State of the Session a third of the way in: MEMO

The Alaska Capitol Building. (Photo by Alaska Senate Majority/Flickr)

Adapted from The Midnight Sun Memo, a newsletter project from your humble Midnight Sun editor. For everyone who’s been asking about keeping up via email or how to support the work we’ve been doing here, we finally have an answer in this nifty newsletter. Sign up now!

With it being about a third of the way through session—and not at all because there’s not anything else super compelling to write about this morning—I wanted to take a minute to highlight some of the major storylines of this legislative session, why they’re important and what to watch out for.

Curious about other issues along these lines? Leave a comment or send me a message and I’ll try to catch up with it in a future newsletter. 

  • The budget. Ah, the budget. If you’re just tuning in, Alaska’s financial picture has looked pretty bad for the better part of the last decade thanks to the fall of oil prices (and depending on where you stand politically, the implementation of oil tax changes in 2013). It’s left the state with a structural deficit meaning the revenues the state brings in aren’t enough to cover everything that state law and policy says to pay out with solutions that are so politically tricky to navigate—cutting the dividend, gutting state services and implementing new taxes—that the state has pretty much kicked the can on the issue and spent down the savings that those high oil prices helped build. With that money nearly depleted, the Senate Finance Committee has been working to unpack the scale and scope of the problem in a “Let’s finally deal with this thing” kind of approach. They haven’t really reached any certainty in terms of direction but something’s gotta give and it’s probably not going to be another round of extremely deep cuts. 
  • The dividend. Ah, the Alaska Permanent Fund dividend. What’s more popular than direct cash payments to Alaska residents? Well, promising even bigger direct cash payments to Alaska residents when the state can’t afford them. Gov. Mike Dunleavy, who campaigned on repaying all the dividend reductions made under his predecessor, has once again proposed another big round of dividends in name of economic stimulus for the pandemic. The big hitch, of course, is that it’ll amount to a roughly $3 billion more than planned from the Alaska Permanent Fund, likely undermining the health of the account and its investment returns. In the Legislature, there’s been little direct talk this year about the size of the dividend and instead the Senate Finance Committee has largely focused on the long-term impacts of the overdraw. Those on the Senate Finance Committee have seemed less than thrilled about the potential harm but the latest round of elections have moved the needle towards big dividends. 
  • New revenue. Ah, new revenue. In an attempt to look like a sound long-term budgeter, Dunleavy’s long-term fiscal plan is technically balanced but only if you don’t look too closely at the $1.2 billion in additional revenue he expects to come on in next year’s budget. Unfortunately, not looking closely at something isn’t the Senate Finance Committee’s strong suit and there have been plenty of questions about the mysterious plan for new money. Perhaps Senate Finance Committee co-chair Sen. Bert Stedman said it best when he described it as a $1.2 billion deficit couched as $1.2 billion in new revenue. It’s just a continued deficit with no plan because the Dunleavy administration has so far opposed even the suggestion of new revenue (and he’s proposing a constitutional amendment that would make passing taxes nearly impossible). Despite the talk of figuring everything out once and for all, there’s not been a lot of work on the tax front so far this session. Implementing a new tax will be difficult politically—and not to mention that Alaska’s small population makes it unrealistic (and inequitable) to raise that much revenue from an income or sales tax alone (though it’s possible they take a look at oil taxes). The House has created a Ways and Means Committee to drill down on spending and taxing issues.
  • The House versus the Senate. The House is finally organized and ready to do business with a Democrat-heavy majority caucus, squashing hopes of Republican control of the entire Legislature. While the House is still on shaky ground after Rep. Geran Tarr left the majority (though it sounds like she’s open to coming back), it has its committees organized and there are mostly progressive Democrats in control of several key committees that will be significant hurdles to the policies generated by extreme-right Republicans in the Senate. It’ll make it near-impossible for Republican bills aimed at curbing voting in the name of election security, injecting politics into the judiciary and placing limits on abortion access (though it’s been pretty quiet on this last front). Similarly, the Republican Senate will also make it difficult for any priority legislation from the Democrats difficult to pass, such as expanding access to voting or, potentially, police reforms. If the chambers are willing to work together—a big if—there could be some middle-ground on these issues, but we’re not holding our breath.
  • The battle over disinformation. The latest salvo on this issue was Gov. Mike Dunleavy’s incendiary letter blasting Sen. Lora Reinbold for spreading lies about the state’s response to the pandemic and impugning the motives of state employees. He’s cut her, her office and the Senate Judiciary Committee she chairs from any and all contact with state officials, arguing that she’s been wasting state resources. It’s a remarkable move for the governor to take but this kind of direct condemnation seems to increasingly be the route of choice after ignoring and humoring the extreme-right world of conspiracy theories didn’t work. The Senate majority will be meeting today to discuss any potential action. It’s hard to justify allowing a committee to be blacklisted, but we’ve also seen a lot of justifications over the last four years that we would’ve once never expected. The moderate House organizing will also serve a critical role in this whole battle because they now have a platform to counter the disinformation in the Senate. 
  • Education. One of the biggest impacts from the pandemic has been on schooling, perhaps one of the areas where the difference between the haves and the have nots is most clearly felt. While some have adapted relatively well to online schooling, others have pretty much fallen off the radar as districts and families grappled with unequal access to internet, technology and even food security. Helping solve the achievement gap is largely going to rest with local school districts but the Legislature can help this effort (and it can also hurt, quite a bit) by ensuring that districts and families have the resources going forward. Summer school seems to be where most are focusing right now, and the state is working on a “Summer School in a Box” program where they can help smaller districts quickly set up programs for this coming summer. Hopefully, they’ll also be looking at what they can do for internet access statewide (and there’s perhaps some promising things on the horizon for rural Alaska). Also in the realm of education is school funding, homeschooling and reading testing.
  • The Department of Health and Social Services split. The Dunleavy administration wants to split the state’s largest department into the Department of Health and the Department of Family and Community Services for… reasons. After a hearing in front of the Senate Finance Committee last week, the administration still couldn’t clearly explain why the split would be good for the state. DHSS Commissioner Adam Crum, who saw opposition to his confirmation because legislators were concerned about his lack of experience in the health care field, told the committee that more than a dozen new executives would help everyone focus in more on the services delivered. Just why there needs to be an entirely new department and not just the 13 new positions, a question raised by Senate Finance co-chair Stedman, was not really answered. Neither were questions about whether they’ve done a cost-benefit analysis or other things you’d think would be necessary for such a dramatic shift. The change would actually cost the state $5.2 million in the first year and about $5 million every year after that, a price tag that the budget-conscious Senate didn’t seemed thrilled with. Though Crum downplayed the concerns with the proposal, there have been significant concerns raised by Alaska Native groups and others about its impact on the state’s child welfare system and it could potentially endanger the state’s federal funding.

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