Capitol Report Feb. 22, 2016

By Chris Christensen, Associate Vice President, State Relations

February 22, 2016

Today is the 35th day of the legislative session. Technically we have completed a little more than one-third of the session, although some years the 90-day statutory deadline is difficult to achieve. �Recall that last year, the legislature spent 143 days in regular and special session before a budget deal was finally reached.

As previously reported, the legislature is considering unprecedented cuts in the state operating budget for FY17. The steep decline in oil prices over the last year, coupled with the long-term reduction in oil production, has pushed the estimated deficit for the current fiscal year (FY16) to $3.8 billion. The deficit in FY17 may be just as large if circumstances do not change dramatically, and so far there is no sign that they will do so. Continuing deficits of this magnitude will drain the state’s savings accounts in three or four years.

Governor Walker submitted an FY17 budget plan to the legislature that proposed cutting $100 million from this year’s funding level. However, key legislators in both the House and the Senate have said that a cut of $500 million is actually needed, and it appears that they are working to achieve that goal.

The House UA Budget Subcommittee chaired by Representative Tammie Wilson has met seven times to consider the university’s operating budget. This subcommittee is doing the detailed budget review work and will make a recommendation to the full House Finance Committee. Last Thursday, Representative Wilson revealed her proposal to the other subcommittee members. It was stunning, both for the amount of the cut and for what the chair proposes to not fund.

The university received $350.8 million in unrestricted general funds from the legislature for FY16. The governor proposed giving the university $335.0 million for FY17, a net reduction of $15.8 million (4.5 percent). Representative Wilson has suggested that the appropriation should be $288 million, a net cut of $62.8 million (17.9 percent) from the university’s current budget. We have not yet completed a detailed analysis, but reducing the university’s base budget from $350.8 million to $288 million would most likely result in a job loss of 600 to 1000 positions system wide.

Moreover, Representative Wilson said her proposal was intended to only fund student instruction; there would be no state funding for research or public service. If the university wanted to conduct research or do other things, Wilson said it would have to find other funding. There is also intent language pending, proposed by another subcommittee member, that would direct the university to not use state funds to support athletics.

The lack of state support for research is particularly troubling. UA’s research grants for FY15 totaled $111.8 million, a disproportionately large amount considering the size of the system. For every dollar of state funding provided for research in FY15, UA received $4.10 in other research support, mostly from the federal government. Federal research grants generally require a state match, just as federal highway funds for roads and bridges require a state match. The federal money that UA injects into the state’s economy is money that might not otherwise have been spent in Alaska, and it is money that the state’s economy can’t afford to lose.

Representative Wilson has asked the other subcommittee members to submit amendments to her proposal by noon on Tuesday. On Wednesday from 7:00 - 7:30 p.m., the subcommittee will take up the proposal and any amendments, and pass a final recommendation on to the House Finance Committee.

Subcommittee members are interesting in knowing what you think of this proposal. If you would like to send comments to members prior to the meeting, here is their contact information:

Representative Tammie Wilson, Chair ( rep.tammie.wilson@akleg.gov )
Representative Jim Colver ( rep.jim.colver@akleg.gov )
Representative Neal Foster ( rep.neal.foster@akleg.gov )
Representative Paul Seaton ( rep.paul.seaton@akleg.gov )
Representative Liz Vasquez ( rep.liz.vazquez@akleg.gov )
Representative Andy Josephson ( rep.andy.josephson@akleg.gov )
Representative Adam Wool ( rep.adam.wool@akleg.gov )

You also can contact the House member who represents you and express your concerns, to be passed on to the subcommittee or to the caucus. If you know who your representative is, you can get contact information here: http://akleg.gov/house.php . If you don’t know, go to http://w3.legis.state.ak.us/ . At the bottom right of the page is a box labeled “Who Represents Me?” Enter your home address to get the information.

Other Hearings
The Senate Finance Committee also has a University Budget Subcommittee to do the detail work on the operating budget. That 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)

The Senate subcommittee will have its first meeting on Wednesday from 3:30 - 4:30 p.m. President Johnsen will be in Juneau for the meeting.

SB 174, "An Act relating to the regulation of firearms and knives by the University of Alaska," had two hearings last week in the Senate Education Committee. You can find UA’s position paper here http://www.akleg.gov/basis/get_documents.asp?session=29&docid=40784 and a briefing sheet here http://www.alaska.edu/files/state/2016-Guns---Final-Review.pdf . President Johnsen testified about the university’s concerns, and a number of students and other employees also testified in opposition to the legislation in its current form. The bill has a third hearing scheduled on Tuesday from 3:30 - 5:00 p.m., and it is expected to be passed out of committee at that time. The next committee of referral is the Senate Judiciary Committee.

New Bills
Representative Jim Colver introduced HB 322, "An Act limiting employee compensation for certain officers and employees in the exempt service; and providing for an effective date." The bill provides that no employee in the exempt service (the exempt service includes UA employees) can make a larger monthly base salary than the governor, with certain exceptions. The law would apply to new contracts entered into after July 1. The governor currently makes about $145,000 per year. Of course, his base salary is also supplemented by a free house and other valuable perks. The bill was referred to the State Affairs and Finance Committees. More information is at this link: http://www.akleg.gov/basis/get_bill.asp?session=29&bill=HB322

Thank you for all your work to promote and support the University of Alaska!

For more information, contact Associate Vice President Chris Christensen at cschristenseniii@alaska.edu or visit www.alaska.edu/state.

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