Day 92: ‘About as good as it gets’

Good morning, Alaska! It’s Day 92 of the legislative session.

In this edition: A day after the Legislature crossed the 90-day mark for the session, the House has finally, at long last, passed the operating budget. It’s broadly similar to what the governor proposed, with a slightly smaller dividend, a one-time increase to school funding and a nearly $600 million deficit. At least for now, the House Majority’s plan to pay for that deficit out of savings doesn’t have the votes, but the budget bill now heads over to the Senate to sort out with about a month left on the clock. Also, the Senate Finance Committee has a new version of its PFD bill out, which got a mixed reception from its members on Monday—also the daily schedule.

Current mood: 🙃

‘About as good as it gets’

Just two weeks after it was first brought to the floor and a day after the Legislature crossed the 90-day session limit set by voters in 2006, the House finally passed the operating budget on Monday.

The bill’s passage in a caucus-line vote of 23-17 is one of the latest in recent legislative memory—nearly a month later than usual—and it heads over to the Senate with significant uncertainty over how it will land when the Alaska Constitution’s session limit of 121 days comes around in a month’s time.

At the top line, things are generally unchanged from the status-quo budget proposed by the governor. The big-ticket changes include a reduction in the PFD from the statutory level proposed by the governor to 50% of the spendable earnings of the Alaska Permanent Fund, amounting to a roughly $2,700 payout this year, and a $175 million one-time increase to public school funding. At the bottom line, though, the budget contains a nearly $600 million deficit.

During the debate on Monday, Republicans in the Majority lauded their work as the imperfect product of an imperfect situation but argued that it hit the big points they felt were important—like a big, private-business-friendly PFD and a “historic” increase in education funding—were met. In addition, several said that passing this one-time budget will make it easier for them to think about potentially considering additional steps to maybe address the state’s financial picture in the future years, hopefully.

“Is it perfect? Is it the long-term solution? Absolutely not,” said Rep. DeLena Johnson, the Palmer Republican who oversees the operating budget. “We’re working on that fiscal plan; those pieces are out there. Revenue changes daily. … It’s not always easy, in fact, it’s probably one of the most difficult states in the country to do a regular budget every year after year and talk about consistency because, frankly, our revenue stream is just not that consistent.”

The Democrats, independents and two Republicans who are not part of the majority had a far different view of the budget. While they conceded it made some reasonable steps on things like education funding and other programs, they argued that the one-time nature of the education money wouldn’t provide any of the stability and certainty that families are asking for in education. They also pointed out that its “historic” size is more of a function of nearly a decade of stagnant, flat funding from the state.

Others pointed out that the budget leaves many needs to be met in the state, particularly child care, senior care, education and food security. Needs, they argued, that could be met without a deficit if only the House agreed on a smaller number for the dividend.

“Flat funding does not mean vesting in Alaska,” said Rep. Genevieve Mina, D-Anchorage. “Alaska is in a crisis when we see so many people leaving today, when we’re hearing so much cynicism from our constituents and our voters. It’s simply not enough to flat-fund government. I want to invest in Alaska. I don’t think this budget spends too much; it spends far too little when we are talking about bringing in more opportunities for Alaskans to stay in this state and to work and to build a life here.”

And as for that fiscal plan that the House is championing, the only significant pieces on the table are a strict but unenforceable spending limit and a sales tax that would see much of the new revenue lost in a simultaneous cut to the state’s corporate income tax rate.

Rep. Cliff Groh, D-Anchorage, said the state needs a real plan to raise new revenue to make proper investments through education and other avenues. He called the House Majority’s plan nothing more than a “corporate giveaway” and this vague notion of economic development misplaced.

"We agree that growth is essential for Alaska, but economic development is not a get-rich-quick scheme, and it's not a Cinderella story," he said, noting that he would prefer higher oil taxes and taxes on high-earners. "When we put forward our annual budget, we're demonstrating our values. I do not see this budget honoring our values as Alaskans. We have sacrificed and not provided for our children, our elders and our most vulnerable citizens. We must bravely confront the reality that we must make the priority to adopt legislation to generate new revenues so we can invest in ourselves."

As for that $600 million deficit, the House Majority could not woo over any votes in favor of tapping the Constitutional Budget Reserve. Of course, the House failing to hit that 30-vote threshold on the first passage of the budget isn’t exactly a new practice as minorities seek to hold onto leverage late into the legislative process. Still, right now, it means the budget passed by the House has an unfilled deficit.

It also means that $175 million of school funding will sit in limbo as the House Majority tied it to a successful CBR vote in hopes of forcing their hand. Finally, in the closing arguments, Rep. Johnson made her final pitch to the minority members who protested the maneuver.

“This is going to be about as good as it gets this year,” she said.

The budget now heads to the Senate, which is set to begin hearing the budget on Wednesday.

Stay tuned.

Follow the thread: The House debates the operating budget

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Daily schedule

• House Community and Regional Affairs meets at 8 a.m. to take public testimony on SB 77, legislation allowing municipalities to create a definition of blighted properties and to implement taxes aimed at getting them developed; and HB 99, anti-discrimination for gender identity and sexual orientation
• Senate Finance has a busy 9 a.m. schedule with an overview of the supplemental and capital budgets followed by hearings on SB 29, civics education; SB 87, lumber grading program; SB 104, civil legal services fund
• House Energy is delayed to the call of the chair this morning but when it meets it has public testimony scheduled for House Bill 154, setting up the Alaska energy independence fund in AHFC
• House Transportation meets at 1 p.m. for a hearing on HB 124, licensing requirements for commercial drivers; and a public testimony hearing on HB 128, oil terminal facilities
• Senate Community and Regional Affairs meets at 1:30 for SB 79, reclassification of first-class cities
• House Finance meets at 1:30 for a hearing on HB49 and HB50, the two bills that are part of the governor’s carbon storage program
• Senate Finance is into twice a days with its 1:30 p.m. hearing including SB 74, physical therapy licensure compact; SB75, audiology and speech-language interstate compact; and public testimony on SB 52, increase the base student allocation
• House Health and Social Services meets at 3 p.m. for a hearing on HB127, Home and community-based waiver services
• House State Affairs meets at 3 p.m. for public testimony on HB116, restorative justice account appropriations; HB 61, limitation on firearm restrictions
• Senate State Affairs has also been delayed to the call of the chair with only SB 21, strategic plans for state agencies on the agenda

A mixed reception for latest PFD bill

The Senate Finance Committee’s proposed solution for the interminable debate over the PFD is to cut the payout to what budgeters say would get the state’s current financial situation under control and then raise the amount when—and, critically, if—legislators get around to improving the state’s budget picture.

In technical terms, the plan would cut the dividend to 25% of the spendable earnings of the Alaska Permanent Fund—an amount that would equate to a PFD in the range of $1,300 over the next few years—with the plan ratcheting the dividend up to 50% of the spendable earnings—about $2,700—once legislators implement additional revenues.