By Ceri Godinez
The second session of the 31st Alaska Legislature ended Sunday March 29 after a whirlwind three weeks leading up to passage of the budget and several COVID-19 response measures.
On March 13, the capitol building closed its doors to visitors and lobbyists to reduce the likelihood of an outbreak. “The joke around here is the capitol is like a petri dish,” Rep. Sara Hannan said. A retired school teacher, Hannan said she has seen the way disease can spread through a building where occupants are in close contact. As pandemic concerns around the world increased, so did the pressure to finish the legislative session, she said.
The legislature’s only obligation by law during a legislative session is to pass a budget, Hannan said. This became the focus for lawmakers. Once the House and Senate approved a budget for the fiscal year beginning on July 1 and addressed immediate funding needs for COVID-19 responses, they could go home.
The final version of the budget the legislature approved is largely flat funded compared to the budget for the current fiscal year, Sen. Jesse Kiehl said. It’s also pretty close to the budget the governor proposed last December. Some notable exceptions include full funding for community assistance, full funding for school bond debt reimbursement and increased ferry funding.
The increase in ferry funding is a roughly $20 million increase in operations funds, still roughly $20 million less than the budget the year before Gov. Mike Dunleavy took office. The budget also includes funding for repairs to the Aurora and modifications to either the Hubbard or Tazlina to extend the vessel’s range.
“I sure hope the governor doesn’t veto it,” Hannan said.
Kiehl and Hannan said they do not know what the governor plans to do with the budget this year. Last year, the governor, exercising his line item veto authority, cut roughly $400 million from the operating budget the legislature passed, with some of the largest cuts coming from the University of Alaska, Medicaid and school bond debt reimbursement.
One of the unfortunate things about the way the session ended is that legislators are unlikely to be able to consider veto overrides, Kiehl said. Instead of adjourning, as the legislature usually does at the end of a session, the House and Senate recessed indefinitely, which means the legislature is still, technically, in session. This gives the governor less time to consider vetoes. It also means that, unless legislators return to Juneau and vote to override, the vetoes become law after five days.
Depending on how quickly the governor issues his vetoes, this would require the legislature to return to Juneau sometime this month. Kiehl said the legislature is unlikely to reconvene, and even if it did, unless the vetoes hit new levels of egregiousness, it is unlikely the legislature would have the 45 votes necessary to override.
Other deviations from the governor’s proposed budget include an additional $30 million in K-12 education funding, on par with last year’s forward-funded education budget; a $12.5 million cut to the university’s budget, only half of what the governor proposed, and a very modest investment in troopers and corrections, Kiehl said. He said the budget includes language suggesting the Department of Public Safety prioritize adding new trooper positions to areas with no law enforcement and single trooper posts before adding to areas with larger trooper populations. Haines could potentially benefit from this request as it has a single trooper post. Kiehl said the motivation behind the request is to increase officer safety.
In an effort to generate enough support to pass measures including the “reverse sweep,” a measure restoring funding to various state accounts including the Power Cost Equalization fund, and a draw from the Constitutional Budget Reserve (CBR), one of the state’s last savings accounts, to fund a portion of the budget, lawmakers tied these votes to this year’s Permanent Fund dividend amount, Kiehl said.
The legislature hit the three-quarters majority in each body needed to pass these measures, so
this year’s PFD payment will be roughly $1,000 per Alaskan, costing the state $680 million total.
The price to secure PFD payments was a larger draw on diminished state savings than he was comfortable with, Kiehl said. However, abysmal oil prices, a global pandemic and a diminished Permanent Fund resulting from a plunging stock market made it difficult to protect savings accounts, he said.
“The next time we visit the budget, we will find ourselves between the devil and the deep blue sea,” Kiehl said. In the real world, these concepts correspond to options including “budget cuts that make last year’s budget cuts look tame, revenue measures that take a crippling amount out of the economy and an unsustainable draw from the Permanent Fund. There won’t be any easy choices.” And the longer the state’s spending gap goes unaddressed, the uglier the options will become, he said.
Many legislators entered the session ready to take a meaningful look at long term solutions for Alaska’s fiscal challenges, but due to the truncated nature of the session, tough decisions didn’t get made, Kiehl said.
Hannan said she is interested in future discussion about diversified revenue streams. While income tax discussions are not pleasant, especially given the current global situation, Alaska needs a revenue source “that’s more predictable and in our control than a commodity (like oil) that’s tied to a global market that we are no longer controlling,” she said.
While Kiehl listed several options for balancing the budget in the future, he did not list further cuts to the PFD. “A zero dividend is not acceptable to me,” Kiehl said. He said cuts to the dividend hit low income Alaskans much harder than wealthier ones. The legislature has already made cuts to the PFD and should look to options that generate contributions from nonresidents and the oil industry, he said.
Lawmakers also made it significantly easier to deliver telehealth during this disaster; gave the lieutenant governor the ability to hold elections by mail if pandemic concerns persist; extended the PFD filing deadline until April 30; specified that healthcare workers who contract COVID-19 are covered under workers’ compensation insurance; expanded eligibility for unemployment benefits similar to new federal eligibility requirements; placed a three-month moratorium on evictions and foreclosures for those unable to pay due to COVID-19; postponed student loan payments; instructed the state to use a portion of federal funding to buy Alaska seafood for use in places like food banks and created price gouging penalties for items like food, medicine, fuel and hygiene products.
Aside from COVID-19 response legislation and the budget, few other bills passed this legislative session, Hannan said. The legislature ran out of time to address bills including a massive alcohol law overhaul that has been almost a decade in the making and Hannan’s vaping tax legislation.
Hannan said lawmakers were hesitant to make any changes to the law in perpetuity, so all COVID-19 measures passed during the session have expiration dates and funding is designed to address immediate state needs. It is likely the legislature will need to return for a special session at some point this summer or fall to address future needs.
Any special session will be scheduled around campaign season as legislators cannot campaign or raise money while in session. Once the regular legislative session officially expires in mid-May, campaign season will begin for 51 of the 60 lawmakers. While Kiehl has another two years in his term, Hannan has filed her letter of intent to run for re-election. She said she is only just starting to think about what a campaign will look like if social-distancing practices persist into the summer.
“People won’t want you knocking on their doors,” Hannan said, and calling people to raise money seems tactless right now. She said she and Kiehl are working to organize a series of virtual town halls in April as part of their legislative community outreach efforts. If pandemic concerns persist, similar virtual forums may become a staple for her campaign as well, she said.