focus that has contributed so greatly to Alaska’s current crisis.”

Still a lot of Alaskans, both liberal and conservatives, prefer the idea of the oil industry paying the cost of Alaska’s government, and a lot of liberal Alaskans think an income tax is a badge of civic honor all Alaskans should be happy to wear.

Alaskaworld

Anyone who thinks recalling Dunleavy will do much to change these fundamental, problematic dynamics is clearly from somewhere far from Alaska. Kaufman’s suggestion of “hints that Alaska’s recall fight may also have national implications” is the hopeful hooey of someone with Trump Derangement Syndrome.

Alaska, the outlier state, isn’t California or New York or even New Jersey. It’s the Last Frontier state finally forced to face the problem that concerned those Congressmen originally reluctant to grant statehood to the territory: the population might be too small to truly support a state.

It survived on Cook Inlet oil revenues and an income tax in a period when Alaskans were hugely independent and all about taking care of themselves instead of expecting government to do things for them. Then it boomed when North Slope oil flowed, and the revenues started pouring in.

Today, in the wake of the oil boom, it is a state filled with people who expect the services and amenities of every other state even though Alaska is home to fewer than 750,000 people. That’s about the population of the city of Seattle.

Seattle operates on a budget of $6.5 billion. Alaska spending, which Dunleavy has helped decrease, is over $10 billion. As a result, everyone – or something – has to pay a bigger share. Oil has been the something paying the bigger share for decades.

The Urban Institute, a left-leaning think tank, offers what might be the best, simplified breakdown of Alaska state spending.

Alaska’s combined state and local direct, general expenditures were $12.7 billion in FY 2017 (the most recent year census data were available), or $17,200 per capita,” the Institute reported. “National per capita direct general expenditures were $9,449.

“Alaska’s largest spending areas per capita were public welfare ($3,483) and elementary and secondary education ($3,172).”

Dunleavy’s budget cuts reduced these numbers, but the state remains an unavoidably big spender.

As the Institute points out, “per capita spending is often relatively high in states such as Alaska that have low populations and lots of space. Delivering services over large areas can drive up costs, and low density prevents states from taking advantage of economies of scale.”

And there’s the problem.

Largely as a result of the economies of scale, Alaska’s top-5 industries are government, mining (which includes oil and gas), transportation, finance and social services in that order. New York’s top five industries are finance, professional services, government, social services and information.

The financial sector is more than three times as big as government in New York. Professional services, social services and information are near the same size. Collectively, they help provide a healthy tax base to support government.

This is the way other states work. Alaska is the only state in the union with government as its most important industry. In Massachusetts, largely considered one of the farther left state’s in the country, government is the fourth largest industry.

Government is the second largest industry in a number of states. Wyoming is one of those; government there makes up about 15 percent of the state’s gross domestic product (GDP) and the other 85 percent of the economy pays the taxes to support government.

In Alaska, the split is 20-80. There is a smaller economic base in the private sector supporting a larger public sector.

In the state of Washington, the split is around 12.5-87.5; in California, closer to 12-88; in Oregon, about the same. 

Those states are near the national average. Forget the debates about per capita spending on government in Alaska. GDP is a much better measure; it illustrates what the economy as a whole can support.

When Alaska was rich with oil money, the 20 percent of the economy tied up in government jobs was easily supported by the flood of oil money coming as part of the other 80 percent. Alaska is no longer oil rich. Even if the state squeezes more money out of the oil industry, Alaskans are going to have to chip in more than in the past.

Or the size of state government is going to need to be reduced.

Viewed against realities defined by 49 other states, the fiscal situation in the 49th state today appears clearly unsustainable. To miss this you’d have to be a journalist from New York, or maybe just a New Age reporter more interested in feelings than in facts.

Especially unpleasant facts.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

19 replies »

  1. What a glorious waste of time Dunleavy does not match any of the recall requirements of ((1) lack of fitness, (2) incompetence, (3) neglect of duties, or (4) corruption) so stop wasting everyone’s time whipping up stories that he does. There are a great many issues out there more deserving of these whipped up stories.

  2. What we need is realistic, dependable income. No one here is talking about that or about a state income or other tax that Hammond said would be necessary again down the road.

  3. Medred, a Big Mike supporter, takes on the New Yorker with an unusually wordy essay. I’m sure his day has been made. I go to the New Yorker for good writing/entertainment; here only for reverse entertainment. It’s unfortunate that Andy Borowitz didn’t write about this….

    • Yeah I thought, really – New Yorker? What the heck’s with that? I come here to read about this neurotic blue-blood?

      Then I did some pointed dunleavy-searching … and hell the returns are packed with East Coast Elites and Beltway Pundocracy. Alaska? You can’t get out of the paved megalopolis.

      Why? They’re all twisting their hankies that Alaskans might not drink the Kool Aide. Apostasy!!

      Live within your means? What kind of trip-wire, PTSD survival-kook is this Dunleavy? And these fawning journo-hillbillies of the froze north, how … how deplorable!

      Yep. This is some pretty rich entertainment alright.

  4. All over the county, Education has become a sort of Medieval Catholic Church, which gobbled up more & more of everything, until finally civil society revolted. With tragic consequences that continue today.

    President Obama tried to tackle another form of Popery (as the Protestants came to call it), in the Health Care industry. Hillary Clinton set out to show the world how effective she could be in government, by tackling this task in the 1990s …

    The weakness of education, is that what it delivers has not kept pace with what it costs. Health care is expensive too, but they steadily improve what they can deliver, and pretty dramatically.

    The Media institution has ‘played politics’, trying to push pet theories under the rubric of Journalism … but the Internet is managing this issue handily.

    Both Education and Health Care have chugged impressively on their preference of kool aid. As usual with mind-altering indulgences, the highest faculties of judgement & perception are affected first. Again, health professionals at least know they are delivering-for-dollar. Education, otoh, only holds a decent patch of moral ground, in local communities where parent’s children are benignly managed Mon-Fri.

    Higher education? Actively subversive, trending to downright Orwellian.

    Revive the state correspondence school system (now by Internet), buff-up, support & ‘lionize’ home-schooling … and send the big kids Out for a few years. Reciprocal In State Tuition is already a done deal.

  5. The reason that the size of the public sector matters is that, compared to the private sector, government is always an inefficient allocator of resources. The basic reason for that is that it is “nobody’s money” so by definition, there is nobody who can care. The inefficiency from the largest public sector by far of all 50 states represents a permanent anchor on our economy…I just realized why our largest city is named Anchorage. How visionary of us.

    The private sector is far from perfect, but eventually corrections to inefficient/unsustainable allocations of capital are attempt, because “somebody’s money” is involved.

    I’ve never been a fan of the PFD but allocating it to sustain the largest US public sector is the worst possible public policy.

    If I was king, I would use the PF to pay off/defease all of our debt and fund unfunded liabilities. If the voters want a higher dividend then it will be up to grow the corpus. The easiest way to do that is resource development.

  6. I wonder what the “deep dive” on the Clark Penny contract will turn up?
    Nearly half a million dollars is a lot of money to award in a “no bid” contract to a grandson of your biggest donors…especially when he lives in California.
    This action did not make me feel much loyalty in the face of the struggles most wage earning Alaskans currently face accross the state.

    • Well, Alaska Land Mine wants us to think they’ve found something Dunleavy was doing wrong.

      So far, all they’ve shown/found, is that Dunleavy let out a no-bid.

      Did he do it to grease Grandpa Penny? Stay tuned! Don’t touch that dial!

      If he pulled a chitty, he deserves to be weeded out. But what I hear is, it’s as hard to find dirt on Dunleavy as it was on Palin … and is now, on Trump.

      It’s the Internet era …. and before that it was already the Computer era … all these records have been going into digital files, for decades verging into generations now.

      ‘Trust but Verify’ … and they know we can!

      So there’s probably no dirt.

      Speak of clean, dirt-free, compacted snowmachine trail … did you get all the way up to your place on the Yentna? Have you ever moseyed into that Shell Lake Cutoff? Getting ready for another outing? 🙂

      Hmm … deicing for snowmachine tracks? After sloshing through overflow?

  7. And this my friends is what failed socialism looks like. Socialism is for losers and will always be a failure. Keep waiting on that “free” check and when it is threatened, vote for the guy who promises you more, rinse and repeat..
    Oh, I wouldn’t quote anything with the words “New York, New Yorker, etc” in it.

    • Bryan,
      AK is a lot closer to modern “Cronie Capitalism” than it is to any form of Socialism.
      Take a lot at the “back flow” of cash back to D.C. and you can see the real weight pulling us down.
      Have you ever heard of the great “Eskimo Tax Scam”?
      “He shows how corrupt insiders in Alaska use something known as the “Rent‐​an‐​Eskimo” scam to pull in hundreds of millions of tax dollars from no‐​bid federal contracts.
      These insiders, meanwhile, steers big bucks to Washington lobbyists (almost all of whom worked for politicians like Lisa Murkowski), who then provide campaign cash to the corrupt officials who pass the laws that enable the circle of graft to continue.”
      Ted Stevens and the old Republican Gang really sealed the faith of the last frontier when he pushed the “Eskimo Tax Scam” on AK with the help of the Carlyle Group which is a 50 percent owner in Hilcorp….can you see the “corporate welfare” trend that is pulling us down?

      https://www.cato.org/blog/alaska-version-big-government-means-big-corruption

    • Steve, if this article doesn’t ring with recall socialism I do not know what to tell you. This whole article is about promised government “freebies”. Hell, one guy even cried because he couldn’t get his Medicaid stamped “free” teeth.
      Of course there is “Cronie Capitalism”, but there is also too many pissed off people holding empty hands that feel they should be full.
      Where do you think they get that entitlement from?

  8. I did not vote for the gov, though I clearly see what dilemma he is in:
    The world is awash in oil & natural gas, the value keeps falling.
    The cost of good, services & pensions are rising.
    AK needs new sources of revenue.
    The ferry system, though very important to AK coastal towns, has never been financially sustainable.
    This is not the ‘80s, AK cannot spend money like it is.
    AK residents want to continue with all the services, they have had, since oil started flowing down the pipeline, not going to happen.
    A gas line was a pipe dream, which money was spent on, now wasted dollars.
    Solution:
    250K residents need to move to the lower 48.
    Continued cuts need to happen.
    Leave the small towns and villages and move to MatSu.
    Move the state capital to Anchorage, the cost of running the government from Juneau, is not cost effective.
    These are only suggestions, though once the reserve dollars are gone, the hard choices will be made.
    A recall does not accomplish anything, the next gov will have to make the same cuts.

    • Is the legislation that was passed in the 1970s to move the capitol out of Juneau (to Willow, iirc) still on the books? Or was action taken at some point to scrub that?

      Juneau makes government more expensive, and difficult … but getting the capitol set up somewhere else would be expensive too.

      But yeah, it should be done … gradually but steadily, incrementally in steps perhaps.

    • Moderately shocked at finding myself in general agreement with JM. Strange bedfellows indeed. Don’t disagree completely with your recommendations. Have a slightly alternative approach that could work:

      1. Cut education across the board 50%. Move to vouchers for K-12. Move to distance / online ed as the new model. Problem will be the AEA & that public ed is viewed as daycare by a substantial portion of young parents.
      2. Freeze all COLAs for a decade (perhaps more). Includes all retirees (I am one of those).
      3. Move to a MSA / concierge model for health care.
      4. Roll back Walker’s Medicaid Expansion.
      5. Get more product thru TAPS. GTLs batch shipped down the current infrastructure with oil. Your market for this product (synthedic diesel) is on both sides of the Pacific Rim.

      Exact balance? Probably not, though you’ll get close. Cheers –

    • James,
      “A recall does not accomplish anything, the next gov will have to make the same cuts.”
      Very true, but mike is not a leader,recallable offense? No,but thats facts, when he ran he said more or less “we won’t have to make any big cuts, we’ll just not fill the backlog of unfilled state positions”It was in the hundreds I believe-PRESTO-solved.
      And republicans/independants drank deeply on that koolaid.
      And when the vote on last years budget went down, was standing tall mike @ the capital, making last minute calls and face to face meetings with various on the fence legislatures?
      No he was in the midwest at a national governors meeting
      There must be something in the water here in the valley, we produce idiots by the cord:keller,kohring,palin,eastman,babcock.On and on the list goes.
      As far as state economics go,take a look at fridays closing trade for Brent crude, at what price does conoco take a defensive strategy?
      And the ankle biter wildcatters funding will dry up quicker than snot,with there less than investment grade debt ratings.Oh yah that funding thing,JPM, GS,WFC have publicly stated they will no longer fund arctic exploration.
      The majors dont necessarily need institutional lines of credit, but XOM specifically has a free cashflow problem.I’d love to know the profitability profile of Pt Thompson.
      On the possibly positive side of the ledger depending on your perspective,Donlin goldmine is looking like a go 3-5 yrs out.
      The words quoted (second hand to me/us)”Its not a matter of if, but when.”
      300 mile access road,w/14-16″ gas pipeline.30 mile road from Kusko river to minesite.250-275 megawatt power plant.
      The state has its back against the wall financially.We as a state have to start saying yes to projects, we really dont have any choice.And I suggest people start getting friendly with the idea of an income tax.
      Life is about change, its time to accept that things won’t stay the same here.Which is the way its always been…

      • Change is the only constant in our lives.
        It is gonna happen. We are not the Fed Gov, we have to balance the budget. The reserve account is almost gone.
        As I said: either cut the budget (of every program, agency, education, Medicaid etc. the state has) or find new sources of revenue. Not gonna happen.
        Once residents realize party is over, some may think it is time to move out of state. What we have currently is not financially sustainable.

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