Commentary: Budget includes millions for AMHS, ADF&G, cuts oil and gas tax credits

Dear Friends and Neighbors,

I hope this update finds you all in good health and spirits. I know COVID-19 represents a very uncertain time for all of us in Alaska, both in terms of financial and physical wellbeing.

This update will cover legislation passed in the final days of session to respond to COVID-19, a brief synopsis of what’s in the budget, as well as ongoing efforts to address the pandemic both on a state and federal level. If you have not read my previous COVID-19 online update to The Cordova Times on Friday, March 20, please do so as it contains a lot of information that I will not repeat here.

After passing a budget and much needed COVID-19 emergency relief packages, the Legislature recessed this past Sunday morning.

During the final weeks, we acted with urgency and swiftness to fulfill our constitutional obligation and pass essential relief ahead of a potential infection in the Capitol Building; as a result, there were a number of important items, mostly from the capital budget, left on the table. I am hopeful that we are able to return later this year to address those items and other important issues.

Moving forward for the immediate future, however, we have provided the state with the tools to combat this pandemic, as well as a decent budget to operate on this year. I and my colleagues will stay actively engaged and will reconvene as needed to maintain our commitment to Alaskans across the state.

This past Saturday, on March 28, the Legislature approved SB 241. This critical piece of legislation will assist families and small businesses struggling with the economic impacts of COVID-19. The bill extends the governor’s 30-day public health emergency to Nov. 15, provides $10 million to the Disaster Relief Fund,  grants the chief medical officer authority to issue COVID-19 related standing orders to healthcare providers, ensures that first responders and healthcare workers receive workers compensation if they become infected, halts the eviction of tenants unable to pay their bills as a result of COVID-19, pauses foreclosures on property owners, prevents utility shutoffs, enables the Department of Commerce Community and Economic Development (DCCED) to provide grants to small businesses, ensures that government COVID-19 assistance payments are not counted as income when determining eligibility for means-based programs, outlaws price gouging, directs DCCED to purchase Alaska seafood for distribution to food banks, soup kitchens and Alaska Native organizations, requests the Alaska Housing Finance Corporation to provide financial assistance to address homelessness caused by COVID-19 and provides $5 million in grants for that purpose, extends the PFD application period to April 30, 2020, and allows for vote-by-mail elections this year.

Please see my previous update for detailed information on the state’s expansion of unemployment benefits in response to COVID-19 through the passage HB 308.

Also on Saturday night, the Legislature passed HB 205, the combined operating and capital budget bill. The bill totaled $4.74 billion and included $88 million in COVID-19 response funding, $120 million in capital project funding, the full $100 million for school bond debt reimbursement, full K-12 formula funding at $1.3 billion, full funding for the senior benefits program at $21 million, $4.3 million for Pre-K, full funding for Village Safe Water projects, $98 million for Pioneer Homes, $151 million for State Troopers and $14 million for the Village Public Safety Officer (VPSO) program, a targeted $30 million investment in K-12 education, $12.5 million to partially restore the University of Alaska’s budget, and $675.5 million for a $1,000 PFD to every Alaskan.

I’d like to take a moment to address the PFD. As your representative, I understand what the PFD means to rural Alaska and want the check to be as large as possible; that is true now more than ever. However, I also must balance that with providing essential services like ferry service, education, public safety, the ability to pay future dividends, and the financial position of the state in general. Paying more than a $1,000 PFD would have dangerously jeopardized the state’s ability to provide for essential services and PFDs in the future, as well as respond to unexpected expenses.

The state began the year in bad shape financially and our position has only degraded. Oil has plummeted to $21 per barrel, there is a $1.1 billion budget deficit, we are in the midst of a public health emergency, and our last savings account is being virtually liquidated. The Legislative Finance Division has always advised that the state needs to maintain at least $1 billion in the Constitutional Budget Reserve (CBR) for unexpected expenses or emergencies; this certainly qualifies. With this budget, assuming no vetoes by the governor, the CBR is now less than $500 million and the state’s expenses regarding COVID-19 are yet unknown. As much as I want to provide for more than a $1,000 PFD this year, doing so would have been extremely irresponsible.  

In a rare bright spot, I am pleased that we were able to secure a $20 million operating budget increase for the Alaska Marine Highway System (AMHS) and a $19 million capital appropriation for repairs and retrofits to the fleet. The capital appropriation will be used to repair the Aurora and add crew quarters to one of the Alaska Class Ferries, allowing for overnight trips.  According to DOT in finance subcommittee, the operational and capital budget increase should provide about 50 weeks of additional sailings over last year. 

Obviously, this isn’t the full amount needed to restore our fleet and the operational increase must survive a potential veto by the Governor; however, this is a really good start. I strongly suggest that you call Governor Dunleavy at 907-465-3500 and email his chief of staff at ben.stevens@alaska.gov to voice your opposition to any veto of AMHS funding. 

I will have a detailed ferry-specific update in the paper soon, including the current status of fleet repairs and expected dates for return to service, plans for the current and future Tustumena, as well as what is being done to hold DOT’s feet to the fire. 

In other rare good news, there was a $2 million increase to the Department of Fish and Game’s Commercial Fisheries Budget. Regardless of other factors this season, these dollars will provide more fishing opportunity by keeping weirs and aerial surveys operating, and directly funding other essential management functions.

Finally on the budget, it is worth noting that $55 million in oil and gas tax credits were cut.

Last Wednesday, the Legislature passed HB 234, the supplemental budget. This bill provides an additional $23.5 million in COVID-19 response funding, funding for expenses related to last year’s wildfires, as well as $5 million for AMHS overhauls, repairs, and certifications and $7 million for AMHS operations. It also restores the governor’s 2019 Medicaid vetoes. 

Let’s take a few moments to talk about the $2.2 trillion Federal COVID-19 stimulus package, otherwise known as the Coronavirus Aid, Relief, and Economic Security Act (CARES) that just passed congress. This is the largest stimulus package in U.S. history, $300 million of which is slated for the fishing industry and $350 billion for small business loans.

The bill creates a $150 billion Coronavirus Relief Fund, of which Alaska is expected to receive $1.25 billion. When those funds arrive, Alaska will have a lot of options regarding how to best apply the relief.

CARES also provides for direct payments to lower and middle-income Americans, which are expected to be mailed in 3 weeks. Payments start phasing out above adjusted gross income levels of $75,000 for individuals, $112,500 for heads of households, and $150,000 for married couples. 

For those with no children, the benefit disappears at $99,000 for individuals and $198,000 for married couples. A family with two children with an income over $218,000 would not receive a stimulus payment.

CARES also significantly expanded federal unemployment benefits. It extends unemployment insurance from three to four months and provides temporary unemployment compensation of $600 per week, which is in addition to and simultaneously with regular UI benefits. It also allows for part-time and self-employed workers (fishermen) to access unemployment benefits. 

The federal bill does much more than I can list here. The National Conference of State Legislatures is hosting a very useful website on what CARES means for States. I encourage you to visit the site and read through the material to learn more about the bill: ncsl.org/ncsl-in-dc/publications-and-resources/coronavirus-stimulus-bill-states.aspx.

There are a lot of coronavirus related resources out there. There is also a lot of available economic relief on both the federal and state levels. I will update you as things develop, but please do not hesitate to reach out to my staff at (907) 465-3271 or email me at rep.louise.stutes@akleg.gov if you have any questions about what is out there or how to access it. We are here for you as a resource.

To close this update, I wanted to address the concerns facing the commercial fishing industry and fishing communities this summer. With the current trend of COVID-19 infection and the salmon season rapidly approaching, there is rightfully a high level of angst regarding bringing outside workers into communities and processors, what the market will look like, and if there will even be a season at all.

I share those concerns and it is very unlikely that the pandemic will be on the downhill trend by the time the salmon season arrives; however, I also want to share with you that the preparations the industry is undertaking are proactive and extensive. The processing industry, harvesters from across the state, member organizations, municipalities, the state, and our congressional delegation are working overtime on plans within plans, contingency plans for those plans, and are approaching the preparations in a methodical and careful manner that speaks strongly to our chance of success. The specifications and needs for each fishing region are different, and each region is developing its own plan to ensure communities stay safe while facilitating a successful fishery. After being involved in this process over the past few weeks, I am obviously still concerned but confident that the right preparations are taking place.

As preparations continue, my goal is to connect stakeholders with state and federal agencies, as well as other layers of the process, so the various plans and adaptations for each region have the best chance of success. I am also working with the Administration throughout this process to ensure, as best I can, that it’s doing all it can to support the industry. If you have any questions, concerns, ideas, or see gaps in the current process, please reach out to Matt Gruening in my office at 465-3271 or matt.gruening@akleg.gov.

The Alaska Department of Health and Social Services has created the following COVID-19 website that includes the most up-to-date information on mandates, as well as health guidelines and alerts in Alaska: dhss.alaska.gov/dph/Epi/id/Pages/COVID-19/default.aspx.

I strongly encourage everyone to visit the website, read the materials, and adhere to the mandates and health guidelines to a T. Working together, we can stop the spread of COVID-19 and lessen its impact on Alaska. If you have coronavirus related questions, please dial 211 for information. If 211 doesn’t work in your area, please dial 1-800-478-2221.

Remember, I work for you. Please reach out to me with any questions or concerns on this or any other issue important to you and your family.

Sincerely,

Louise Stutes


Rep. Louise Stutes for State House Representative for District 32, proudly serving Kodiak, Cordova, Yakutat and Seldovia. Reach her at Rep.Louise.Stutes@akleg.gov or 907-465-2487.