Legislative Update: Work on budget is nowhere near complete

The Alaska Capitol Building. (May 15, 2019) Photo courtesy of Paxson Woelber/The Alaska Landmine

Dear friends and neighbors,

I hope this update finds you well.

First, let me say how disappointed I was at having to cancel my trip to Salmon Jam last week. I am pleased that the sign for the “Irene Webber Bridge” was unveiled for the marathon, but sorry to miss the trip to one of my favorite communities. I plan on rescheduling as soon as possible, hopefully this fall. I look forward to seeing you all then.

On Monday, June 28, the second special session was adjourned after the House passed the effective date on the operating budget by a vote of 28-10. Although this was one of the most divisive years in Alaska’s political history, I am relieved to reach a compromise that averted a government shutdown and kept critical services operating. 

Unfortunately, our work on the budget is nowhere near complete. With the failure of the “reverse sweep” and the Statutory Budget Reserve transfer necessary to fund the PFD at $1,100 — they require a three-quarter majority vote — the PFD was reduced to $500, and the Power Cost Equalization and Alaska Performance Scholarship Programs were defunded.

Governor Dunleavy, in a bitterly ironic twist, vetoed the remainder of the PFD.

Historically, the reverse sweep has amounted to a procedural vote to keep critical programs funded at the start of the new fiscal year. In 2019, that vote was leveraged for the first time in policy negotiations, namely, to force a PFD we cannot afford. That same scenario is replaying itself this year.

In another first, the effective date for this year’s operating budget, which requires a two-thirds majority vote, was leveraged for the same purpose. I am highly disappointed to see Alaskans held hostage in this manner.

I want to be clear that every single member of the House Majority voted for the effective date on the operating budget, to fully fund the PCE and APS Programs, as well as for a $1,100 PFD.

With the exception of three members, the House Minority voted against the effective date the first time around, the reverse sweep, and a $1,100 PFD, effectively barring our ability to reach the necessary super majority vote. Ironically, a gamble to leverage services Alaskans depend on for a PFD we cannot afford resulted in a $500 PFD, then a zero-dollar PFD, as well as the loss of those services.  Shortly after passage of the budget, the governor announced over $800 million in vetoes, including $8.5 million from the Alaska Marine Highway System, $38.9 million in community assistance grants, over $50 million in deferred maintenance for K-12 and the University of Alaska, $3 million from the Alaska Seafood Marketing Institute, and much more. You can view the full list of the vetoes at https://bit.ly/3hDgddv.

The governor himself introduced a flat budget last December. With that in mind, the vetoes seemingly serve as additional leverage in the negotiations for the governor’s constitutional amendments.

I understand how critical the PFD is to my constituents and have always been clear that I support as large of a payment as we can afford; however, the PFD cannot be so large as to bankrupt fisheries management, ferry service, investment in education and communities, the capital budget, and the very future of the Permanent Fund itself. There is no doubt that we need a solution to the PFD. You deserve consistency and permanency to yearly distributions, but any solution must also balance the diverse needs of Alaskan communities and look beyond the present to the future.

On a brighter note, I am pleased to announce the formulation of a bipartisan, bicameral fiscal plan working group tasked with bringing policy recommendations before the Legislature at the next special session. This group, comprised of equal membership from the minority and majority in both bodies, is meeting on an aggressive schedule, and I am optimistic that it will provide the framework for a solution at the next special session.

The governor has called a third special session for August 2 to address his constitutional amendments, new revenue, and the appropriation of federal relief funds. It’s my hope that the governor will move the special session out at least a few weeks, so that the working group has time to complete its work.

The House Majority remains dedicated to working with the governor and the other three caucuses to approve the “reverse sweep”, overturn these damaging vetoes, appropriate a PFD we can afford, and implement a fiscal solution to end this yearly cycle of uncertainty. You have my word that we will do everything in our power to get the job done.

I would be remiss if I didn’t briefly mention the status of our ferry system and the newly published draft winter schedule.

This year represents a mixed bag regarding AMHS, with some major victories, as well as a setback or two.

Having worked hard to secure a $6.7 million increase to ferry operations, I cannot fully express my disappointment at the $8.5 million veto. Ferry service was cut a draconian $44 million in 2019 and, despite that and the resulting public outcry, this is the third year in a row that increases to AMHS have been vetoed.  I will fight tooth and nail to reverse that veto at the next special session. 

However, a lot was accomplished for AMHS this year in cooperation with the governor. Credit where credit is due, I applaud the governor for his support of forward funding the marine highway, his support of my marine highway reform bill, HB 63, which was signed into law last week, the improved winter schedule, as well as his commitment to the construction of the new Tustumena.

The winter schedule was released on July 13. The schedule and release from the Department of Transportation can be viewed here: https://bit.ly/3wFIvbz .

Although there are still service gaps that need to be addressed, there is a significant improvement in winter service to Kodiak and Cordova. The remaining gaps in service could be addressed with the reversal of the $8.5 million veto at the upcoming special session.

Please have your voices heard. Written comments on the draft winter schedule can be submitted prior to July 27, at dot.amhs.comments@alaska.gov.

A public teleconference to hear additional comments and consider adjustments is scheduled for Thursday, July 29 at 1:30 p.m. for Southwest and Southcentral schedules. The toll-free number to participate in the teleconference is: 1-515-604-9000, access code 279613.

We have made some great strides this year in relation to AMHS, but we still have a ways to go to rebuild our fleet and restore complete service.

As always, restoring complete and robust ferry service to the communities I represent is my number one priority. I am confident that we will get there soon.

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

Sincerely, 

Louise Stutes 
Speaker of the House  
Proudly Serving Kodiak, Cordova, Yakutat, and Seldovia 
Rep.Louise.Stutes@akleg.gov 
907-465-2487 
facebook.com/RepLouiseStutes