State Relations

The Capitol Report

January 30, 2015

The Capitol Report
By Chris Christensen
Associate Vice President for State Relations

Today is the 11th day of the First Session of the 29th Alaska State Legislature. The session is scheduled to end in 79 days, on April 19. 

The length of regular sessions was shortened from 121 days to 90 days in 2008. There is a lot of work to get done in only 90 days, and the shorter sessions mean that legislators have less time to meet with constituents and less time to deliberate on the budgets and on the bills in committee. Committees start working at full speed during the first week.

As I previously reported, Governor Walker has substantially revised and reduced the operating budget that was prepared by the outgoing Parnell administration. This was necessary because of the dramatic drop in state revenues. One fact that the legislature is grappling with is that if it laid off every single state employee, it would only reduce the projected deficit by about 35%. The problem is that big. 

The House Finance Committee and its budget subcommittees will be reviewing Governor Walker’s FY16 operating budget over the next five or six weeks. The work should be finished by early March, and then the budget will head to the House Floor for a vote.

President Gamble appeared before House Finance yesterday to provide an overview of UA and its budget situation. He lined out the challenges that UA faces in the near-term and long-term to deal with reductions, while still providing for the postsecondary education and research needs of Alaska. He shared what has been done to reduce expenditures during the current fiscal year, and the discussion that is ongoing with the Board of Regents, chancellors, faculty, and staff to explore longer-term strategic cuts and revenue opportunities that will help UA preserve and strengthen its core during this downturn in the state’s finances. Quality must be preserved in that core, and a right-sized cadre of faculty and staff must be retained to do the preserving. When Alaska makes its eventual economic turnaround, UA needs to be healthy enough to make a successful recovery along with the rest of the state.

A budget subcommittee will do the detailed review work on the University’s budget and send a recommendation back to the full Finance Committee. The subcommittee is composed of one House Finance Committee member (Tammie Wilson), and six legislators who are not members of the Finance Committee. Our subcommittee members are:

  • Representative Tammie Wilson, Chair (R-North Pole; House Majority)
  • Representative Jim Colver (R-Palmer; House Majority)
  • Representative Neal Foster (D-Nome; House Majority)
  • Representative Paul Seaton (R-Homer; House Majority)
  • Representative Liz Vasquez (R-Anchorage; House Majority)
  • Representative Andy Josephson (D-Anchorage; House Minority)
  • Representative Adam Wool (D-Fairbanks; House Minority)

The House starts the work on the operating budget, and the Senate Finance Committee will do much of its work after the House has passed the budget and transmitted it to the Senate for consideration.The Senate Finance Committee also has a University Budget Subcommittee to do the detail work. The subcommittee is made up of two members of the Senate Finance Committee (Pete Kelly and Anna MacKinnon) and two senators who are not members of the Finance Committee. The subcommittee members are: 

  • Senator Pete Kelly, Chair (R-Fairbanks; Senate Majority)
  • Senator Anna MacKinnon (R-Eagle River; Senate Majority)
  • Senator Gary Stevens (R-Kodiak; Senate Majority)
  • Senator Johnny Ellis (D-Anchorage; Senate Minority)


Next Week:
 

UA President Pat Gamble will appear before the House’s University Budget Subcommittee on Monday, February 2 at 5:00 p.m. to provide an overview of the university system. There will be a second subcommittee meeting on Thursday, February 5 at 5:00 p.m.

On Tuesday, February 3, the House Resources Committee will hold a Lunch & Learn in the Capitol at noon. The topic is the "Economics of Mining Exploration & Development.” Bob Loeffler, Professor of Public Policy, Institute of Social & Economic Research at UAA, will present.

Bills of Interest:

Companion bills declaring the Arctic policy of the state were introduced in the House and Senate last week. HB 1 is sponsored by Representative Bob Herron, and SB 16 is sponsored by Senator Lesil McGuire. Among other things, the bills provide that it is the policy of the State to “build capacity to conduct science and research and advance innovation and technology in part by providing support to the University of Alaska for Arctic research consistent with state priorities.” HB 1 will have a hearing in the House Economic Development, Tourism, and Arctic Policy Committee on Thursday, February 5 at 10:15 a.m. SB 16 is currently in the Senate Special Committee on the Arctic, but has not yet been scheduled for a hearing. 

Representative Scott Kawasaki has introduced HB 54. This bill authorizes the university to establish a school of medicine at UAF and a school of law at UAA, if it chooses to do so. It is currently in the House Education Committee.

Representatives Les Gara, Dan Ortiz, and Adam Wool have sponsored HB 63. This bill provides for a reduction in interest on postsecondary education loans for residents. It is currently in the House Education Committee.

Senator Anna MacKinnon has introduced SJR 2. This resolution proposes a constitutional amendment to establish a cost-effective way to finance state education loans by leveraging the State’s outstanding general obligation credit ratings. Doing so will not only achieve lower costs of funds than what is otherwise available through current alternative financing structures, but will also permit some relaxation of the loan underwriting criteria which currently results in a 41% denial rate on loan applications. SJR 2 is currently in the Senate State Affairs Committee.

Watch Gavel to Gavel (www.360north.org) to view hearings. Also see the legislative information web page (http://www.legis.state.ak.us/basis/start.asp).

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For more information, contact Chris Christensen at cschristenseniii@alaska.edu.

January 23, 2015

The Capitol Report
By Chris Christensen, Associate Vice President, State Relations

Last night, Governor Bill Walker gave his first State of the Budget speech to the Alaska Legislature. Governor Walker said that he was submitting new FY16 operating and capital budgets to the legislature, to replace those that were prepared by the last administration when oil prices were higher. He stated that the new operating budget would cut state spending by about 5 percent, with all agencies receiving general fund budget reductions. Cuts are even proposed for popular programs like K-12 funding and municipal revenue sharing. Walker also said that unless oil prices rebound quickly, the state will need to start discussing new taxes next year, because the savings accounts that cover deficits will be empty in three years.

In the governor’s proposed operating budget, UA receives a smaller cut than most executive departments. The average non-formula agency cut from the current fiscal year (FY15) is 6.5 percent; UA’s proposed cut from FY15 is 2.4 percent. This number does not include some increased costs that UA will be expected to cover (such as pay raises, new building operating costs, and utilities increases), which will make the effective budget reduction much higher than 2.4 percent.

In the governor’s proposed capital budget, UA has two items: $8 million in unrestricted general funds to continue construction of the UAF engineering building project, and $8 million in unrestricted general funds for deferred maintenance. There was nothing for UA in the previous version of the capital budget, so this is good news.

These new budgets will now be considered by the legislature. It is expected to make additional cuts to the budgets before they are voted on in April.

For more information, contact Associate Vice President Chris Christensen at cschristenseniii@alaska.edu

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January 21, 2015

The Capitol Report
By Chris Christensen, Associate Vice President, State Relations

The First Session of the 29th Alaska State Legislature is underway in Juneau. My name is Chris Christensen, and I am the Associate Vice President for State Relations. This will be the 32nd session I have spent working with the legislature in Juneau, and the fourth year I have represented the university. I know the legislature and its members well, but each year brings new challenges and this one will be no exception. One thing I have learned in my time here is that there are many passionate advocates for the university, people who are willing to devote their time and energy to advancing its interests. You made my first three sessions with UA much easier, and I look forward to working with all of you again this year.

Over the course of the legislative session, you will be receiving this newsletter periodically to keep you up to date on what is happening in Juneau. When there are important hearings or opportunities to actively engage in advocacy for the university, we will also post it on the UA State Relations webpage: www.alaska.edu/state

The steep decline in oil revenues this year, coupled with the long-term reduction in oil production, has created a budget situation that will probably result in unprecedented cuts to the state budget over the next few years. When the legislature left Juneau last April, it anticipated that the budget for the current year, FY15, would result in a $1.4 billion deficit. In fact, the deficit is approaching $4 billion and collapsing oil prices keep pushing it higher. Think of the $4 billion deficit this way: the state’s FY15 general fund budget is approximately $6 billion. Two-thirds of the revenues needed to fund that level of spending are simply not there.

In recent years, the legislature has covered deficits by withdrawing money from savings. However, continuing deficits of the size we are running this year will drain the state’s savings accounts in less than three years. The legislature can’t reduce the size of future deficits by raising the price of oil, but it can reduce those deficits by cutting spending. That is what it will do this session. The question is, how much?

Governor Walker plans to introduce new state operating and capital budgets for FY16 in the next few weeks. These budgets will replace the budgets that former Governor Parnell prepared before he left office; much of the work on those budgets was done when oil prices were expected to be much higher and the deficit much smaller. It is anticipated that the new operating budget will contain cuts for all state agencies of five percent to eight percent. It is also anticipated that there will be no capital money for any projects that do not have a federal match, such as road projects.

We will update you when we learn how much Governor Walker proposes for UA’s budget in FY16. We will also provide you with more information on the best way to approach the advocacy process during this challenging session.

While waiting for the latest word from the governor, the House and Senate Finance Committees are already starting to work on the operating budget. University President Pat Gamble has been asked to appear before the House Finance Committee on Thursday, January 29 between 1:30 – 3:30 p.m. to give committee members an overview on UA and its operating budget. He will give the same presentation to the Senate Finance Committee on Wednesday, February 11 between 9:00 – 11:00 a.m. President Gamble will also appear before the House’s University Budget Subcommittee on Monday, February 2 at 5:00 p.m.  We will keep you updated as budget hearings are added to the schedule.

Here are links to some handy reference guides for your information and use. We will also post them on the State Relations webpage for easy access:

A roster of legislative members with contact information:
http://akleg.gov/docs/pdf/whoswho2015.pdf

Legislators by district:
http://akleg.gov/docs/pdf/DISTRICTS.pdf

Committee assignments for the 29th legislature:
http://www.akleg.gov/basis/committee/#tabCom4

BASIS – A great reference tool to locate specific legislation, bill sponsors, legislative actions, and a host of other reference materials:

http://www.akleg.gov/basis/Home/BillsandLaws

Thank you for supporting the University of Alaska!

For more information, contact Associate Vice President Chris Christensen at cschristenseniii@alaska.edu
 


This publication is produced and distributed by the State Relations office of the University of Alaska System with assistance from the UA Office of Public Affairs.

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