Summary: Read more here from the Senate Finance Committee meeting here, more from Sen. Jesse Kiehl’s talk to the Juneau chamber this afternoon here, and coverage from this morning’s Tlingit and Haida executive council meeting, where the president had some harsh words against Dunleavy’s administration, saying Dunleavy’s attacking Native communities and families with his vetoes.
Teal is elaborating on the problems he sees in the logic of OMB, which has designated a number of funds sweepable or not sweepable that have not been considered in the past. Earlier he said that without law, we’re left with policy, and policy changes with whoever is in power.
He gives as an example of disagreement over “sweepability” the Training and Building Fund which OMB says is not sweepable because its funding comes from the General Fund. LFD disagrees because its funding is an appropriation.
We don’t know if we can convince OMB to change their minds regarding sweepable funds, Teal says, we haven’t talked to them, they haven’t talked to us.
OMB is confusing revenue with balances, Teal says, so putting certain funds on the sweepable list is irrelevant, he says. He is explaining a chart of sweepable funds according to the Legislative Finance Division.
When the sweep is reversed, Teal said, it doesn’t matter what programs are swept or not. It’s only when you don’t sweep that it becomes an issue, he said.
Von Imhof asks Teal if he feels that OMB’s reclassification of certain programs as sweepable is in conflict with Hickle v. Cooper, the case noted below, which ruled previous statues concerning a reverse sweep was ruled unconstitutional. Teal says he believes OMB’s reclassification is in conflict.
Teal is explaining that because the legislature was not aware of what funds had been added to the sweep list, they were not able to pass laws that prevented those programs from being swept.
Teal is talking about past legislation which covered how the money was to be swept. However, this particular legislation was found to be unconstitutional and never replaced. “With no statutory guidance, we’re left with policy decision,” Teal said. (The legislation he is talking about is available here, with items ruled as unconstitutional in bold.)
Stedman thanked members of the OMB who made their presentation, calls Director of Legislative Finance Division, David Teal.
Stedman says that decisions will have to wait until the legislature convenes to consider all options.
Steininger explains that OMB believes that the best solution would be a appropriation bill that would “back-fill” empty accounts from the the general fund but that would run the risk of future budget shortfalls. That solution would only require a simply majority of the legislature to pass. A “reverse sweep,” which is what the legislature would normally do, would restore all funds by taking the money from the CBR but would require a two-thirds majority vote.
Harbour explains that the list covered by Steininger was a provisional list of areas they determined to be of great concern, and that the numbers for the Department of Labor are not yet clear.
Steininger says that the senior benefits fund was paid out of the general fund and that the elimination of those funds was caused by Dunleavy’s line item vetoes. Steininger was responding to a question from Senate Majority Leader Lyman Hoffman, who asked why seniors had already received letters informing them their benefits had been cut.
Steininger explains that some programs are on two-year cycles which means that there are funds so some of the effects of the sweep will not be “as traumatic” but it will become an issue in the future.
Steininger is going over the list of accounts that were not listed on the Legislative Audit Presentation. A list can be found in OMB’s PowerPoint presentation for this meeting. (More documents for this meeting can be found here.)
Sen. Natasha Von Imhof, R-Anchorage, says that many of these cuts are immediate, that she has had several people come to her office regarding the Alaska Performance Scholarship, which provides scholarship money for students. Many students have been told that funds will not be there, and that those students don’t know what to do about continuing their education.
Sen. Lyman Hoffman, D-Bethel, asks why this administration has prioritized certain groups of people of the lack of funds but others have not. This has great financial implications for those people and they should be notified. Introduces a formal request to have those people informed as soon as possible.
Steininger is explaining that certain programs will not experience any interruption until later because it takes time for expenditures to catch up with money that has already been allocated.
However, other accounts have not had funds allocated. Rep. Stedman gives the example of certain state employees, particularly university employees, have already received letters telling them there will be no money for their paychecks.
Steininger says it has been difficult to determine what the impact of the sweep will be because it has never happened before and the funds that have been swept are “so broad and all encompassing.”
Steininger explains that the money from the CBR is taken out to pay for future services. He gives as an example money being taken out for a future ferry trip, so that the voyage is paid for at the time it takes place.
Any question anyone had about what should or shouldn’t be swept was typically a matter of idle conversation, Steininger said.
Stedman explains for those at home that this is “basically an interest free loan.”
Harbour explains that the CBR has $16 billion but the state owes $14 because that’s the amount that has been taken out.
The state owes the Constitutional Budget Reserve $14 billion from debts accumulated over the past six years.
Steininger begins by explaining what the sweep is, saying under normal circumstances the sweep is generally an, “academic concern.”
Paloma Harbour, OMB Budget Director
Neil Steininger, Administrative Services Director
Members of the Office of Management and Budget are present to make a presentation on the sweep.
Gov. Dunleavy has added an number of state accounts to the list of sweepable funds that have not traditionally been emptied at the end of the fiscal year.
Today’s session is, “not to resolve any of the legal or technical issues,” Stedman said, “but (to) continue the legislatures work on understanding the impacts of the sweep.”
Sen. Bert Stedman, R-Sitka, begins the meeting say that the committee will not be considering appropriations or the capital budget today, that will take place Friday.
Today’s session will cover “the sweep,” which is when a “litany of accounts,” according to Stedman, are zeroed out and their funds are moved into the Constitutional Budget Reserve. Normally this process would have been immediately reversed by the legislature.
The room is packed. The galley is full of legislators, press, staff, and members of the public. There are six handouts that have been distributed.
HB 2001 restores many of the cuts made by Dunleavy’s vetoes but it only allocates a $1,600 PFD. The bill also includes a provision for a “reverse sweep,” which will restore funds to state accounts that were automatically drained at the end of the fiscal year.
Several members of the House, as well as senators who are not members of the Finance Committee are in attendance.
Senate Finance Committee Meeting
The legislature is still waiting for more members to arrive. Sessions are being held today mostly to do technical business that will allow action to be taken at a later date.
Senate adjourns to Friday, July 19, at 10 a.m.
Senate meets for technical session. Governor’s amendment of proclamation calling special session is read out across the floor.
Because this is a technical session, no business is being conducted other than announcements
Senator Bert Stedman, R-Sitka, announces the meeting of the Senate Finance Committee at 3 p.m. to discuss “the sweep.”
Senators begin to gather for what most think will be a short technical session. Senate Finance Committee set to meet a 3 p.m. House Finance meeting scheduled for 1 p.m. was delayed because of a change in membership on the committee.
Rep. Tammie Wilson, R-North Pole, has left the committee to be replaced by Rep. Jennifer Johnston, R-Anchorage.
Senate meets for technical session
Kiehl stressed that the legislature was determined to work together and he was hopeful that they would be able to come to a agreement before the end of the special session in the first week of August.
Eriksen comes back to the podium and thanks the senator for coming, and the luncheon wraps up with the “Red Marble Drawing” which awards a cash prize to the winner.
Has there been a discussion on what programs and services that the state is going to supply? A prioritization of programs?
There are 60 people (in the legislature) and 75 opinions, but there has been discussion. The governor wants to cut early childhood education and head start, the arts program, and certain programs in the department of agriculture.
Conversations about those programs being brought back are happening, he said.
Every program has a constituency, he said.
Many of the programs that were not traditionally considered part of “the sweep,” the end of fiscal year draining of state funds into the Constitutional Budget Reserve, have been swept by this administration.
People like you and me don’t need the dividend, but many people in Alaska do, wouldn’t it make sense to give those below the poverty line a larger dividend?
“It is regressive, there’s no doubt about that,” he said. Cutting the dividend hurts the poor more. But what’s more regressive Kiehl said, was cutting senior benefits, early childhood education, and other programs that help the poor.
“I don’t want to play into the false narrative in front of us that it’s reducing dividends, or reducing services,” there are more than just those two options, he said.
What’s happening with House Bill 2001, which reinstates much of what the governor cut and gives only a $929 PFD?
That will probably not be the final version of the bill. Many of the cuts that the governor made will probably stand, but we need the capital budget.
We need the federal matching funds, we need to fund programs.
“I think it’s highly unlikely that the legislature will come up with a 45 vote majority without negotiating with the governor,” he said.
Alaskans will always have a PFD, he said. Anyone who tries to remove the dividend will lose the next election, but it’s time to look at the formula.
“We should think carefully about what role we want that dividend to pay in Alaska’s economic future,” Kiehl said.
“We’re going to look at the revenue side of things,” Kiehl said. The legislature worked hard on a budget but the state’s revenue was too constrained by it’s dependence on oil money.
Originally, Kiehl said, the Permanent Fund was only allowed to invest in certain types of financial instruments, namely bonds. Now the Fund can invest in a wider range of assets, many of which are very profitable.
Kiehl also says that it’s time to reconsider the formula which calculates the Permanent Fund Dividend. The current formula is based on revenue from a time when oil prices were high.
“That dividend formula, I think it’s time we take a serious look at it,” Kiehl said.
Senator Kiehl is talking about working with other legislators who have campaigned on wanting to move the capital. There has been “a slow creep of jobs northward,” he said.
In some instances that makes sense, he says, certain departments can better serve Alaska by having their headquarters outside Juneau but he has worked with the administration and fellow legislators to keep the state government in Juneau.
Kiehl begins talking about changes to criminal justice laws. He mentions the recent crime bill that was signed by the governor. Kiehl says that there are parts of that crime bill that he agrees with, other he doesn’t.
He says that keeping people in prison longer hasn’t been shown to reduce crime. “Do there need to be consequences? Absolutely.”
Kiehl says that rehabilitative services are good and have been shown to work in other states.
“I don’t like the idea of holding an adult’s hand, but if that’s the difference between them committing another crime, then that’s a good idea,” he said.
Kiehl thanked the Chamber for coming out against the vetoes, for joining other chambers around the state for their opposition, for recognizing that these cuts were “too far, too fast.”
The senator tells some stories about some of the people and families that he’s spoken to about how they’re going to be hit by the cuts. Several people have told Kiehl how they’re planning to move out of state because of the cuts.
“Let’s get hyper local for a minute,” the Senator says, saying that the people in the City and Borough of Juneau pay local taxes to promote public broadcasting, particularly, “gavel to gavel” or 360 North, the public broadcasting of legislative sessions.
Giving some background on the legislature’s attempt to pass a budget, the senator tells the crowd about the hard work that went into the legislature’s budget and the deep cuts were made, many of which were difficult for him to make, he said.
Kiehl details the cuts that have been made to ferry system, and the economic impacts that those changes will have on small businesses.
Kiehl notes first off that the legislature is still in session, but thanks Gov. Mike Dunleavy for amending his proclamation and moving the session to Juneau. The governor and the legislature have been, “at loggerheads,” Kiehl said but after much negotiation the governor moved the session with no questions.
Senator Kiehl opens with a few jokes about the old picture used for the the Chamber’s presentation, it’s good that he has hair, he said.
Eriksen introduces Senator Kiehl, giving some of his background, his education, experience as a legislative aid and member of the Juneau Assembly.
Attendees introduce themselves and the companies they represent, passing a microphone around to each person.
Chamber Board President Eric Eriksen, opens the meeting with a flag salute and introducing distinguished members. Eriksen then reads off the names of the many sponsors of the Chamber.
Senator Jesse Kiehl, D-Juneau, is speaking before the Greater Juneau Chamber of Commerce for their July, 18, Luncheon at Moose Lodge 700.
About 50 attendees are sitting down to a lunch of Chicken Cordon Bleu, mashed potatoes, and steamed corn. Senator Kiehl is making the rounds, shaking hands and meting with members.
After several days of meetings being held throughout the state, and uncertainty of where and when the legislature would come back together to finish the special session, Gov. Mike Dunleavy announced Wednesday that lawmakers were to meet at the Capitol in Juneau.
With a capital budget and appropriations still yet to be settled, the governor and party leadership agreed that the legislature could no longer remain split.
Many in the legislature are hoping to pass House Bill 2001, which would restore much of the funding vetoed by the governor. While some are opposed to the bill, the governor and his supporters in the legislature still need to appropriate the Permanent Fund Dividend, which they have made a priority.
Dunleavy has promised a $3,000 PFD as well as back pay for reduced payments in previous years. HB 2001, currently only appropriates $1,600 for a dividend and uses the remained of the funds to pay for state programs.
A floor session of the House was scheduled for 10 a.m. Thursday, but was pushed back as many legislators had not yet arrived in Juneau.
House and Senate Finance Committees are meeting to discuss HB 2001. The House Finance Committee is scheduled to meet at 1 p.m. today and the Senate committee will meet at 3 p.m.
• Contact reporter Peter Segall at 523-2228 or firstname.lastname@example.org.