Dear Friends and Neighbors,
I hope this finds you well and in good spirits. I wanted to provide a short recap of the end of regular session and my thoughts on the path forward, as well as a brief Alaska Marine Highway System (AMHS) update.
On May 19, the Legislature adjourned the regular session shortly before midnight. Minutes before the deadline, the Senate passed the operating budget back to the House for final consideration. Concurrence on the changes failed by a vote of 39-1, and a conference committee consisting of members from both bodies was appointed to negotiate the differences.
A special session began the following morning at 10 a.m. to finalize work on the budget, including this year’s Permanent Fund Dividend (PFD). Negotiations by the conference committee are limited to the differences between the two versions, such as agency funding levels, the size of the PFD, the allocation of federal relief funding, capital projects and other appropriations.
The conference committee has been meeting regularly, and once their work is completed, the budget will come back before both bodies for a final vote. I am optimistic that we will have a final budget in place by the end of next week.
You have every right to be frustrated as the Legislature enters June still in session without a final budget, let alone a comprehensive plan to end this yearly cycle of uncertainty in place. I can assure you that I’m equally as frustrated by the gridlock.
While it’s tempting to cast blame for the situation we find ourselves in yet again, I want to reiterate the House of Representatives’ commitment to finding a solution. That includes members from both the majority coalition and the minority. We’re here and ready to work.
Further, policymakers have significantly more points of agreement than disagreement these days, which wasn’t always the case.
Two short years ago, the state of Alaska was spiraling as the administration and a large contingency of lawmakers questioned funding basic functions of state government such as fisheries management, operating our ferry system and pioneer homes, investing in our education system, etc.
The landscape has changed considerably. In this budget, for example, AMHS is forward-funded with an investment of $76.8 million, and there is an increase of $6.7 million to the coming year’s operational budget.
Certainly, some agencies still need adjustment up or down over time, but there is a general consensus on the level and type of services that are to be funded in this year’s budget.
So, why are we still here?
The answer is the PFD.
I want to be clear that I support as large of a PFD as we can afford, but it must be balanced against our ability to provide services like AMHS, whether it necessitates taxes, as well as the longevity of the fund itself.
There are plenty of different ideas regarding what the dividend program should become, but as with the question of spending, we’re getting closer to a consensus.
Nearly every elected official — including Gov. Mike Dunleavy — now accepts that we cannot afford to continue following a formula that would overdraw the fund, decimate essential services and rob Alaskans of our last pot of savings.
What the disagreement now boils down to this year is whether to spend more than we can afford “just this once.”
The reason the House coalition cannot support that approach is simple. If we take an unsustainable amount out of the Permanent Fund once — to pay the largest dividend in history, as the governor proposes, or to subsidize spending we can’t afford — future Legislatures will follow suit and delay tough decisions until the spendable portion of the Permanent Fund is depleted. Then the only option will be massive taxes AND crippling cuts to essential services.
What’s the difference between paying a $1,000 dividend suggested by the Senate Finance Committee versus the $2,100 in line with the governor’s latest proposal?
Every $1 billion we remove from the Permanent Fund today increases the deficit by $50 million every year into the future — meaning that a one-time decision to pay the largest dividend in the history of the program, rather than $1,000 per Alaskan, would leave $75 million less to pay for fisheries, ferries, schools, roads and troopers every year, forever.
While we are getting closer to agreement on a fiscal plan, it is clear today that neither the political will nor fiscal reality support the governor’s proposal. In order to get to 11 votes in the Senate and 21 votes in the House, we need to address the $1 billion hole the plan would create in the budget.
That being said, I applaud the governor for moving the conversation forward and agree that the time to act is now. His proposal will serve as a strong starting point for discussions this special session, as well as the next.
With more common ground than not, we are closer than ever to reaching a consensus. I am in daily meetings with the governor, as well as House and Senate leadership to find a permanent solution as soon as possible. You deserve nothing less.
I will be sure to update you as soon as I have more information on our progress.
ALASKA MARINE HIGHWAY UPDATE
I would be remiss if I didn’t mention the incredible strides made this year in relation to AMHS. Coastal Alaskans have been loud and clear about the importance of AMHS, and policymakers have heard you. HB 63, my marine highway reform legislation, passed both bodies unanimously. It is rare to pass a bill in one year, and even rarer to do so with no dissenting votes. The legislation won’t fix all that ails AMHS, but it is a critical first step to getting the system back on a path of long-term sustainability.
As previously mentioned, AMHS is also forward-funded for 18 months to the tune $76.8 million. Long a project of mine, forward-funding will provide stability and additional revenue to AMHS. Simply having a schedule out a year in advance will increase revenue to the system by 5-10%. A further benefit of forward-funding is that it will allow AMHS to bank its revenue into the Marine Highway Fund for future investment in the system. The House’s addition of $6.7 million to AMHS’s operating budget will make a huge difference in winter service levels. On a final note, the administration has committed to me to move forward with the construction of the new Tustumena. We have a long way to go to return AMHS to its former glory, but I am very encouraged by the progress made this year.
Remember, I work for you. Please reach out to me with any questions or concerns on these or any other issues important to you and your family.
Speaker of the House
Proudly Serving Kodiak, Cordova, Yakutat and Seldovia