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.
- OMB presented the governor’s proposed capital budget
- 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.
- The CEO of the Permanent Fund answered basic questions like:
- 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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