AKLEG Week 3: No to the Future.

Beyond mines, politically motivated lawsuits and questionable sole-source contracts, it’s hard to see exactly what the governor has said “yes” to in the last five years.

Happy Friday, Alaska. It’s the end of Week 3 of the legislative session.

In this edition: Gov. Mike Dunleavy delivered his sixth annual State of the State address, doubling down on his call for the state to develop its way to prosperity by saying “yes” to any and all resource extraction projects. While it’s a fine enough call to action, it also belies the fact the biggest singular force of “no” in Alaska over the last five years has been none other than Dunleavy. Meanwhile, legislators are digging into the governor’s proposed budget and, as usual, aren’t particularly impressed with what they’re finding. The Senate passed a long-sought-after change to the public retirement system. Also, this week’s threads, the reading list and weekend watching.

Current mood: 🥶

No to the Future

Comic courtesy Pat Race/Alaska Robotics.

Alaska Gov. Mike Dunleavy delivered his sixth annual State of the State address this week, renewing his pitch that if Alaskans and lawmakers just say “yes” to enough opportunities, everything will be alright.

“Too many in this state have gotten very good at saying ‘no,’” he said, directing his scorn to Alaskans rather than just the good ol’ federal government. “No to mining. No to oil and gas. No to harvesting timber. No to renewables. No to growing more food. No to trucks on roads. No to roads, period. Unless we change this attitude, North to the Future will become ‘No’ to the Future.”

“Alaskans can’t afford to say no to any opportunity,” he said.

As far as speeches go, it was a perfectly acceptable resource-extraction-heavy speech, but it also belies the fact the biggest singular force of “no” in Alaska over the last five years has been none other than Dunleavy, who has used and threatened to use the veto pen on just about everything, including the kids who are literally the state’s future.

He said “no” to $87 million in funds for K-12 schools. He said “no” to legislation aimed at cleaning up toxic forever chemicals. His administration’s “ineffective and inefficient” operation of the state’s food stamp program has left families without food.

Just this year, he’s said no to federal funds to feed kids.

Even now, the efforts to address school funding are running headlong into the governor’s promise to veto a straightforward increase to the base student allocation if he can’t extract his desired expansion of charter schools from the Legislature.

Critically, he’s also said no to any meaningful resolution to the state’s fiscal crisis, the crux of much of the legislative battles we have today. In offering his status quo budgets, he’s essentially abandoned efforts to make deeper cuts while simultaneously saying no to any efforts to raise new revenue, leaving legislators with little choice but to balance the budget by cutting the dividend he allegedly cares so much about.

Beyond mines, politically motivated lawsuits and questionable sole-source contracts, it’s hard to see exactly what the governor has said “yes” to in the last five years.

Follow the thread: Dunleavy’s State of the State address

‘I’m a little aghast’

Speaking of the lack of a fiscal plan, the House and Senate finance committees have been busy getting to work understanding the governor’s budget, which contains a deficit north of $1 billion. Interestingly, there seems to be little pretense that legislators will follow the budget and little weight given to the long-term forecasts that predict a financial reckoning in a matter of years if the Legislature budgets according to Dunleavy’s plan.

Still, that hasn’t stopped some legislators from harping on the shortcomings in the budget, particularly when it comes to the proposal to spend down the state’s constitutional budget reserve—its main savings account outside of the Alaska Permanent Fund—and what the state would be forced to do once it’s gone.

“I’m a little aghast,” Sen. Bert Stedman, R-Sitka, said during today’s meeting with budget director Lacey Sanders of a proposal to spend down the CBR to the bare minimum. “After that comment has been put on the table today, my concern is what the Permanent Fund board is going to be looking at and taking action on if they get a capital call from the Legislature, which could very easily happen in those balances. They would be liquidating illiquid investments at substantial prices below market value to meet the capital call; to me, that’s just an unacceptable way to run the financial assets of the endowment of the state. It’s just ridiculous.”

Spending down the Alaska Permanent Fund’s spendable funds—the earnings reserve account—has been a looming specter over budget talks in recent years. Unlike the corpus of the Permanent Fund, which is constitutionally protected against being spent, or the constitutional budget reserve, which requires a tough supermajority to tap, the ERA can be spent with a simple majority.

Some have eyed it as an easy place to pay for larger dividends or cover unsustainable deficits without raising revenue, but most have warned that overspending the ERA is the best way to undermine the fund’s future. While spending it down isn’t on the table currently, it could quickly become the last remaining option if the state doesn’t come up with a stable fiscal plan.

“That is alarming,” Stedman said. “Lighting the permanent fund on fire is just absolutely unacceptable. I hope the administration reconsiders that position.”

Follow the thread: Senate Finance’s update with the administration’s questions

Senate says ‘yes’ to pensions

Meanwhile, the long-running effort to reinstate a pension system for state and local employees in Alaska took a meaningful step forward this week with the passage of Senate Bill 88. Authored by Senate Majority Leader Cathy Giessel, R-Anchorage, the plan is decidedly less generous than the defined benefit plans of the past, with several levers aimed at keeping the fund solvent well into the future.

While labor groups, workers and several legislators have long fought for the change, it has found renewed energy in the bipartisan Senate Majority as a way to address the severe worker shortages throughout state and local government. Giessel argued that the vacancies—which are higher than 30% in some agencies—are hampering the state’s economic growth.

“If we want to see more cranes, as the governor said last night,” Giessel said, referencing Gov. Mike Dunleavy’s State of the State address, “those cranes mean people are investing here. It means they have trust that the state government here is stable and effective. That means we’ve gotta have departments that can issue those building permits. We’ve gotta have departments that can keep the roads cleared. That our schools are there, so families moving here know their children will be educated well.”

Alaska did away with its old pension plan in 2006, moving from a defined benefit system where workers are guaranteed payouts to a defined contribution system where workers aren’t. The defined contribution system is similar to a 401(k)-style plan that allows individuals to direct how their retirement is invested. Critics argue it puts too much burden on employees and leaves open the possibility that their retirement falls short of covering costs.

A report last year found the retirement accounts of most employees on the current defined contribution plan were lagging well behind those on defined benefit plans at the same point in their careers. It’s also particularly critical because Alaska’s public employees aren’t eligible for Social Security, which means they could have no guaranteed retirement.

Some Republicans were not so sure, including Palmer Sen. Shelley Hughes, who questioned whether a stable pension really matters to young employees anymore.  

“They’ve coined the phrase ‘golden handcuffs’ in regard to pensions, as in they don’t want them,” she said, referring to a term that has been around since at least the 1970s and does not mean what Hughes claims it means. “This is not grandpa’s workforce. Today’s employees want flexibility and mobility.”

She also worried that offering pensions to public employees would create undue competition with the private sector, where pensions are rare, but Social Security is available.

“How could I put the private sector at a disadvantage when it’s their businesses and their jobs that actually create our economy and are the basis of our economy,” she said. “It solves it for the public sector, perhaps, but not for the private sector.”

Ultimately the measure passed 12-5. It now heads to the House, where Republican leadership has already signaled skepticism about the measure. A more limited proposal that would offer pensions only to first responders has been stalled out in a special committee since last year.

Still, passage through the Senate is a meaningful step forward for an issue that won’t be going away anytime soon.

Stay tuned.

The reading list

• Alaska plans to send National Guard members to Mexico border in support of the federal government

• New bill would require Alaska schools to pay for armed volunteer guards

• Alaska’s federal food stamp funding at risk, USDA letter warns

• A closer look at the Harvard charter school study making waves in Juneau

• Protestors rally at the Alaska State Capitol for more school funding

• Dunleavy executive order creating an energy board is likely unconstitutional, legislative lawyer says

Weekly threads

• Dunleavy’s State of the State address

• Senate Finance’s hearing on SB56, updating the Alaska Performance Scholarship

• Senate Majority’s weekly news conference

• Senate Finance’s update on PRS/TRS

• Senate passes SB88, the pension bill

• Senate Finance’s update with the administration’s questions

• The House passes HB129, updating laws for voter registration

Weekend watching

This chilly weather has me thinking of warmer days spent riding roller coasters.

Have a nice weekend, y’all.