Legislative Update: Amended budget is just a start for ferry service

AMHS winter schedule options are still being explored

Dear Friends and Neighbors, 

Now that we have reached the end of this special session and the Legislature has finished its work, I wanted to keep you informed on where we stand with the governor’s vetoes, the capital budget, the PFD, ferry service, and other issues.

On Wednesday, July 24th, the House passed HB 2001 by a vote of 21-10. This legislation contains a $1,600 PFD and reverses all of the governor’s vetoes except $21 million of the $130 million veto to the University of Alaska. Notably for our district, the bill also contains a $5 million increase to the Alaska Marine Highway System’s (AMHS) operational budget, which I was able to add through an amendment during floor debate. The bill was subsequently passed by the Senate on July 29 by a vote of 17-1 and is in front of the governor awaiting approval.

It is worth noting that AMHS was the only state entity to receive an operating budget increase in the legislation. Although I am extremely disappointed at the recently released draft winter schedule and the ferry budget in general, I feel fortunate to be able to add $5 million back in. The amendment is obviously just a start at getting service levels back to where they need to be in communities like Cordova. With the current administration in place, restoring lost ferry service will be a difficult and incremental process. However, as your representative, that is now my highest priority.

Aside from seeking additional funding increases, I’m having regular work sessions with AMHS regarding ways to improve the winter schedule for Cordova and Yakutat. DOT received a lot of feedback from coastal communities regarding the inadequate levels of service proposed under the draft and is making revisions in response. AMHS currently estimates that a finalized winter schedule could be out as early as next month. It is my goal meantime to work with AMHS leadership to explore options, some of which were discussed at the recent House Transportation Committee meeting in Cordova, for implementation this winter.

On that note, I would like to thank Cordova for its amazing attendance at last week’s committee hearing on AMHS’s draft winter schedule. There were almost 260 community members present, which is incredible considering the hearing was held in the middle of the fishing season. 

 As I said in my last update, the level of engagement from concerned citizens across the state is at an all-time high right now. I am very pleased that the Legislature heard its constituents loud and clear and came together to override the governor’s vetoes. I can attest that it was your voices that changed hearts and minds and made this outcome possible. Some of the vetoes that were overridden include those to the Senior Benefits Program, early childhood programs, the court system and public defenders, Cordova’s and Kodiak’s ADF&G surveys, assessments, and weir counters, village public safety officers, the Alaska State Council on the Arts, the Therapeutic Courts, $77 million for Medicaid, including Adult Dental, and approximately $110 million of the $130 million taken from the University of Alaska.

As previously mentioned, HB 2001 also set the size of this year’s PFD at $1,600. As many of you are aware, the size of the PFD was the major sticking point in negotiations this session. It represented a very difficult decision for all legislators, particularly those from rural districts. As legislators, we all support the PFD and what it brings to Alaskan families and our local economies.

However, I also have to recognize that consistent ferry service, a quality K-12 education, a functioning university system, available and affordable health and end-of-life care, robust fisheries management, strong public safety, low municipal taxes, and many other essential services bring a tremendous value and quality of life to communities like Cordova. Without services such as those, this would no longer be a place that people would want to live or do business in regardless of the size of the PFD. We have seen what $190 million in cuts looks like in Legislature’s budget. Now we seen (with the governor’s vetoes) what $600 million plus in cuts would look like. Can you imagine what well over $1 billion in cuts would mean to Cordova’s service levels or local tax rates?  

Frankly, a $1,600 PFD is considerably more than the state can afford at this time. However, it represents a compromise that has consensus in the Legislature, provides Alaskans with a healthy-sized dividend to get through the winter, and hopefully, is acceptable to the Governor. 

Whether the governor vetoes or signs the bill remains unseen; however, he has referred to it as a “disappointment” and indicated that vetoes are in store for parts of the legislation. It is my sincerest hope and appeal to the governor to listen to his constituents and accept the compromise that is supported by so many across the state.

On Monday, July 29th, the House passed SB 2002, the capital budget, by a vote of 31-7. The bill had previously passed the Senate and is now before the governor for approval. This legislation fully funds this year’s capital budget and reverses the sweep of 53 state accounts into the Constitutional Budget Reserve (CBR). Passing a fully funded capital budget was essential for keeping Alaska’s economy moving forward as it provides the state with $171.3 million necessary to access over $1 billion in federal highway and construction matching funds. I am proud to say that this was a bipartisan effort and that the governor is expected to approve the bill. With the “reverse sweep” approved in the bill, funds for AMHS operational contingencies, power cost equalization (PCE), college grants and scholarships, medical education, vaccines, and etc. were not swept into the CBR.

So, there is a fully funded capital budget, the vetoes were overridden, the “sweep” was reversed, and there is a $1,600 PFD in place. You are probably asking what is next? That answer is up to our governor as the Legislature has fulfilled its obligations. As an eternal optimist, I would like to think that the Governor has had a change of heart under the torrent of Alaskans reaching out to him. However, the more likely outcome is that he will attempt to restore at least some of his vetoes by vetoing parts of HB 2001. It is also likely that Governor will call the Legislature into another special session to try and force a $3,000 PFD. Only time will tell what choice the governor will make, and I hate to speculate but I did want you to be aware of that possibility. 

For my part, I will continue to represent with my vote what I am hearing from Cordova and the other communities I represent. What I’ve been consistently hearing is that although the PFD is certainly important, essential services are vital to coastal Alaskans. 

Alaska is a rich state with many options; however, if the governor continues to narrow the discussion to a false choice between the services we need or a large PFD, then I, and my colleagues, will continue to make the same choice. It is the only choice that is responsible to current and future Alaskans.

This year, the Legislature worked hard alongside each other and the public in good faith to form a bi-partisan supported compromise. The governor can accept that compromise, which is clearly supported by the vast majority of Alaskans, or he can keep dragging the State through turmoil and uncertainty. The choice is his.

Regarding a way out of this mess and the overall budget picture: The Legislature will continue to make reductions where appropriate; however, we need a long-term plan for the Permanent Fund that sustains and grows the Dividend for future generations while also recognizing the fiscal reality the state is in. Equally as important, we need oil tax reform in Alaska, and we need it now. Oil companies are making record profits in this state and reforming our oil taxes should be at the top of our list. Finally, we need to seriously consider some form of a broad-based tax; Alaska is the only state in the country without one.

The people of Alaska, the Legislature, and the governor need to have a conversation that puts all of the options on the table. Only when that conversation happens can Alaska put this turmoil behind us. I continue to believe that a balanced approach, where everyone contributes a little and the entire burden is not placed on certain segments of society, is the only real solution for Alaska. 

I did want to take a moment to express my gratitude for the resolution of the recent ferry strike. Although as Legislators, we do not insert ourselves into contract negotiations or strikes, those of us in affected districts were doing everything we could to get the State and the IBU back to the negotiating table. The strike was having a very real cost in service to individual Alaskans and businesses, as well as to AMHS’s budget. Both parties have my thanks for returning to good-faith negotiations and resolving this issue before it got too far out of hand. 

Remember, I work for you. If you have any thoughts on the issues I have discussed in this update or anything else that is important to you and your family, please do not hesitate to contact me.

Sincerely,

Louise