Following months of legislator-free bliss, the second regular session is set to kick off today in Juneau at 1 p.m. As we all brace for 90-plus days of committee meetings, floor sessions and election-year posturing, we’re breaking down some of the major stories of the session that are taking shape.
The Dividend (and the Budget)!
The Alaska Permanent Fund dividend will continue to be a significant political fight that sucks the air out of pretty much every other conversation and gets wrapped up in budgeting. Gov. Mike Dunleavy continues to push for his full statutory dividend but has largely abandoned any semblance of a reasonable plan to pay for it. Gone are his attempts to cut government spending deeply and he’s still staunchly opposed to new revenue, so his approach now is an unsustainable draw on the state savings.
Most legislators are uncomfortable with the outlook of spending down state savings as the governor’s status quo budgeting and full-size PFD isn’t a repeatable solution. It would nearly deplete savings and finally send the state off the much-feared fiscal cliff.
Though some had hoped that this “fiscal precipice” would have finally forced the discussion on new revenue, the most likely avenue for legislators will be to cut the dividend as they have done since Gov. Bill Walker first did it in 2016. The question is now how it’ll be done: Will legislators continue with the path of ignoring the historical law or will they finally muster the votes to pass it?
The Permanent Fund Working Group, which wrapped up work on Monday, didn’t really produce an answer. Its main recommendation is for the Legislature to continue to abide by the spending limits the Legislature set on the earnings of the Alaska Permanent Fund.
Sen. Shelley Hughes, R-Palmer, suggested at the meeting that the Legislature move forward with a 50-50 split of the earnings of the Alaska Permanent Fund, which would send half the revenue to dividends and the other half to state government. That proposal was rejected, and Hughes pledged to continue the fight for a full dividend under the existing formula.
The size of the dividend will continue to be a fight as long as Legislators leave the formula on the books.
The Ferry (and the Budget)!
With several communities facing longer-than-expected gaps in ferry service, funding for the Alaska Marine Highway will be getting an early push this session. Several coastal lawmakers have indicated that they would like to open an override attempt of the governor’s final round of vetoes during 2019, which axed $5 million in additional funding the Legislature hoped would ease the impacts of the cutbacks.
The Legislature had expected service would be impacted to several communities after it passed a roughly $43 million cut to state funding for the marine highway, which had been a “something is better than nothing” approach to Dunleavy’s initial proposal to completely gut the system and end all ferry service by Oct. 1, 2019.
There’s doubt that the Legislature will be able to muster the three-quarter votes to override the vetoes.
Still, that’s not stopping the Kodiak Republican Rep. Louise Stutes from going to bat for the ferry system. The House Transportation Committee, which she co-chairs, will be meeting today at 2 p.m. with a presentation entitled “The Importance of AMHS to Alaska & the Need for Increased Funding.”
Finally a Budget Director (and the Budget)!
The position of permanent director of the Office of Management and Budget was left open for so long that people started assuming the administration was, after all, just running out the clock on the state laws that prevent legislators from taking state jobs for a year after leaving office.
Former Sen. Anna MacKinnon had been rumored to be the pick to take over for the now-departed Donna Arduin, but several sources said it was unlikely. That the job was then left open for so long led a few sources to wonder if it was actually in the cards after all.
We finally got an answer on Monday when the administration announced that it would be going with the internal hire of Neil Steininger, who’s worked in the OMB office since the Walker administration.
Steininger told the Anchorage Daily News that he plans to be more apolitical than his predecessor—who helped fuel the backlash to the governor with draconian cuts and an indifferent attitude toward their impacts—saying that “I see the role of OMB as providing objective technical analysis to inform and help make decisions.”
From a practical standpoint, it will be interesting to see what–if any–changes there will be to the administration’s approach to budgeting this year. Last year, the Legislature struggled mightily to extract any information from the administration about its proposed cuts, the impact of those proposed cuts or, hey, how they even settled on proposing those proposed cuts. After the administration gave the boot to Arduin, officials pledged that commissioners would return to having a more active role in putting together the budgets for their agencies.
Whether any of that plays out or whether the administration’s budgeting will continue to be driven by the goal of paying out a big dividend without figuring out a way to pay for it and state government has yet to be seen.
The administration is still without a permanent Department of Revenue commissioner and without a permanent press secretary. The Legislature is also short-handed following the retirement of Legislative Finance Division Director David Teal.
And Shakeups (and the Budget, probably)!
The Legislature will have some reorganizing to do this week.
The Senate will need to select a new chair of the Senate Resources Committee following the death of Sen. Chris Birch last fall. Sen. Josh Revak, R-Anchorage, is Birch’s replacement but won’t be a shoo-in for the seat. Instead, it’s likely that things will be reshuffled.
Also unanswered is the state and strength of the Senate Republicans following a last-minute rebellion over the budget by several of its far-right members: Sens. Lora Reinbold, Shelley Hughes and Mike Shower.
In the House, they’ll be looking for a new chair of the Labor and Commerce Committee, which was chaired by Fairbanks Democratic Rep. Adam Wool. Wool is moving over to a spot on the House Finance Committee following Rep. Tammie Wilson’s defection from the House Majority.
The power structure in the House Minority could also shift after it picked up Wilson and Rep. Mel Gillis, who was appointed to fill Revak’s seat.