The stakes are high as the Legislature returns to session

After a mountain of moving expenses and a flurry of fundraisers, legislators are set to get to work on the second session of the 30th Alaska Legislature this afternoon. After a 2017 that was dominated by budget gridlock, partisan bickering and seismic revelations on sexual harassment in the capitol, there are few people in Juneau who are particularly optimistic about 2018.

The same problems of last year persist—Alaska still faces a multi-billion dollar deficit, the economy is still sputtering and the Legislature’s sexual harassment problems are far from fixed—and now it’s an election year with plenty on the line. Today, we’re bringing you a primer on the session.

The budget

Alaska’s running out of money. Well, more accurately, Alaska’s running out of money that’s easily politically accessible. According to the latest report by the Legislative Finance Division, the Constitutional Budget Reserve is nearly empty and will come up short of covering the upcoming year’s projected deficit as it’s done in recent years.

While the magnitude of the deficit is smaller than the average for the past four years, the legislature no longer has the option it has exercised in the past. That option is to fill the deficit by drawing money from the Constitutional Budget Reserve Fund (CBR). After years of massive draws, the projected end-of-FY18 balance of the CBR (approximately $2.2 billion) is no longer sufficient to fill the projected $2.5 billion FY19 deficit.

That means the Legislature will either need to cut an additional $300 million from Gov. Bill Walker’s proposed budget or tap the last remaining savings account, the earnings reserve of Alaska Permanent Fund. This is the account that’s so far been used to pay for dividends and inflation-proof the fund. We doubt there’s the appetite for $300 million in cuts or completely zeroing out the CBR, meaning the Legislature will almost certainly be pulling money from the earnings reserve this year. The question is whether they’ll be doing so with a plan.

Both chambers have already passed legislation to make structured, planned draws on the earnings reserve (though both have their problems given more recent analysis of the health of the permanent fund) but never reconciled the differences. The House wants to balance cutting the dividend with some sort of progressive tax on high-income earners while the Senate wants no tax of any kind.

And that’s entirely setting aside the inevitable disputes on just how the state should be spending its money.

Legislative overtime?

Legislators have been unable to get their work done on time in recent years, and this year will be no exception even if it’s in their best interest.

The pressures to get done on time will be big. Legislators can’t campaign at all while the Legislature is in session (this relaxes a bit when we’re getting closer to the primary or general elections). It was a big motivator for Sen. Mike Dunleavy’s decision to leave the Legislature to focus on his campaign for governor.

Legislators will be facing extra pressure to get done this year thanks to increased scrutiny on hefty per diem payments that have been paid out during the regular, extended and special sessions. There’s a voter initiative that would, in part, punish legislators for failing to pass a budget by the end of the regular session and Gov. Bill Walker’s likely to push the issue with his own legislation this year.

The cost of overtime is expensive for everyone involved. There’s the political hit to the Legislature as a whole in the eyes of the public, it’s another round of uncertainty for state employees who are constantly being asked to do more with less and there’s also uncertainty for the many sectors of the economy that rely on the state functioning like normal.

Political implications

The 2018 elections will decide 50 of the 60 legislative seats and the governor’s mansion.

It will not only determine who’s in control of the state, but also play a critical role in determining the political makeup of the redistricting board in 2020. By Sept. 1 of that year, the sitting governor will get to appoint two members to the board, the Senate president will get one seat, the House Speaker another and the Alaska Supreme Court’s chief justice will get the fifth seat. As we saw with the 2010 round of redistricting, the state district lines will play a major role in the landscape of the Legislature.

We’re expecting a lot of political jockeying of all sorts during the next 90-plus days, which means there’ll be plenty of big and small votes taken that don’t make a great deal of sense until campaigns get a hold of them later in the year. We’re particularly interested to see how things play out between Rep. Scott Kawasaki, D-Fairbanks, and Sen. Pete Kelly, R-Fairbanks. The two will be going head-to-head in what’s poised to be the most interesting legislative race of 2018, and any votes one can hold over the other will be a premium.

While we expect the dividend, the budget and crime to dominate the 2018 elections, there’s no party that can truly claim moral superiority of any one issue (though Walker will reap most of the blame, at least in the eyes of the Republican party). Republican and Democratic legislators have voted on either side of each one of those issues over the last few years, so it will likely vary from legislative race to legislative race. The muddy picture will, as it did in 2016, give an upper hand to challengers.

Everything else

Legislators escaped from the October special session having passed a potentially flawed update to the state’s criminal justice laws, but promised to fix it first thing when they returned back to Juneau. Since they’ve left, there’s been debate about whether or not a legislative fix is really needed or if the problem can be solved with some sort of court rule. If legislators do bring forward a fix, it will certainly not be as easy as a quick vote because last we checked the passage of Senate Bill 54 hasn’t completely erased crime in Alaska. Regardless, the only vehicle at the moment is Sen. Mia Costello’s full-scale repeal of Senate Bill 91.

The Legislature had its #MeToo awakening last year when more than a half dozen women who worked in the capitol came forward with accusations of sexual harassment against Rep. Dean Westlake. Finally heeding the call of his party and colleagues, Westlake resigned from his position but the problem of harassment and sexual harassment in the Legislature is far from solved. The Legislature has instituted mandatory training this year, but we expect there to be some talk of legislative fixes and, of course, for efforts to pin blame in a politically advantageous manner to continue.
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