Capitol Report May 16

By Miles Baker
Associate Vice President Government Relations

Today is the 120th day of the legislative session. While there have been some procedural movements since my last update, not much has been resolved in the four primary areas that need agreement before the Legislature can adjourn: the operating budget, a broad-based tax, oil tax reform and Permanent Fund restructuring.

As of this writing, it’s still unclear how and when things will wrap up here in Juneau. All observers agree that work won’t be finished by tomorrow’s 121-day regular session deadline. But there isn’t real consensus on what comes next.

The Alaska Constitution provides the Legislature with up to a 10 consecutive day extension with the agreement of two-thirds of each chamber. That means 14 of 20 Senate members and 27 of 40 House members must all agree to extend. That threshold could prove easier for the Senate, where the current majority numbers 14, but the House Majority Caucus is 22
members, 5 short of the number needed. So at least a portion of the House Republican Minority will be needed to pass a 10-day extension in that chamber. Alternatively, with the support of two-thirds of the entire Legislature (40 of 60), they could simply adjourn the regular session and call themselves back into a 30-day special session. Finally, the Governor could call the Legislature into a 30-day special session and he has the ability to limit the subjects that will be covered.

Today at 1:00pm the Legislature will meet in joint session to vote on the confirmation of the Governor’s cabinet nominees and other appointees to state boards and commissions. University Regents Mary Hughes and Karen Perdue will both be up for confirmation votes today. Regent Hughes was reappointed on February 6th by Governor Walker to serve a third term on the Board of Regents. Regent Perdue was appointed on February 6th to her first term on the board. Good luck to both of these excellent leaders.

Operating Budget:

On Saturday, April 29th more than 70 Alaskans took the time to testify in support of the university’s budget before the House Finance Subcommittee. The subcommittee heard four straight hours of testimony from all over the state and ended up extending the hearing an extra half hour to accommodate everyone that wanted to testify. I would like to personally thank everyone involved in spreading the word and to all who called-in, showed up and told their story. You can watch 360 North’s broadcast of the public testimony here.

The FY18 operating budget conference committee held its first organizational meeting yesterday afternoon. The six conference members are Representative Seaton from Homer, who will serve as chairman, Senator Hoffman from Bethel, who will serve as vice-chairman, Senator MacKinnon of Eagle River, Representative Foster from Nome, Senator Olson from Golovin and Representative Pruitt from Anchorage. The conference committee will be responsible for deciding the final unrestricted general funding level for the University of Alaska. The Governor and the House have endorsed $325 million while the Senate proposes $303 million, a $22 million UGF cut over the current year. You can watch 360 North’s broadcast of yesterday’s largely organizational first meeting of the committee here.

Your personal involvement can make a difference over the next several weeks. You still have an opportunity to tell legislators what the University of Alaska means to you and why maintaining an appropriate level of state funding is so important. The university has developed a digital postcard campaign to bring more attention to the critical legislative budget decision. We encourage you to lend your voice to this effort and to communicate the reasons you support funding the university at the $325 million level. You can access the campaign here. Share your e-cards on social media using the hashtags #SupportUA and #AKleg to broaden the impact of your advocacy.

Now that the operating budget conference committee has been formed, the Legislature is operating under the 24-hour rule. Legislative hearings now have to be publicly noticed just 24-hours in advance. In practice, this means hearings must be noticed by 4:00pm the day prior, even if they are scheduled to begin early in the morning. Although this rule helps speed up the process, it also means staying on one’s toes as things can change very rapidly.

Capital Budget:

On May 9th, the Senate Finance Committee released a committee substitute for SB 23, the FY18 capital budget. In a bit of good news, the bill included an addition of $5 million for deferred maintenance at the university. Historically, the university relies on annual capital appropriations to address our facilities maintenance backlog which now exceeds $1 billion. On May 12th the Senate passed their bill and the House Finance Committee held its first public hearing last Saturday. You can see a breakdown of the projects included in the $1.4 billion capital budget here. The House Finance Committee will now review the Senate’s legislation and make modifications. Expect this budget to be one of the last pieces of legislation that moves through the process this year.

Broad Based Tax:

On Friday, the Senate voted down HB 115, the House’s income tax bill, on a 4-15 vote. Because the House and the Governor have indicated that a broad based tax must be a component of this year’s fiscal plan, it’s unclear where the Legislature goes from here. There isn’t another legislative vehicle under consideration capable of raising the $700 million in tax revenue this bill was estimated to generate. You can watch 360 North’s broadcast of the Senate’s income tax floor debate here. You can watch the Senate Majority’s post vote press availability here.

Oil Tax Reform:

The Senate spent much of yesterday afternoon debating HB 111 before passing the bill on a 14-5 vote. The Senate’s version will now be sent back to the House for consideration. There are major differences between the two bills that will more than likely take a conference committee to resolve and is one of the primary reasons the session will have to be extended. You can watch 360 North’s coverage of today’s Senate floor debate and vote here.

Permanent Fund Restructuring:

As discussed in my last update, the House and the Senate have agreed in principle to spend a portion of Permanent Fund earnings to fund government. SB 26 is the vehicle that will be used to resolve these differences. The primary disagreements are on the size of the draw and the size of the dividend over the next few years. However, the House conditioned their agreement on some type of broad-based tax becoming law this session. Friday’s action by the Senate rejecting the House’s income tax bill complicates negotiations on a Permanent Fund deal. A conference committee has been appointed and the first organizational meeting was held on May 9th. You can watch 360 North’s broadcast of that first conference committee meeting here.

Other Legislation of Interest to the University:

On May 10th, the House agreed to concur with the Senate’s changes to HB 141 by a vote of 39 to 1. HB 141 extends the Technical Vocational Education Program (TVEP) for three years through 2020. The House had originally proposed a five-year extension, but the final compromise extends the program for three years. The bill is now waiting to be transmitted to the Governor for signature.

Thank you for your continued support of the University of Alaska. For more information, contact Miles Baker at miles.baker@alaska.edu or visit www.alaska.edu/state.

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