Welcome to the latest belated edition of Friday in the Sun, our weekly column that attempts to catch up and break down the political news of the week. As always, speculating on Alaska politics is a pastime second only to arguing about whether winter or summer is the season of choice and it’s best to treat it like that.
You can get ahold of your editor at [email protected] with tips, questions and grammatical advice.
Also, hey, if you’re a subscriber to the The Midnight Sun Memo (and, if not, why?!? It’s so easy to sign up!) you may have noticed the increasing overlap between this column and the newsletter. Here’s a handy way to jump past the reheated newsletter to the new and/or fleshed out stuff for anyone who’s already done the reading: Too long; already read.
A long-shot fiscal plan
After plodding around for a couple weeks, the Legislature’s Fiscal Policy Working Group—the eight-member, bicameral team established as part of a deal with some House Republicans to avoid a shutdown—looks like it’ll be throwing things into… second gear next week, with more than two meetings on the agenda and an abbreviated public-testimony roadshow to lead into the Aug. 2 special session on the budget, the PFD, revenues, PCE, constitutional amendments, etc. The initial hearings have covered scintillating topics like the history of the state’s revenues and expenditures, the state’s retirement system and a brief overview of the proposed constitutional amendments dealing with the Alaska Permanent Fund. They’ve not made for the most consequential hearings in the world but have at least given us all a pretty good handle on who is and isn’t doing the required reading (which’d be the House Republicans who demanded we set up this committee in the first place).
On the one hand, the whole thing has loads of people scratching their heads about what’s going on here as it’s not immediately clear how a hearing on the state’s retirement accounts gets the state to a fiscal plan. But on the other hand, the hearings have done a good job at keeping a lid on things while also quietly making some important points about how some of the far-right’s fanciful thinking (like diverting the earnings from the state’s pension to the budget) is a bad idea. Side note: I’ve heard that a handful of pro-PFD protestors have showed up raring to give legislators a piece of their mind to find themselves sitting through hours about intricacies of retirement accounts and investment risk.
Anyways, the closest we’ve got to any real sense of direction out of the committee was some closing comments from co-facilitator Sen. Lyman Hoffman, D-Bethel, during Thursday afternoon’s meeting. Here’s his points summed up:
- The plan should have some room for emergency funding. Whether that be some funds diverted into the Constitutional Budget Reserve (where it’d need a three-quarter vote to spend) or socked away in some other fashion, Hoffman said many legislators are unwilling to lock the state’s budget in with little room for error.
- If the Legislature ultimately agrees to pay out larger dividends—a move that would require the Legislature to also implement either cuts or taxes, which from a practical standpoint would take considerable time to implement—then Hoffman suggested a stepped approach. It sounds like there’s little traction for Gov. Mike Dunleavy’s proposed plan of “Big PFD now, $500 million in unspecified cuts and taxes… eventually,” and Hoffman suggested the size of the dividend grow as those revenues and/or cuts come online. He pegged the number for the initial dividend in the $500 range.
- “If it comes to be 50-50, then we need to look at giving serious consideration into when the effective date of that is and how do we get there. Most importantly, I think that coming up with the number is going to be the most important question, but to get there is going to take a lot of dialogue by this committee. I think … members (should) start contemplating where you might go, how large of a deficit, where we would get the $1.8 billion to afford that number. If it’s higher than that or lower than that, we also need to address that question.”
Why it matters: Sure, it’s been a pretty uneventful couple weeks as far as committee hearings go, but let’s be honest that it was always going to be a long-shot that a plan would come together during a committee hearing. Hoffman’s comments give us a good look into what folks are talking about behind the scenes and, frankly, make for one of the best/only pitches to bridge the various opposing viewpoints on the budget and state’s fiscal direction. Settling the size of the dividend is the most critical question in front of the Legislature, which will trickle down to everything else, but it’s not enough to simply put whatever figure that is into action without resolution on who pays.
What’s next: Next week’s schedule will kick off with a pair of hearings, agenda to be determined, as well as a quickfire series of public hearings starting in Anchorage on Thursday evening. From there, they’ll go to Mat-Su on Friday, Fairbanks on Saturday and then hold a hearing in Juneau where folks can also call in from around the state on Monday.
The special session is set to start on Aug. 2.
The practical goal
Anchorage Superior Court Judge Herman Walker Jr. heard oral arguments today in the maybe-lawsuit over the operating budget’s effective date. The core of the case is whether or not budget bills require an immediate effective date (which requires a two-thirds supermajority vote) to, well, be immediately effective. But before they’ll even get to that, the court will have to decide if the entire case is itself constitutional. The governor is barred by the Alaska Constitution from suing the Legislature, but the question here is whether the Attorney General—who was acting on orders of the governor—suing the Legislative Affairs Agency is the same thing or, in fact, a clever legal workaround.
The state argues it’s different and also you’re not supposed to look at all the news releases and public statements of the governor and Attorney General Treg Taylor that, essentially, said they’re working to sue the Legislature to decide the issue.
The attorney for the Legislative Affairs Agency argued that the legal workarounds largely don’t matter and that the court needs to look at “the practical goal of the action.” He said it’s clear that governor is trying to sue the Legislature to determine a constitutional issue and therefore the entire case should be barred on those grounds.
As always, it’s hard to suss out what Judge Walker may do with this case. He’s already told them that the underlying issue would override the fact that the issue of the effective date is moot given the Legislature’s ultimate passage of the bill, but just how he might rule on the issue of the lawsuit’s constitutionality is less clear. He said he’s planning on issuing a decision sometime next week.
Cicotte off the job… for now
In response to the bombshell news from The Guardian that Assistant Attorney General Matthias Cicotte was running an anonymous Twitter account that was deeply bigoted, racist, antisemitic and perhaps even a little secessionist, the Department of Law today announced Cicotte “has been removed from his caseload and his status with the department is subject to change at any time as the investigation continues.”
Critics and opposing attorneys have generally argued that Cicotte shouldn’t necessarily be fired because of the account alone, but have raised questions about whether his racist, homophobic, transphobic and antisemitic viewpoints have affected his work, which has recently largely dealt with the Department of Corrections.
That’s how much the Alaska Public Offices Commission’s staff has recommended in fines for the several egregious campaign finance errors and gaps committed by Anchorage Mayor Dave Bronson on the campaign trail. The agency has found several errors or gaps in pretty much every single financial disclosure report his campaign filed as well as several over-the-limit contributions. In a somewhat remarkable move for APOC, the staff recommends the enforcement of the full statutory fines.
“After wading through (Bronson for Mayor’s) utterly confusing reports for many days, it is clear to staff that the public had no idea of what was going on in the (Bronson for Mayor) campaign until well after the April 6, 2021 election and the May 11, 2021 runoff elections,” concludes the report. “Under all the circumstances staff recommends no reduction to the civil penalty in the case.”
I’ll have a more complete break-down of this report for the blog early next week. Find the full report here.
Word on the street is everyone’s favorite economist, ISER’s Mouhcine Guettabi, is packing it up and headed to the greener pastures of North Carolina university system where we hear he’s got a better offer. To be honest, it’s hard to blame him. It’s gotta be tough to have a front-row seat on a sinking ship, spend several years warning about the leaks on said ship that need to be patched up with some reasonable, but inconvenient measures and to see, essentially, next to nothing done about it while being threatened with a lay-off notice nearly every year.
We’ll miss Guettabi. Thanks for all the work.
Obligatory: The 202 election is going to have a radically different election system with the open primary and the ranked-choice general election, so we don’t really know how anything will play out… and, for that matter, we really never knew how anything would play out before, either.
The talk about former Gov. Bill Walker getting into the gubernatorial race is starting to really heat up. Walker has long ago said he’s considering entering the race but given the increased talk about his outreach to key groups to gauge support as well as poll numbers starting to circulate a bit—putting Walker and Dunleavy essentially tied (which, again, the election is not going to be head-to-head)—that would lead us to believe something is going to happen sooner rather than later. Getting a campaign launched at the tail-end of summer, especially as the governor’s last-ditch effort to finally deliver on his mega-PFD campaign promise comes up short once again, would be good timing.
Also, speaking about 2022 there’s a lot of talk that Gov. Dunleavy’s big plan for the election is to go all-in on calling a constitutional convention. “Trust me, the system’s broken! I should know! Look at the mess I’ve made!” is a real interesting play here but, hey, nothing else has really worked so far. The whole issue of the constitutional convention is a ball of wax that is worth unpacking at another time, but off the cuff it’s wild to assume any particular outcome from a convention, which itself would be a monumental logistical feat to pull off.
Unless the governor pulls off a landslide win in the race along with winning himself a sizable legislative majority that would allow him to really skew the entire process, there’s little guarantee that it would go his way. Who’s to say that a whole litany of special interest groups—oil, mining, health care, unions, drag queens who read to kids at the library—wouldn’t have an outsized influence on the whole process. How about an all-Bar Association Alaska Judicial Council?
And, hey, if we’re really at fixing this “broken” system, the massive power imbalance between the governor and the other branches seems like a pretty good place to start. How about lowering the veto override (or eliminating the line-item veto altogether), reworking the appointment process, lower the constitutional budget reserve’s three-quarter vote and make it so budget bills can’t be held hostage by the minority?
The special session
Despite initial talk that the special session could be pushed in order for the Legislature to take its time in finally figuring out the long-term fiscal plan that has eluded the Legislature for nearly a decade, it’s sounding like the governor is likely to stick to the Aug. 2 start date. The main thing to keep in mind is that biggest piece of leverage that Dunleavy and company have over the rest of the Legislature is the fate of the Power Cost Equalization program. But that leverage could quickly disappear with the Alaska Federation of Natives and company’s lawsuit challenging the governor’s plan to sweep the PCE Endowment Fund into the supermajority vote-requiring Constitutional Budget Reserve, which is scheduled for oral arguments on Aug. 5. (So don’t expect a lot to happen those first few days.)
If the court rules that the PCE Fund isn’t subject to the sweep, then that takes a heckuva lot of pressure off the need to get that three-quarter vote.
And, frankly, if the court rules that the PCE Fund is subject to the sweep—which some think would also likely mean that the Alaska Permanent Fund’s investment earnings could also get swept up—then who really knows.
The asking price for the three-quarter vote is at such a ridiculously high point—as we saw in the tail-end days of session, the asking price to even keep government open ranged from bigger PFDs to PFD repayment, anti-abortion language and a litany of constitutional amendments—that there has to be a conversation about whether it’s even worth engaging on. When the cost to cover the affected programs is somewhere in the $115 million range, it might be more prudent to cover them on a one-time basis.
Food for thought, anyways.
Have a nice weekend and take care!