Legislative Update: Reaching a complete fiscal plan was not possible

Capital budget includes an additional $20M for AMHS

Rep. Louise Stutes speaks during the crab dinner at the Reluctant Fisherman on Saturday, March 24, 2018.

Dear Friends and Neighbors,

Things change fast at the end of session and now that the House and Senate have adjourned the 30th Legislative Session, I wanted to provide you with an update of what happened in the final weeks.

First of all, I would like to say that we always try to get our business done in 90 days, but I am pleased that we were able to adjourn before the constitutionally allowed 120 days without the need for special sessions.

I won’t mince words with you, with two very different viewpoints between the House and Senate about how to solve the state’s fiscal deficit, reaching a complete fiscal plan this year was not possible.

I have always heard that perfect is the enemy of the possible and as session moved towards a close, it became obvious that we needed to focus on what was possible. In the end, we did get an important first step passed. Both bodies were able to compromise in conference committee and pass one of the largest pieces of the puzzle to solving our deficit: SB 26.

SB 26:

This bill sets out a structured draw from the Permanent Fund Earnings Reserve Account (ERA) by placing a cap on what is available for appropriation each year. Currently, there is no limit to the amount that can be appropriated. What this means is that without a complete fiscal plan in place, future legislatures will use large, ad-hoc draws out of the ERA to fill the gap, endangering the health of the overall fund and the existence of the PFD.

This bill puts a structured draw in place that is carefully designed to maintain the health of the fund and preserve the PFD. It does not change the way the PFD is calculated and the structured draw closes almost 80 percent of our fiscal gap. Another important note is that it steers the state away from such a heavy dependency on the price of oil. With this piece of a fiscal solution in place, the legislature will be able to focus on new revenue and smart efficiencies in government next year to close the remaining 20 percent of the budget deficit.

The Budget:

There were some really good things for our district in the budget as well. I was able to secure an additional $240,000 over the Governor’s budget for more weir time and aerial salmon surveys. In the last two days of session, myself and other coastal legislators were able to insert another $20 million in the capital budget for the Alaska Marine Highway Fund, which will go a long way towards increasing the dependability of our ferry system. In addition, the budget includes $1 billion to pay each eligible Alaskan a $1,600 PFD.

We have cut almost $1 billion in state agency operations since 2015 and the capital budget has been whittled down to almost nothing. We need to continue to make smart reductions, but we also need our roads plowed, our ferries running, good teachers, and adequate funding for public safety and fisheries management.

Additionally, we need to put people to work and a healthy capital budget maintains our infrastructure and adds massive economic stimulus through construction jobs. Next year, the legislature needs to focus primarily on finding new revenue to balance our portfolio, close the remaining deficit, maintain the government services that rural Alaska depends on, and eventually grow our capital budget again. In a perfect world, this could have been done this year; however, we made a very important step in SB 26.

Other Important Bills Passed at the End of Session:

HR10 – Kodiak Seafood and Marine Science Center:

On the last day of session, I was able to get HR10 passed. This resolution expresses the legislature’s strong support for the Kodiak Seafood and Marine Science Center (KSMSC) and urges the University of Alaska to find a solution to keep this valuable resource operating.

KSMSC is the only center of training, applied research, and technical-assistance program of its kind in the state. Its active seafood processing, fisheries training, and education program trained over 250 people in 2016 alone. It serves as a regional science center, providing a hub for Gulf of Alaska research and science education. The plant contains a wide range of seafood processing equipment used for research in seafood safety and product development, technical assistance, testing, and workforce development training.

As the Kodiak Island Borough and the Alaska Research Consortium work with the University to explore a public/private partnership to keep the Center open, this resolution will help encourage the University along that path.

HB 287 – Early K-12 Education Funding and Student Transportation:

The Alaska House Majority Coalition kept its promise to protect education with HB 287. This bill, which appropriated $1.3 billion for education and pupil transportation, funds education through a separate mechanism, removing it from the politics of passing the operating budget. More importantly, it will avoid pink slips being handed out to our teachers. For the first time in three years, our schools have been funded on time and pink slips will not be handed out!

HB 287 does the following:

  • Maintains funding at the same level as last year.
  • Makes funds available earlier so school districts know their level of state funding and can finalize their budget for next year.
  • Provides an additional one-time funding of $30 million for K-12 education in FY20, which amounts to approximately a $117 increase to the Base Student Allocation.

HB 56 – Commercial Fishing Loans

This bill increases the amount of a loan that a fisherman may receive from the Commercial Fishing Revolving Loan Program by $100,000. The revolving loan program is one of very few tools that the state has to give an advantage to Alaska residents with a desire to become fishing skippers. It will help to ensure that the young fishermen of today have an opportunity to become the skippers of tomorrow. This in turn should provide options for those individuals who wish to remain in Alaska’s small coastal fishing communities.

SB 63 – Regulation of Smoking

On the final day of session, SB 63 passed into law. This bill protects Alaskan employees from the adverse health effects of secondhand smoke by providing a statewide smoke-free workplace law for businesses and public places. As amended by the House, it includes a municipal opt-out provision to all allow communities to make their own choice regarding whether or not they want to be included in the ban.

Recap:

As I previously stated, I wish we had a complete fiscal plan in place this year, but I am pleased that the House and Senate were able to agree on a compromise that gets us 80 percent of the way there. We were able to pass a responsible budget that protects the essential services we all depend on, adds fishing opportunity, prioritizes the ferry system, and sends the message that we care about a quality education for our children.

There is a lot of hard work left to be done, but we did some good things this year. Next year, the legislature’s focus will be clear: find new revenue to plug the remaining 20 percent of the deficit and ensure that Alaska remains a place where we all want to live, work and play.

There is so much to say that I cannot fit in this update, but I would love to continue this discussion. I will be in Cordova for Copper River Nouveau and will be bringing Governor Walker’s Office of Management and Budget Director Pat Pitney with me to show her around. I look forward to seeing you all there!

Please contact me anytime. I work for you and am always available to discuss issues or hear your concerns.

Sincerely,

Louise Stutes
State House Representative for District 32
Proudly Serving Kodiak, Cordova, Yakutat, and Seldovia
Rep.Louise.Stutes@akleg.gov
(907) 465-2487
facebook.com/RepLouiseStutes
twitter.com/RepLouiseStutes

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