Capitol Report: Lawmakers wrestle over FY 2018 operating budget

Senate’s proposed budget is $4.1 billion; House budget calls for $5.1 billion in general spending By Sen. Gary Stevens, R-Kodiak

Greetings from Juneau. The Legislature is in the second week of an extended session as the Senate and House work to resolve differences between the two versions of the Fiscal Year 2018 operating budget. Also still in the works are the FY ’18 capital budget, bills pertaining to a long-term fiscal plan, as well as other time-sensitive legislation, and a confirmation vote on the governor’s appointees to various state agencies and boards.

The state constitution allows for a legislative session of 121 days. Hopefully, we will not need all of the extra time, but we are prepared to be here as long as it takes to complete our work.

Dueling Budgets
The Senate’s proposed budget calls for $4.1 billion in general fund spending. That figure is a cut of $276 million from the current fiscal year. The budget includes 5 percent reductions in spending on the state’s four most significant cost-drivers, including the departments of Health & Social Services, Education and Early Development, Transportation and Public Facilities, and the University of Alaska. With the House calling for a budget of $5.1 billion in general fund spending, reconciling the differences in the two budgets will not be easy.

Dueling Fiscal Plans
With a backdrop of a $2.7 billion budget deficit brought about by the dramatic drop in oil prices in recent years, and projections for this trend to continue into the foreseeable future, the call for a long-term fiscal plan has never been louder in my 17 years in the Legislature. Coming up with a palatable plan to Alaska’s diverse population is no easy feat.

On April 15, the House voted 22-18 on its component of a fiscal plan, advancing HB 115 to the Senate. The bill establishes a progressive income tax, calling for rates of 2.5 percent to 7 percent of one’s federal adjusted gross income. The bill also includes a provision allowing the application of the Permanent Fund Dividend to cover the tax.

The Senate Labor and Commerce Committee, which I am a member of, is currently hearing HB 115. Should the bill advance from the Labor and Commerce Committee, it will then go to the Senate Finance Committee for further consideration.

Earlier in the year, the Senate passed SB 26 as part of its long-term fiscal plan. The Senate version of SB 26 protects the Permanent Fund by establishing a sustainable percent of market value draw to help pay for essential services, and guarantees a $1,000 PFD for the next three years. After that, the dividend will be based on a percentage of fund earnings, allowing for modest dividend growth. A House substitute for SB 26, however, upped the PFD amount to $1,250 for the next two years, while adding contingency language that kills the bill if lawmakers do not approve a broad-based tax generating at least $650 million a year, with proceeds intended to pay for public education.

Another condition added to SB 26 by the House was passage of a bill changing the state’s oil tax structure. That measure, HB 111, was amended by the Senate Resources Committee to remove the tax language while keeping language eliminating future cash credits to oil and gas companies. HB 111 is now under consideration by the Senate Finance Committee.
Although we may differ in our approach to the financial situation, I believe all 60 legislators are committed to coming up with an answer. Reaching a solution will take time and effort.

Tracking the Legislature
You can get more information on the status of legislation through the Legislative Information Office (LIO) near you.
The Cordova LIO can be reached at (907) 424-5461.
The Homer LIO can be reached at (907) 235-7878.
The Kenai LIO can be reached at (907) 283-2030.
The Kodiak LIO can be reached at (907) 486-8116.

You can follow the Senate during the remainder of the extended session online at: www.alaskasenate.org. The site provides a wealth of information on the Senate Majority and our membership.

Alaska’s public television system produces Gavel Alaska, which broadcasts live and recorded coverage of floor sessions and committee meetings. The programming is also on the Internet at: http://www.360north.org.

AlaskaLegislature.tv will offer live coverage of committee meetings and bill hearings. The service is provided by the Legislature.

You can also access information on any bills and resolutions introduced during the 30th Alaska Legislature through the Bill Action and Status Inquiry System (BASIS) on the Internet at: www.akleg.gov/basis/Home/BillsandLaws.

Contact Information
My Capitol building office can be reached toll free throughout the year at 1-800-821-4925. The fax number is 465-3517.

My Kodiak office will be staffed throughout the interim. You can reach us there at 486-4925. The fax number is: 486-5264.

E-mail me anytime at: sen.gary.stevens@akleg.gov.

As always, thanks to Senate District P’s media for helping me keep you informed on the Legislature’s work this year, and to you for reading this edition of the Capitol Report.