David Teal, director of Legislative Finance, gives a FY20 Budget update to the Senate Finance Committee at the Capitol on Tuesday, July 9, 2019. (Michael Penn | Juneau Empire)

David Teal, director of Legislative Finance, gives a FY20 Budget update to the Senate Finance Committee at the Capitol on Tuesday, July 9, 2019. (Michael Penn | Juneau Empire)

Capitol Live: There may not be enough lawmakers in Juneau to override vetoes

Live updates from inside the Capitol.

Summary: The House and Senate each spent time today on matters that will require a super-majority vote to change — “the sweep” and veto overrides.

A joint session for veto override consideration is scheduled for tomorrow, but there’s doubt about whether there will be the 45 lawmakers neccessary to override the governor’s vetoes present.

There are House Finance Committee meetings scheduled for 1 p.m. Wednesday, Thursday and Friday.

3:35 p.m.

I caught up with Wilson immediately after the conclusion of the House Finance Committee meeting.

Wilson, who was in Wasilla yesterday, said she went there since that’s where the governor called the session.

“Once we went there and found we didn’t have a quorum to do business, we knew that they were going to continue doing business here in Juneau, and I’m going to make sure my constituents are represented,” Wilson said in a short interview.

She said she encouraged other legislators to come to Juneau, too.

“I’m not an attorney, they’re not an attorney, so we don’t know what will result here, but I think everybody should be representing their constituents,” Wilson said.

Regarding tomorrow’s scheduled joint session, Wilson said she didn’t think there would be 45 legislators in Juneau, and since 45 votes are needed for an override, it seems unlikely to happen.

“But planes are still coming in,” Wilson said. “Anything is possible.”

House Finance Committee Co-Chairs Rep. Tammie Wilson, R-North Pole, and Rep. Neal Foster, D-Nome, listen to testimony on Tuesday, July 9, 2019, at the Capitol about how Gov. Mike Dunleavy’s budget vetoes will effect local communities around the state. (Michael Penn | Juneau Empire)

House Finance Committee Co-Chairs Rep. Tammie Wilson, R-North Pole, and Rep. Neal Foster, D-Nome, listen to testimony on Tuesday, July 9, 2019, at the Capitol about how Gov. Mike Dunleavy’s budget vetoes will effect local communities around the state. (Michael Penn | Juneau Empire)

3:20 p.m.

We’re down to the last testifier.

Ben Mallott with the Alaska Federations of Natives will close things out.

“AFN is asking the House and Senate to override Governor Dunleavy’s vetoes,” Mallott said.

He said the request is not inspired by partisan politics but by a desire for the state to fulfill its responsibilities.

3:10 p.m.

“The governor has said this is a multi-year process, we’ll be here with you,” Andreassen said.

He said the AML will want to work with the Legislature moving forward, including on a possible step-down spending solution.

Wilson asked Andreassen if any communities changed their mill rates in light of the governor’s February proposed budget.

He said some had.

Wilson said she was aware of a mill rate increase in Fairbanks.

She also disagreed with the idea that slashing school bond debt reimbursements would be breaking a state promise.

Juneau kept it’s mill rate the same rather than opting for a small decrease in anticipation of assuming more school bond debt.

[Juneau’s property tax bills could be going up]

3 p.m.

Alaska Municipal League Director Nils Andreassen is the first person to deliver testimony in person.

“It’s your action now that’s required,” Andreassen said to lawmakers.

He said the timing of the vetoes means that municipalities may not have a time to raise taxes in response to increased burdens by raising mill rates until next year.

At that time, it’s possible that some will need to met out two years of tax hikes at one time, Andreassen said.

“A 50-percent reduction to school bond debt reimbursement breaks the state’s promise,” he said.

2:50 p.m.

I just received an email from the Alaska Artists Coalition about a few other arts protests like the one happening in Juneau tonight.

Anchorage will be rallying at 5 p.m. at the south entrance to the Alaska Airlines Center, and it will feature Portugal. The Man!

In Sitka, the rally will be at 8:30 a.m. Wednesday in front of Pacific High, 509 Lincoln St.

A #saveAKarts is the suggested hashtag for the efforts.

2:45 p.m.

Ending the Senior Benefits program doesn’t sit well with the AARP, per its call-in testimony.

This warm, fifth-floor room seems a little listless after nearly two hours of testimony.

2:35 p.m.

Jim Roberts, senior executive liaison for intergovernmental affairs for the Alaska Native Tribal Health Consortium is now giving testimony.

He said the vetoes would be harmful and reduce the services ANTHC can provide, the goods it can purchase from the private sector and more.

There are several more speakers waiting to deliver testimony. It will be interesting to see if anyone with a pro-veto stance was invited to deliver testimony, but it doesn’t seem likely.

2:25 p.m.

Becky Hultberg, President and CEO of Alaska State Hospital and Nursing Home Association, is now on the line.

She said data doesn’t support the conclusion that state government spending is out of control.

“On a per person, inflation-adjusted basis we’re spending about the same,” Hultberg said.

She said she is concerned about Medicaid cuts as well as cuts to homelessness support.

“An increase in homelessness means an increase in crime and emergency department costs that impact everyone,” Hultberg said.

2:15 p.m.

Jeff Twait of the Alaska State Home Building Association is joining the chorus voicing support for veto overrides.

“Our position to support an override is not to be taken lightly,” Twait said.

He said while his organization does not have a “direct dog” in the fight and is usually thought of as “right-leaning,” but there is concern that the vetoes could set the stage for a recession.

2 p.m.

Lundgren said he was worried about what the vetoes would mean for municipal and university bond ratings.

Wilson asked if spending at a deficit won’t also have a negative impact on bond rating.

Lundgren said that as long as things gradually move in the “right direction” it’s unlikely to cause lasting harm and it would not be as impactful as the governor’s vetoes.

“We do believe that a step-down approach would be looked at favorably by the rating agencies, but the significant decrease will create so many unknowns, and I think that’s what got the attention of rating agencies,” he said.

1:55 p.m.

Steve Lundgren called in to speak on behalf of the Alaska Bankers Association.

“All seven banks in Alaska are aligned in our request that the Legislature override the governor’s vetoes,” Lundgren said.

He said the bankers believe in less government spending but not in the drastic measure that the vetoes would entail.

“We’ve all come together to support a full veto override,” Lundgren said.

He said the bankers do not believe private spending will fill the gap created by the vetoes.

“I can’t put into words how serious this is and how important it is to override the governor’s veto package,” Lundgren concluded.

1:45 p.m.

Rasmuson Foundation President and CEO Diane Kaplan is next up.

Typically, she said the foundation does not attempt to impose its agenda on the state and instead works to collaborate on areas that are common ground.

“Currently the areas in which the Rasmuson Foundation and the state collaborate are many,” Kaplan said.

That includes providing one-third of funding for the state arts’ council.

She said the foundation was poised to contribute $10 million over the next three years to addressing homelessness in Alaska.

Instead, Kaplan said if cuts go through, homelessness will increase quickly.

“If the vetoes go through, we are looking at least that number going up by 1,800 to 2,000 by the end of July,” Kaplan said. “We’re going to be caused to reconsider this entire effort.”

She said she is concerned about statements that a $1.6 billion gap will be filled by the private sector. Kaplan said anyone who believes that is fooling themselves.

“It’s impossible,” Kaplan said.

She is getting charged while describing the message the vetoes send to people who work with at-risk populations — such as homeless shelter employees — who will be hurt by the vetoes.

“We feel our very ability to do this work will be impacted by these vetoes,” Kaplan said.

1:35 p.m.

Laurie Wolf, President and CEO of the Foraker Group, is also speaking in favor of a veto override.

Foraker Group is a nonprofit that helps support other nonprofits.

Wolf spoke against the governor’s vetoes’ impact on nonprofits and what they mean for Alaskans in general.

“Our most vulnerable will be the most harmed,” Wolf said.

1:25 p.m.

Marisa Sharrah, President and CEO for the chamber, said it is a staunch supporter of University of Alaska Fairbanks.

While the chamber does support less government spending, Sharrah said the vetoes aren’t the approach it would support.

“If this cuts aren’t methodical and strategic, we stand to lose much more than we stand to gain,” Sharrah said.

She said the vetoes need to be overridden for the benefit of all Alaskans.

1:20 p.m.

The Greater Fairbanks Chamber of Commerce is providing brief testimony over the phone.

1:15 p.m.

Johnsen said research efforts would be hurt by governor’s vetoes.

“On the staffing side of things…a conservative estimate is roughly 1,300 positions would need to be laid off or eliminated ASAP,” Johnsen said.

However, in light of expected decreases in tuition and research revenue it’s likely the total would be greater, Johnsen said.

“I would ask your consideration of the override,” Johnsen said. “This is very disruptive and an unprecedented interruption in investment in higher education.”

1:08 p.m.

The purpose of this meeting is for invited testimony.

First up is University of Alaska President Jim Johnsen, who called in.

He reiterated the governor’s vetoes would have a “devastating” effect on the university.

Should an override fail, Johnsen said the board of regents would likely vote to declare financial exigency, which allow for quick response to the vetoes.

“Students will fall through the cracks no question because we will be in the process of closing campuses,” Johnsen said.

1 p.m.

Rep. Tammie Wilson, R-North Pole, House Finance co-chair, is present for the meeting. She was the lone House Majority caucus member to be in Wasilla yesterday.

12:50 p.m.

It will be interesting to see what new ground is covered by the House Finance Committee in 10 minutes.

12:45 p.m.

Word is circulating about an art blackout in downtown Juneau tonight.

Artists and art-supporters are encouraged to gather at 5:30 p.m. at the corner of Front and Seward streets. The peaceful protest is in objection to the governor’s vetoes, which would eliminate the Alaska State Council on the Arts.

11:50 a.m.

The next items on today’s agenda are discussion of the impact of veto override at 1 p.m. with the House Finance Committee.

At 1:30 p.m., the Senate Finance Committee will take a close look at the Constitutional Budget Reserve and reverse sweep with legislative auditor Kris Curtis and Legislative Legal Services Director Megan Wallace.

The same super majority needed for veto overrides would also be required for a reverse sweep.

The theme of today for legislators present in Juneau seems to be building cases for both causes.

11:45 a.m.

The Senate is adjourned until 11 a.m. Wednesday.

11:40 a.m.

Von Imhof said the value of a larger PFD is not equal to the state services that would be cut as a result of the governor’s vetoes.

“These vetoes to pay for a dividend of any amount, much of that money is going to go to plugging the holes in the budget that has helped our economy maintain vibrancy,” she said. “I worry people are cutting their nose to spite their face and not realizing the full visceral impact of these vetoes. “

Sen. Click Bishop, R-Fairbanks, spoke to the importance of funding the University of Alaska in order to maintain its acclaim as an Arctic research university.

Senate Finance member Sen. Click Bishop, R-Fairbanks, center, studies the FY20 Budget during a Senate Finance Committee meeting at the Capitol on Tuesday, July 9, 2019. Sen. Gary Stevens, R-Kodiak, left, and Sen. Chris Birch, R-Anchorage, right, listen in the background. (Michael Penn | Juneau Empire)

Senate Finance member Sen. Click Bishop, R-Fairbanks, center, studies the FY20 Budget during a Senate Finance Committee meeting at the Capitol on Tuesday, July 9, 2019. Sen. Gary Stevens, R-Kodiak, left, and Sen. Chris Birch, R-Anchorage, right, listen in the background. (Michael Penn | Juneau Empire)

11:30 a.m.

The Senate convened just after 11 a.m., and the importance of a reverse sweep and unifying the Legislature are the main matters being addressed by senators.

“I urge the Legislature come back together to unite and debate the issues that are at hand, so we can have a more functioning government,” said Sen. Donny Olson, D-Golovin.

11 a.m.

Rep. Sara Hannan, D-Juneau, announced she will hold a town hall meeting 5-6:30 p.m. Monday at Douglas Public Library.

There will be a lot to talk about regardless of what happens tomorrow.

10:50 a.m.

I caught up with Teal after the meeting for a little more clarity on why the lack of a reverse sweep raises concerns.

He offered up the following scenario: If Higher Education endowments are swept, college students could be under the impression that their scholarships survived vetoes only for there to ultimately be no money for the scholarships.

However, he said it’s not a certainty that will happen, just a possibility.

“This isn’t a clear matter,” Teal said.

10:30 a.m.

Teal will be back this afternoon to talk about the capital budget, but this morning’s meeting is adjourned.

10:20 a.m.

The reason a reverse sweep was not included in the Legislature-approved budget was because the budget was not OK’d by a super majority, Teal said.

“There’s another opportunity assuming you have a capital bill before you again to put the reverse sweep back in the capital budget,” Teal said.

Stedman said there will also be future appropriation bills between now and next May, which could provide opportunities to stop the sweep that would otherwise go through on June 30.

All of this discussion is based on conjecture about what the governor may decide to do.

“All we have are rumors about what he plans to sweep,” Teal said.

Sen. Lyman Hoffman, D-Bethel, who as of today is Senate Majority Leader, said at some point it may make sense for there to be a once-and-for-all legal decision about whether Power Cost Equalization funds can be swept.

“This is quite the can of worms,” Stedman said.

10:10 a.m.

Senators are now weighing in and asking Teal questions.

“I just think it’s important what you pointed out that while WWAMI was not vetoed, it may not be funded because of a lack of a reverse sweep,” said Sen. Natasha von Imhof, R-Anchorage, committee co-chair.

10:05 a.m.

If a fund is swept, there will not be money to back appropriations. That could mean a lack of funding for the crime bill, WWAMI — WWAMI is the University of Washington School of Medicine’s multi-state medical education program; the acronym, stands for the states it serves: Washington, Wyoming, Alaska, Montana and Idaho — and post-secondary education grants and scholarships.

“These are things you probably need to consider and weigh the consequences,” Teal said.

10 a.m.

“We are hearing rumors of a greatly expanded sweep,” Teal said.

However, he said a list of what will be swept has not been provided to him.

9:55 a.m.

Teal said the focus of the media and public on veto overrides and Permanent Fund dividends may be stealing attention from the CBR sweep.

“I’m not sure the public knows how critical an issue it is,” Teal said. “If you don’t reverse this sweep…it’s just a nightmare. You’re dealing with appropriations that have no money to back them.”

9:45 a.m.

Teal said the post-veto budget may be balanced, but there are some caveats.

Unrestricted General Fund capital budget may be less than $172 million; $31 million for crime bill funding may be available if power cost equalization endowment isn’t swept, and there was an $18.7 million error in the Medicaid veto may be correct by the Legislature.

“In vetoing adult preventative dental vetoed general funds instead of federal funds,” Teal said. “He vetoed an extra $18.7 million in general funds.”

Also, Teal said the budget contains no safety valve if revenue falls short of projections, and it leaves no money for supplemental appropriations.

That means, there would be no extra funds to address emergency costs that could be generated by a natural disaster such as a fire or earthquake, Teal said.

“It’s a risky high-pressure situation,” Teal said.

9:40 a.m.

Sen. Bill Wielechowski, D-Anchorage, asked if the governor’s line-item vetoes will cause Alaska to lose federal funding.

Teal said it’s difficult to calculate how much would be lost.

Stedman said the short answer is yes.

9:30 a.m.

Teal’s overview of Alaska’s financial situation accounts for Gov. Mike Dunleavy’s budget vetoes as well as a couple of assumptions. Those assumptions are that Constitutional Budget Reserve funds will be replaced by Unrestricted General Funds, and that the Power Cost Equalization fund, which helps offset the cost of power in rural Alaska, will be swept.

Swept in this case means the almost $1 billion in the fund would be moved to the Constitutional Budget Reserve, Teal said.

Sen. Bert Stedman, R-Sitka, Co-Chair of the committee, keeps reminding Teal to speak in plain terms and avoid acronyms.

“Thank you for bringing me back to Earth,” Teal said.

Teal said he understands there are plans to sweep the Power Cost Equalization Fund, which helps offset the high cost of power in rural Alaska.

“If that fund is swept, then the crime bill which is funded from the power cost equalization fund will have no money to implement it,” Teal said.

9:15 a.m.

Today the Legislature will set the table for tomorrow’s vote on overriding Gov. Mike Dunleavy’s budget vetoes.

That means a review and updates from Legislative Finance Director David Teal with the Senate Finance Committee first thing this morning.

At 1 p.m., the House Finance Committee will meet to discuss the impact of a veto override, and at 1:30 p.m., the Senate Finance Committee is back at it for more discussion on the fiscal impacts of reversing budget changes.

[Read about yesterday’s whirlwind first day of special session here]

• Contact reporter Ben Hohenstatt at (907)523-2243 or bhohenstatt@juneauempire.com. Follow him on Twitter at @BenHohenstatt.

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