Senate Finance week four recap

Friday, February 19th, 2021

This week in Senate Finance we heard from the Office of Management and Budget on the governor’s fiscal year 2022 budget amendments.

One main takeaway from these changes is that motor fuel tax revenue is down again. This is important because that revenue helps fund highway maintenance.

Another change is to implement the suggestion from the Alaska State Legislature Task Force on Therapeutic Courts to add three positions: one new prosecutor, one new public defender, and one person to oversee and coordinate peer support groups for the various therapeutic court participants and graduates.

There was also a request for $800,000 to implement Ballot Measure 2 changes. Ballot Measure 2 was passed in November, and changes our voting from party primaries to ranked-choice voting. The Division of Elections needs these funds to be able to accommodate updated procedures for voting.

Watch that hearing here.

We also heard from Commissioner of Health and Social Services Adam Crum about the governor’s proposed plan to split the department into two departments. You can read the full executive orders here. The split would cost $5.7M with $5.2M in ongoing costs.

Sen. Stedman says "it should be an easy answer" to determine just how much of the $5.2 million is going to the pay for these new 13 positions. Notes that if they just divide it out, it's more than $400K per person.

Crum says they can get those numbers to them…

— Matt Acuña Buxton (@mattbuxton) February 18, 2021

We will be holding more hearings on this, specifically with more cost-benefit budget analysis and legal ramifications.

Next week we will be focused on the Capital Budget.

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Senate Finance committee week three recap

Friday, February 12th, 2021

We heard from the Office of Management and Budget about the governor’s proposed supplemental budget for Fiscal Year 2021. The proposed supplemental as it stands is the largest ever proposed because it includes a second Dividend payment.  Gov. Mike Dunleavy’s supplemental budget proposal totals nearly $1.4 billion — about $1.2 billion of which would go toward additional Permanent Fund Dividend payments. These are large supplemental numbers, but there are a lot of anomalies. We’re going to silo them into the proper fiscal year, & then try to factor out what are the anomalies & other issues so we can put a finer point on the structural deficit.

Read more in a Juneau Empire article here. View the meeting here.

The Department of Administration gave an overview about how the CARES Act money from the federal government was spent throughout different phases.

Here’s a breakdown of the State of Alaska Response:

And the federal response:

Overall funding to Alaska:

This week we were visited by University President Pat Pitney for a University subcommittee of the whole meeting. We also went over statutory formula funding for education and how that might look different now that many students have moved to virtual classes out of safety precautions during the pandemic. School bond debt reimbursement was a big topic of Thursday, because the governor’s budget only contains 50% of the statutory formula.

Senate Finance Committee has been talking with DEED this morning. Tough questions from Sens. Stedman and Hoffman on the administration's refusal to fully fund school bond debt and whether it's meeting mandates to support rural schools.#akleg

— Matt Acuña Buxton (@mattbuxton) February 11, 2021

Watch the meeting here.

At the end of the week, we had a presentation from the Department of Revenue about our oil and gas tax structure and revenue estimates for this year. Alaska’s severance tax is one of the most complex in the world and portions of it lead to an unstable tax structure.

Watch the meeting here.

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Senate Finance Committee week two recap

Friday, February 5th, 2021

We just finished the second week of Senate Finance committee. We also announced the list of finance subcommittees and their members which can be viewed here.

Some highlights:

• Legislative Finance Division
  • Last Friday the executive branch (OMB) presented the Governor’s proposed budget and continued on Monday morning with presentation. View it here.
  • This Monday the Legislative Branch fiscal analysts’ responded to the Governor’s budget. View it here.

• Savings Accounts & Budget Reserves
  • We got a real picture of our cash reserves (Statutory Budget Reserve & Constitutional Budget Reserve) and other major accounts: Power Cost Equalization, Higher Education Fund, and the Public School Trust Fund. We also heard about how lack of cash reserves affects cash flows/operations of the state. View the full meeting here.

• Public Debt
  • State’s credit rating, debt affordability, & review of past payments and projection of future payments if we don’t go further into debt.
  • Impacts of governor’s proposed $350m bond package. The question here is whether now is a good time to go into debt for capital projects that will put more Alaskans to work during the economic downturn. Or if we should not risk going further into debt since we could use COVID-19 stimulus money from the federal government on these projects instead.
  • View the meeting here.

• SB 50 – Capital Budget
  • OMB presented the governor’s proposed capital budget
    • It is another lean budget. It has been ‘flat’ since 2015, which means there have been no major cuts since 2015, however this budget is still sizeable at $1.89 billion, which includes the $350 million bond bill.
  • Reviewed projects department by department.
  • View the full meeting here.

• Confirmation hearing for Revenue Commissioner – Lucinda Mahoney. View it here.

• Alaska Permanent Fund Corporation – we need to balance the present and future needs of the state.  We are making decisions that have generational impacts. The issue in front of the Legislature: Is the Permanent Fund permanent? Do we pass it on to future generations of Alaskans, or do we just spend it? I want to see it for future generations. I don’t want to see it liquidated or overdrawn – that doesn’t mean it won’t happen.
  • The CEO of the Permanent Fund answered basic questions like:
    • How does the Principal grow?
    • How does the ERA grow?
    • How much can we draw?
    • View it here.

• PRS / TRS
  • What is the unfunded liability? $6.1 billion
  • How much does the state have to contribute on annual basis? Roughly $342 million/year.
  • View it here.

Main thoughts from this week: The state has enough revenue to meet obligations in the operating budget… without a dividend. But we’re going to pay a dividend. The question is what size dividend do we pay, and how do we pick up additional reductions and expenditures from other revenue sources. I don’t want to mask the true size of the deficit. No matter how ugly this tar pit looks – it is what it is, and let’s do what we have to do to fix it.

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Comment period open for Alaska Marine Highway draft summer schedule

Monday, February 1st, 2021

The Department of Transportation has posted the draft schedule for the Alaska Marine Highway System for May 2021 through September 2021 and it is now available for public review. The proposed schedule is based off funding estimates and projections based on the state’s fiscal environment, the governor’s proposed budget, and service demand due to the COVID-19 pandemic. However, I would like to remind you this is a draft schedule, and with your input it could still yet be changed. I am very concerned about the elimination of service to Kake on this initial schedule and low levels of service to other communities. Hopefully with input, and during budget negotiations in the Capitol, we will see a final schedule that provides better service to our coastal communities.

Due to pandemic travel restrictions and negotiations with Canada over ongoing issues, there will be no service to Prince Rupert. This service may be added later pending international pre-clearance requirements. AMHS is also interested in knowing about any need for special events scheduling and requests that organizers or communities give the event name, dates, location, and arrival/departure times needed for each special event.

The draft schedule is available online with accompanying documents at http://alaska.gov/go/Z9GC. Interested people can comment on the proposed schedule through Feb. 7, 2021.

Written comments will be accepted on or before February 7, 2021, via email at dot.amhs.comments@alaska.gov and by fax at (907) 228-6874.

A teleconference to hear comments and consider adjustments is scheduled for Monday, February 8, 2021, at 10:00 a.m. for the Southeast schedules, and at 1:30 p.m. for Southwest and Southcentral schedules. The toll-free number to participate in either teleconference is 1-515-604-9000, access code 279613.

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