Expect tighter budget, but more say in how the money is spent, local legislators say

There probably won’t be as much money, but Juneau’s delegation will have more say in how it’s spent and legislators should be able to cast votes with less concern about retribution from a governor nearing the end of his tenure.

That assessment of this year’s session of the Alaska State Legislature that starts next Tuesday was offered during a town hall Monday night hosted by state Sen. Jesse Kiehl and Rep. Sara Hannan in the Dzantik’i Heeni school commons. Both local Democrats, along with Rep. Andi Story who was absent due to illness, will be in the majority caucuses of their respective chambers this year, which they say may allow some familiar issues to make more progress compared to the past two years when a Republican-led majority controlled the House.

But Hannan noted legislators also likely will be facing a tight financial situation due to oil prices that right now “are hitting $71 (a barrel) on a good day,” with the official revenue forecast for the coming year putting oil at $70 a barrel. The forecast predicts prices will average $73.86 for the current fiscal year ending June 30, compared to $85.24 the previous year.

“So we know that one, we’re not going to end this fiscal year with any surplus,” she told the roughly 30 people attending the town hall. “And two, we don’t even have enough money (next year) to fund everything we funded this year and that’s going to be a struggle.”

The 21-member House majority — the bare minimum necessary, consisting of 14 Democrats, five independents and two Republicans — set four primary goals that largely mirror recent priorities of those lawmakers, Hannan said. They include:

• A permanent increase in the Base Student Allocation for public schools that has been largely unchanged since 2017 (but has seen one-time increases the past two years).

• Reviving traditional pensions for public employees (which passed the Senate and fell short in the House last session). Kiehl has reintroduced a prefiled bill giving employees the option of a pension or the existing 401k-style program.

• Not increasing spendable earnings from the Alaska Permanent Fund, as the ever-present debate about the amount of dividends, how much of earnings should be spent on state government and how much protection to give the principal of the fund continues.

• Legislation to address energy supply issues largely involving Southcentral Alaska, which surfaced as a major concern toward the end of the last session.

Those goals largely overlap the primary agenda of the Senate majority, although its 14 members won’t have the ironclad grip the 17-member majority did the past two years. Among other things the minority can prevent the three-fourths vote necessary in the chamber to access the Constitutional Budget Reserve to cover a shortfall if the budget doesn’t balance.

But Kiehl said the majority is large enough “really to put some of the more petty stuff aside and just focus on issues.” He said legislators also may be more willing to take on controversial issues that fell short last year — such as a veto override attempt on a permanent increase to education funding that fell one vote short — since Republican Gov. Mike Dunleavy is now in his seventh year in office and thus will have to step aside next year.

“I think that what you are more likely to see with the majorities we have in this coming Legislature is a willingness, especially if the votes are there, to go ahead and take the vote,” Kiehl said. “Part of that dynamic is just an old, predictable thing: This governor can’t run again. We’ll work with him for two more years. He’s in office. He’s that guy, but he can’t be reelected because the Constitution limits governors to two consecutive terms. There will be a little less fear of consequences from him going forward. There won’t be zero fear — he’s in office for two years. But that dynamic, I think, begins to shift.”

Dunleavy’s proposed budget for next year is similar to his plans from previous years, calling for a “full” PFD of $3,838, no education increase (thus reducing the amount districts would get compared to this year, due to the one-time increase in effect) and a deficit of about $1.5 billion — which would wipe out more than half of the budget reserve fund. The Legislature the past two years has rejected that approach, passing balanced budgets with much smaller PFDs and the one-time education increases.

Hannan said that while she doesn’t see support in the Legislature for any new large-scale revenue-generating measure such as a sales tax or income tax, she will reintroduce a bill from recent years imposing a 25% statewide tax on retail e-cigarette products to match the rate for other tobacco products.

“We’ve got it passed once and it was vetoed by Governor Dunleavy, so this is three years ago,” she said. “We’ll see if he has a better appetite for even a small revenue bill that has a few million dollars in positive revenue to the state.”

Another veto by Dunleavy nixed $2 million in the capital budget for infrastructure at Pederson Hill, which Kiehl said will again be sought by the delegation as they try to address affordable housing issues.

“I thought this governor would be good about getting public land in private hands since that’s a mantra of his, but he took that money out,” Kiehl said.

Questions from audience members included asking Kiehl and Hannan about their support for legalizing sports gambling (which they don’t support, citing addiction issues among other factors) and providing more skills training for prison inmates (which they do, noting 95% of inmates will be released back into society). Both also expressed support for more state park funding, as well as for projects related to climate change such as renewable energy.

• Contact Mark Sabbatini at mark.sabbatini@juneauempire.com or (907) 957-2306.