AKLEG Day 73: 'Catch the car'
"Unbelievable levels of irresponsibility."
Good morning, Alaska. It’s the week leading into Easter, so things haven’t been the most exciting in the Legislature… at least until this Wednesday.
In this edition: The House Finance Committee is on the precipice of a vote to overspend the Alaska Permanent Fund to pay for a PFD, putting the state’s golden goose on the chopping block in a move that one legislator warned represents “unbelievable levels of irresponsibility.” Still, in a surprising turn, it doesn’t look like one of the most dependable votes against overspending the fund is willing to save the pro-PFD crowd from themselves this time. Meanwhile, the House Republicans’ half-hearted education bill got a half-hearted hearing where the most notable development was over a big red button.
Current mood: 😬
‘Catch the car’
The House Finance Committee is poised to approve a budget amendment that calls for overspending the Alaska Permanent Fund, breaking the spending rules set by legislators in 2018 to pay out a dividend according to the long-ignored formula in state law. The move was proposed by House Finance Committee co-chair Rep. Neal Foster, D-Nome, who said that the two laws are in conflict and that he and his constituents favor following the dividend law.
The move would pull about $800 million out of the Alaska Permanent Fund’s earnings reserve account, the part of the fund not constitutionally protected against spending. It comes amid increasing warnings from budget analysts that the fund is perilously close to running out of money under the status quo spending, let alone overspending, a point that Legislative Finance Division Director Alexei Painter confirmed was still valid at Wednesday’s hearing. He added that spending the $800 million would reduce future investment earnings by about $50 million yearly.
Like the PFD and BSA laws, the spending cap on the Alaska Permanent Fund is essentially an optional guideline that legislators can ignore with a simple majority vote. Like the PFD and BSA, it only works as long as legislators abide by the law, which, up until Wednesday, seemed like a bright line legislators were unwilling to cross. That’s because, as many have rightly pointed out, once you break the seal on the fund, there’s nothing stopping legislators from raiding the account.
That fear wasn’t lost on everyone. It prompted one of the more memorable moments in House Finance Committee history when Fairbanks Republican Rep. Will Stapp responded with an amendment that would balance the budget not by overspending the Alaska Permanent Fund but by cutting it. Namely, it would have eliminated the entire criminal justice system—closing prisons, courts, and the Alaska State Troopers—and made sizeable cuts to everything else.
“That would effectively liquidate the entire corrections budget, close all prisons, release all prisoners, and, of course, I would have to add conceptual language for our executive to give amnesty to everyone currently incarcerated in our prison system because we wouldn’t have any jails,” he said, adding he would also eliminate the court system and the Department of Public Safety. “Because if you don’t have any prisons, you don’t need any courts. … If you have no courts and have no prisons, you certainly don’t need public safety officers because you don’t need to put anybody in jail.”
Of course, Rep. Stapp was making a point and ultimately withdrew the amendment. But not before giving a fierce warning to his colleagues that there is no easy or magical way to pay out a dividend while avoiding the hard decisions.
“The reason I think this is a bad idea is that I tend to think that we should probably have corrections, a court system and public safety,” he said, noting he was clear on the campaign trail there isn’t an easy way to get to a full PFD. “In order to pay a statutory dividend, this state either has to reduce its expenditures on government or tax people. Those are your two options. You have no other options. If you want to reduce $801 million out of the state’s operating budget, that literally means the entirety of those budget items I listed off. I believe the scope of the government can absolutely be reduced. I don’t believe you can cut a billion dollars out of it. I don’t believe you can cut $801 million out of it because you would have catastrophic consequences.”
In closing, he said he would not entertain “unbelievable levels of irresponsibility in terms of budgeting” and would vote against the underlying amendment.
The point seemed lost on many of his colleagues, as Republican after Republican piled on in support of the full PFD. Several legislators, including Reps. Mike Cronk, Julie Coulombe and co-chair DeLena Johnson, acknowledged the risk of overdrawing the dividend but essentially said that their campaign promises on a dividend were more important. Some suggested that paying out a dividend and pushing the state closer to financial peril would be the best way to force action on a fiscal plan, seemingly overlooking the fact that they are in the Majority and the movement of a fiscal plan is largely their responsibility.
As the votes in favor of the move ticked toward a majority, with all the Republicans save for Rep. Stapp joining Rep. Foster in supporting the move, it sparked incredulity from the Minority members who called the move reckless and dangerous.
“Am I the last conservative here? Am I the last conservative in this body?” asked progressive Anchorage Democratic Rep. Andy Josephson as he and the other members of the House Minority outlined their opposition to the amendment. Josephson warned doing so would hand almost all budget leverage over to the Senate.
But then something unexpected happened.
After years of playing the role of the begrudgingly responsible adult on the budget, Dillingham independent Rep. Bryce Edgmon said he had enough. He warned his colleagues they were walking the state into financial calamity but that if they were so deadset on doing so, he wouldn’t be saving them from themselves this time.
“I couldn’t think of a more irresponsible vote I could take, but you know what? I’m going to help you guys catch the car,” he said. “I’m going to vote yes, and we’re going to see where this is going to go.”
That prompted an at-ease from Rep. Stapp, followed by a long break. They eventually returned with Rep. Foster, the maker of the underlying PFD amendment, offering a conceptual amendment that would cut the $8 per barrel oil tax credit to make a similar point about the move needed to balance the budget with a dividend. Since the credit is foregone revenue and not something actually outlined as an expense in the budget, he ultimately withdrew the amendment.
But it was readily apparent that the Republicans expected Rep. Edgmon to vote against their play and save them from themselves. Suddenly, they were about to catch the car or get run over by it.
The committee then adjourned for the night with the plan to return at 11 a.m. today.
Stay tuned.
Follow the thread: The House Finance Committee starts the amendment process
Button brawl
The House Education Committee held its first hearing on Republicans’ half-hearted attempt to replace the education bill they helped kill. The hearing revealed that little thought had been put into the new version and that there are still significant, undetermined changes to be made to what had been a hard-fought compromise on education funding and policy. Also, unsurprisingly, Department of Education Commissioner Deena Bishop again showed up astonishingly unprepared to answer even the most basic questions about the governor’s demands on charter schools. Instead of offering concrete evidence supporting the proposals, she returned to her decades of experience as a school administrator to provide anecdotal evidence supporting her claims.
That included a claim that some 2,000 students are on charter school waitlists when groups that have done the actual work on understanding waitlists say the total number of applications is closer to 800. In Anchorage, for example, there are just 388 applications on the charter school waitlists for the upcoming school year. As many have also pointed out, families frequently apply to several programs, so those numbers are almost certainly higher than the number of unique individual students on the waitlists.
But Commissioner Bishop’s bumbling answers aren’t particularly new or noteworthy; instead, the meeting was head-turning for an entirely different reason.
The meeting screeched to a halt when House Education Committee co-chair Rep. Jamie Allard took issue with Rep. CJ McCormick’s button, which referenced the $1,413 BSA increase schools say is needed to keep up with inflation. She called in “propaganda” and demanded he take it off. She even halted the meeting to call up legislative legal. As was reported by the Anchorage Daily News, Allard didn’t have particularly kind words for Rep. McCormick during the break:
“You might want to do an apology tour to everybody … it reflects your age,” Allard said loudly to audible gasps from legislators watching in the committee room. McCormick, 26, is currently the youngest member of the Alaska Legislature.
Here’s the view from the Gavel cameras:
Stay tuned.
So much for “pivoting to energy”.