AKLEG Recap, Day 43: House reduces earnings reserve draw, boosting PFDs by $54

House Finance Committee co-chairs Paul Seaton and Neal Foster listen during a meeting. (House Majority Coalition photo)

Day 43 of the Alaska Legislature’s session is in the books. The House Finance Committee approved one last round of operating budget amendments before opening the floodgates to public testimony and Alaska’s election system may or may not have been compromised. Here’s what happened and what to look forward to.

Just 47 days to go (and 34 days to Wrestlemania).

Budget amendments

The House Finance Committee spent Tuesday afternoon going through another set of operating budget amendments on Tuesday, including an amendment to reduce the draw from the earnings reserve of the Alaska Permanent Fund.

The amendment cut the earnings reserve draw from Gov. Bill Walker’s proposed 5.25 percent to 4.75 percent. It also shifted the balance of government funding and dividends from a 70-30 split to a 67-33 split. According to budget documents, the change would boost the dividend from an estimated $1,216 $1,270. Minority Republicans opposed the amendment, who argued the tactic was intended to force an income tax on Alaskans. (This is a talking point that’s starting to take root with Republicans: support larger draws from the earnings reserve, which cut the PFD, in order to stave off an income tax).

The committee also voted to delete (correction from the earlier story that said they approved it) a retroactive inflation proofing the permanent fund that would have transferred $1.45 billion from the earnings reserve to the corpus of the fund. The committee then voted to eliminate inflation proofing for the upcoming fiscal year.

Walker’s request for an open-ended appropriation for Medicaid was also deleted by the committee, arguing “given the budgetary implications of the Medicaid program, it would be unwise for the Legislature to grant unlimited UGF without program review.” Medicaid surprised legislators with a $93 million supplemental budget request this year. The amendment is notable because much of the angst about the spending has come from Republicans (who’ve turned to Medicaid work requirements as the answer), but it’s clear that the Medicaid spending is a concern for everyone.

One of the more controversial moves was an amendment that capitalizes the oil and gas tax credit fund by $49 million instead of $27 million. It’s controversial because it relies on a new interpretation of the state’s oil and gas law, which minority Republicans and even some in the administration said could cause big problems with how companies view Alaska.

The committee’s independent members, Reps. Jason Grenn and Dan Ortiz, frequently crossed over from the House Majority Coalition on Tuesday. None of it had much material impact, except for an amendment on headroom for next year’s supplemental budget. The House Majority Coalition was pushing for $200 million of constitutional budget reserve spending for the headroom, but Rep. Lance Pruitt, R-Anchorage, put forward an amendment to reduce the headroom to $100 million. Both Ortiz and Grenn crossed over to support the amendment with minority Republicans, lowering the ceiling on a 6-5 vote.

The budget now heads to the drafters as the House Finance Committee begins its public testimony.

Budget public testimony to begin

The multi-day marathon of operating budget testimony begins tomorrow in the House Finance Committee and is set to run through Saturday.

Here’s the Thursday testimony schedule:

  • 1:00 – 3:00 PM Homer, Kenai, Ketchikan, Kodiak, Mat-Su, & Seward
  • 3:15 – 4:45 PM Utqiagvik, Dillingham, & Fairbanks
  • 4:15 – 4:45 PM Off Net sites

Zulkosky to be sworn in

House Speaker Bryce Edgmon said the plan is for Tiffany Zulkosky to be sworn in on March 9, which would give her a few days to find her feet before the House heads into what’s always a marathon floor session on the operating budget.

It’s a fair bit better than Rep. Ivy Spohnholz, who was sworn in on the day of the marathon budget session.

Testimony on gun control

For all the talk about gun control in the wake of the Parkland shooting, no one in the House introduced any additional gun control bills before the personal bill filing deadline last week. The only control bill is House Bill 75 by Rep. Geran Tarr and it has a public hearing today in the House Judiciary Committee at 1 p.m. The bill would create an “extreme risk protective order” that would give families and law enforcement the power to temporarily take the guns away from someone who’s at high risk to harm themselves or others.

Today at 1 pm, House Judiciary Committee will hear HB 75, a bill I co-sponsored that’d empower families to petition for the temporary gun removal from an individual who is at higher risk of endangering themselves or others. Call (907) 563-9085 to testify. https://t.co/73If4wW57H pic.twitter.com/Yaga9xFU9E

— Ivy Spohnholz (@IvySpohnholz) February 28, 2018

Election hacking

Yesterday’s report on Russian interference in the 2016 election left everyone with a lot more questions than answers. Unnamed sources in an NBC report says Alaska was one of seven states “compromised” by Russia-backed hackers without going into any detail about just what that meant for the state. The news also conflicts with what Alaska knows about the hacking efforts. As far as we know, the Russia-backed hackers “rattled the door knobs” on the state’s election website and moved on. Whether or not that constitutes a compromise of the system is unclear in the NBC report. If something more serious happened and the feds knew about it, they haven’t told Alaska. Why?

Sen. Bill Wielechowski was quick to demand answers on Tuesday, issuing a news release demanding the Legislature hold special hearings to get to the root of the issue.

“Alaskans have a right to know exactly what occurred, if there were illegal entrances into our system during the election process, and to what extent it may have tainted Alaska’s election or Alaskans’ data,” he said.

Alcohol board extension delayed

Rep. Adam Wool’s House Bill 299, an extension of the Alcoholic Beverage Control Board, was bumped from Tuesday’s House Finance Committee meeting. He was asked about it during the Tuesday House Majority Coalition news conference and said he wants some extra time to make sure that the board is properly fulfilling its role under the Department of Commerce, Community and Economic Development and isn’t focusing too much of its attention on enforcement.

He then said, however, that as a bar owner he’s not a huge fan of allowing distilleries serve cocktails.

Bills advance

With the operating budget dominating much of the day, the House Finance Committee did double duty on Tuesday. It advanced an extension of the Marijuana Control Board in House Bill 273 and Rep. Steve Thompson’s House Bill 96, which deals with repealing so-called indirect expenditures.

Indirect expenditures are essentially revenue the state foregoes when it passes exemptions and waives fees for certain user groups. A few years ago, Thompson passed a bill that requires regular reviews of the many dozens of indirect expenditures of the state (found here), and this bill seeks to repeal four to save the state $350,000. Two target tobacco use by repealing laws that allowed “the costs of accounting and filing monthly tax returns to be deducted from the tobacco excise tax, as well as the $50 discount on cigarette tax stamps intended to be compensation for affixing the stamps to packages.” The tax stamp bill alone will bring more than $300,000 to the state.

4 Comments on "AKLEG Recap, Day 43: House reduces earnings reserve draw, boosting PFDs by $54"

  1. I appreciate your daily updates/recap of the Legislature, thank you!

    • Thanks! It’s been tricky to stick with it through the session so I’m glad to hear you appreciate them.

  2. Marna Sanford | March 1, 2018 at 10:44 am | Reply

    Me too! So appreciative of your writing and updates!

  3. Yes, I agree as well. Thank you for your valuable reporting.

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