The Alaska Legislature passed the halfway mark of the voter-approved 90-day session last week and work is really just starting to begin on the budget. Usually the House approves its budget in the next two weeks, but with everything don’t expect that to happen so soon.
The tone of the second week of Anchorage caucus was similar to the first with plenty of people upset about the Gov. Michael J. Dunleavy’s budget (and armed with another week of unpacking the budget), but it was a series of livestreamed town halls by Rep. Sarah Vance, R-Homer, that caught the attention of the political world over the weekend.
Did she “stand tall” to the left-wing mob? Well if “repeat Dunleavy’s talking points while the crowd pleads for her to say what she believes” is standing tall, then she did so with flying colors. From the parts that we watched, we heard people frequently asking “No, but what do you believe.”
Vance, who defeated the noble-but-less-than-strategic Rep. Paul Seaton in the 2018 general election, held a series of lengthy town halls throughout on Saturday to crowds that were not simply willing to hear her repeat the increasingly tired Dunleavy lines of “matching expenditures to revenues.”
For her part, Vance said she supports education, but she doesn’t support deficit spending and that “everything has to be on the table”™.
After prodding, she acknowledged that new revenue may be part of the solution, but had this to say about the income tax:
“Even revenue, but I do not look at an income tax as revenue,” she said.
“It is!” someone yelled out as the crowd broke out into another round angry murmurs.
She then pointed to one of the least popular sources of “new” revenue proposed by the Dunleavy administration in the form of a repeal of ability of local municipalities to levy property taxes on oil and gas infrastructure.
It’d put a roughly $440 million hole in local government budgets, but thanks to how education funding works would only be a net benefit to the state of about $398 million.
“We’ll address SB 54 (Actually SB57/HB59) that would repeal the oil and gas tax from the municipalities and the boroughs, and the argument is that money would be filtered down and result in taxes,” she said. “It ends up that way if the boroughs and municipalities suddenly have some of their revenue removed, then the only way they could possibly get it besides looking for efficiencies—and the large number that it is—is most likely raising the property tax and raising the sales tax.”
“That hurts people that are not wealthy,” someone said.
“But you said you’re for an income tax,” she said.
“One that’s progressive!” the person that replied. “Ask the people with the most to give a little back.”
Why it matters: Meetings like this can be spun and the concerns of the public can easily be dismissed as just a bunch of riled up union teachers (You know, all the 15-year-old teachers, senior teachers, low-income teachers, teachers in the health care, teachers hoping to graduate high school and go to a functioning university), but you can also see just how flimsy a lot of the justification is when it’s put up against two hours in front of a less-than-friendly audience.
The Dunleavy administration has only really had to defend the budget in limited interviews with select outlets and in meetings with legislators. These face-to-face meetings with voters will really put it to the test. Is there some huge section of the public that’s not coming to these meetings? Perhaps, but they’ll need to materialize soon.
Economic analysis, at last
The Office of Management and Budget’s economist Ed King is scheduled to give presentations on the economic impact of the governor’s budget to the Finance committees on Wednesday and Thursday. The administration has so far pledged that private sector gains of a more stable state government (that’s even more reliant on volatile oil prices than it was under the final budget approved by Walker) will more than make up for the devastating cuts to government.
This is the sort of justification that pro-Dunleavy legislators like Vance and others will be looking for in order to sign onto the budget, but how will it go up against the economic research that just about every other group is also doing?
Office of Management and Budget Director Donna Arduin has noted before, however, that the analysis largely began after the budget was put together. So is a justified budget or budget justification?
Senate Bill 57 unlikely
Speaking of Senate Bill 57, the property tax bill mentioned above, here’s what Senate President Cathy Giessel told the Anchorage Daily News in a story published over the weekend:
“Among our members, I don’t even know one person who supports it at this point,” Giessel said. “I don’t see a lot of support for it at this time.”
The failure of that bill to pass would punch a $398 million hole back into the governor’s budget.
That ADN story then grabs onto the elephant in the room, Dunleavy’s singular focus on paying a PFD back over every other priority (except for maybe crime and privatizing the criminal justice system):
In a Feb. 21 Senate Finance Committee hearing, von Imhof said, “I keep hearing the administration referring to this ‘fiscal crisis.’ We don’t have a fiscal crisis. We have a priority crisis. We have enough money to pay for a certain level of government services, and a certain level for a dividend. We just don’t have enough money to pay for both at the highest level desired.”
It also probably doesn’t help that Legislators heard opposition to the PFD repayment plan to the tune of 2:1 during the Senate State Affairs Committee hearing last week.
Much of the budget work will happen in the House and Senate Finance Committee’s departmental subcommittees. Those smaller groups are responsible for doing a deep dive into each budget and produce their own recommended changes (most get rolled into a new version of the budget, but not all in cases where a chair might overstep things).
What’s particularly interesting as they get underway is the complete lack of commissioners on this week’s agenda for these subcommittees. There are some presentations from the Office of Management and Budget and others without a guest list, but none that list a commissioner.
It was an issue that Sen. Bert Stedman highlighted last week and if you’re wondering whether it’s normal for the Legislature to get the cold shoulder from commissioners, here’s what former Department of Labor Commissioner Sen. Click Bishop said about the move:
“I’ve sat where you’ve sat and delivered six budgets to this Legislature with him as chair and him as chair,” he said, motioning to Sens. Stedman and Lyman Hoffman. “I’ve never missed a committee meeting with the full committee or a subcommittee.”
Tweet of the weekend
— Zachariah Hughes (@ZachHughesAK) March 2, 2019