The second day of the legislative session had little of the excitement of the first day and all the wonkiness of several finance committee meetings. The Legislature is already getting down to budget business with overviews of the budget and the House is already underway with its finance subcommittee meetings.
The three-quarter vote
The most consequential news of the day came out of the House Finance Committee’s budget overview from its Legislative Finance Division. While plenty of topics came up, it was the pending supplemental budget that is already shaping up to be an early session fight.
Thanks to overpromises by the administration about what’s feasible to cut from Medicaid and a busy fire season, legislators have been bracing for a sizable supplemental budget to cover the hole in the current year’s budget. Legislative Finance Division analyst Rob Carpenter said it could be even bigger than the administration’s estimates and exceed the amount of headroom spending approved by the Legislature last year.
“Leg. Finance has identified a few other areas where we perceive probable supplementals in addition to these likely supplementals the governor identified and that’s $8.3 million for adult dental, $7.5 million for public assistance and an additional amount for fire suppression for the spring fires,” he said. “There’s a total potential supplemental of $281 million, which would be beyond your headroom by approximately $31 million.”
That headroom is the $250 million the Legislature approved to draw out of the Constitutional Budget Reserve last year. Typically, that spending is meant to cover unexpected losses in revenue as well as unexpected costs like fire suppression.
However, the governor’s overzealous cuts and vetoes to Medicaid and other public benefits programs were reversed this year when they ran up against the reality of federal regulations (as was expected by the Legislature last year). Included in the $281 million figure is $30 million meant to refill the community assistance fund, which Dunleavy also vetoed last year.
“Now, this isn’t the end of the world,” Carpenter said. “It just means that there’s the potential for the need of an additional three-quarter vote.”
Though any previous experience with the Legislature will tell you that a three-quarter vote is just about as close to the end of the world as a deeply divided Legislature can get. Neither the bipartisan House Majority nor the Senate Majority control the necessary votes to accomplish this.
The Senate Majority fractured on Monday with punishments handed down to rebellious PFD-or-nothing Senators and even an alliance with the Democratic Minority wouldn’t get them to the necessary 15 votes.
Of course, a three-quarter vote is only needed if the Legislature is intent on paying for everything highlighted by Carpenter. The Legislature could, for example, put off the $30 million to refill the community assistance fund and get close to covering the budget with a simple majority in both chambers.
And the Dunleavy administration has also yet to file a supplemental budget so right now the Legislature is simply operating on estimates so the final number could vary considerably. You can bet that they’ll be keen on keeping it below that $250 million mark.
The other issue that seems like it’ll get considerable attention is the administration’s plans to ship inmates Outside instead of reopening the Palmer Correctional Center as the Legislature had directed them in last year’s budget. The administration is still in the process of awarding a bid to ship inmates Outside and, according to Legislative Finance, there’s no way to pay for it at this point.
The $16 million the Legislature approved to reopen the Palmer Correctional Center was specifically earmarked for exactly this purpose and there’s no way for the state to legally spend the money on a different purpose. Legislative Finance analysts noted that the governor’s budget contains a $16 million cut to the Palmer Correctional Center and a corresponding $16 million increase to ship inmates Outside.
Suffice it to say that legislators are deeply skeptical of everything about this plan. The administration’s claims that it must pursue a contract to ship inmates Outside before they hit capacity rings hollow when the administration’s own timeline would have seen the prison reopen sometime in the next few months if it had began the process as soon as the money became available.
Instead, the administration waited late into the fall to announce that it would be pursuing out-of-state prisoner housing.
The state is currently at 97 percent prisoner capacity. House Finance Committee co-Chair Rep. Neal Foster said that given the considerable interest in the issue, the committee and the corrections finance subcommittee will be spending additional time on the matter. (The corrections finance subcommittee is expected to meet next week.)
The fiscal cliff
The last note from the meeting is that the governor’s budget proposal—which pays out a full PFD, makes no substantial cuts and relies on savings instead of proposing new revenue—will deplete the state’s savings.
According to estimates by the Legislative Finance Division, the Constitutional Budget Reserve will be depleted by Fiscal Year 2022 (which is the budget that would be approved in next year’s legislative session) and based on current revenue estimates, the Alaska Permanent Fund’s earnings reserve account would be depleted by the end of the decade.
Carpenter acknowledged that the revenue, which is based largely on oil and investment performance, is highly volatile but that the current estimates are the best that they have to rely on.
“We really don’t know what’s going to happen next year,” he said.
The Senate unanimously approved HJR 9, which sends the Legislature’s support for the newly minted Elizabeth Peratrovich $1 coin to the U.S. Treasury. It also requests that the treasury mint at least 5 million of the new coins and distribute them to banks throughout Alaska.
Here’s the coin:
Tweet of the Day
Wowwowwowwhatthefuckisthis?!? Looks like the Koch Brothers don’t know the difference between a picture of Juneau or Ketchikan. Don’t listen to outside money-hungry propaganda. #akleg pic.twitter.com/toz7j89UqK
— Nona Dimond (@nonahamhead) January 22, 2020