Want to buy: More time
In a move that no one except for everybody could have seen coming, the Legislature is winding up to kick the can on the state’s fiscal woes for another year.
Happy Friday, Alaska! It’s Day 95 of the legislative session, the House Finance Committee has finally got a budget substitute out and it’s extraordinarily nice out.
Programming note: Friday in the Sun is on a sun delay. Will be out tomorrow morning (and, as always, send your tips to firstname.lastname@example.org).
Kickin’ the can
In a move that no one except for everybody could have seen coming, the Legislature is winding up to kick the can on the state’s fiscal woes for another year. While hopes for a long-term and durable solution were always a long shot this year, the Anchorage Daily News’ article—Hopes dim in Alaska Legislature for a Permanent Fund sustainability fix this year—puts a nail in that coffin. Too big and too unpopular are the decisions when there’s a hearty $1 billion in federal relief aid to get us through the year (and the billions of dollars in the Alaska Permanent Fund’s earnings reserve account, for that matter). The impact of a failure to address revenues, the dividend and spending this year means the state will be another year away from a solution if not more because, after all, next year is an election year.
In the most evergreen of legislative statements, Senate President Peter Micciche acknowledged the waning interest of legislators to make the hard decisions and conceded that it’ll be that much worse when the money runs out.
“I have noticed one by one, legislators have lost interest in making the difficult decisions necessary to get that done,” said Senate President Peter Micciche, R-Soldotna. “We will be slapped in the face with the fiscal reality the moment these federal dollars are gone.”
Swap in constitutional budget reserve dollars, statutory budget reserve dollars, oil tax dollars or Alaska Permanent Fund earnings reserve dollars and you’ve got a statement that spans Alaska’s history.
The House rolled out the latest version of its budget today, using about $700 million of the federal relief dollars to pad out the budget with some new spending but mostly to substitute in for scarce general fund dollars. The overall goal here, it seems, is to just get a budget across the finish line while buying the state a little bit more time to find a solution. But that’s the problem.
Legislators have burned through billions of dollars in savings already in the name of buying time to find a solution, but exactly how much closer are we today than we were when oil revenue first collapsed? The passage of the percent of market value draw from the Alaska Permanent Fund was the most significant step, but it doesn’t close the deficit and already legislators are eying the fund as yet another pot of money for buying that time. Politically, we’re still miles away.
One of the core problems here is the mistrust between the various factions—the let’s not decimate state services and implement a tax folks, the let’s pay out the biggest PFDs possible while cutting government folks and the let’s cut the PFD instead of taxing folks—that prevents pretty much any plan or piece of a plan from advancing. We’ve gotta settle the few things we agree on, some say, while others say it all needs to be solved at once (while conveniently not suggesting a plan to solve it all at once).
The whole battle was embodied particularly well during this week’s meeting of the House Ways and Means Committee on Rep. Jonathan Kreiss-Tomkins’ proposed constitutional amendment that would transform the Alaska Permanent Fund into a true endowment model where legislators can spend only the percent of market value draw on some split between services and the dividend. His pitch is that as long as the Legislature has easy access to money, it will avoid the hard decisions.
As an attempt at compromise, committee Chair Rep. Ivy Spohnholz proposed an amendment that would require the Legislature pay out a dividend without specifying the size of the dividend. The conservative pro-PFD folks didn’t like it, noting that a PFD of one penny would qualify, and the PFD skeptics didn’t like it, arguing that anything beyond that would forever complicate the state’s financial outlook. If you need an idea of how far apart everyone is, Rep. Mike Prax, R-North Pole, suggested a change that would see the entirety of the POMV go to PFDs (a big increase over even the statutory language) suggesting that people can voluntarily donate whatever they want to fund government.
Ultimately the amendment failed and the measure advanced out of committee with members on both sides pretty much admitted that it lacks the two-thirds vote needed to clear the chambers and be put to the voters. As Kreiss-Tomkins said last week, the continued path of spending down savings in the name of avoiding hard decisions is a situation where everyone loses. I guess the other side doesn’t win, either.
Where’s this all going? A former legislator once told me that one benefit of the push for a full PFD is that it will burn through the state’s savings even faster, forcing legislators to finally get their shit together on the budget. The more times passes, the more I think that that will be the ultimate course of action. At this point, I don’t know what else will force legislators into action and, unfortunately, Alaska will be that much worse off for it because every year that the state spends down its savings, the eventual solution will be that much worse with less money to go around.
But, hey, I guess at least this year it’ll be mostly done with someone else’s money.
That’s how many DUI arrests the Alaska State Troopers made up during its beefed-up driving enforcement efforts on 4/20, the agency announced today. They did nab one driver who was driving with a revoked license, investigated three damage-only collisions and issued 56 citations, of which 28 were issued for speeding and 7 for lack of seatbelts. No word if any of those actually related to the devil’s lettuce.
I’m sorry if I offended you, part 2
Hot off losing the Senate Judiciary Committee because she’s apparently too busy reading constitutional law fan fiction to treat others with respect, Sen. Lora Reinbold was spotted once again refusing to treat others with respect.
The view from Anchorage
Over in Anchorage, the city is moving ahead with not one but two recounts next week in the school board race. With a .35 percentage point difference separating progressive Kelly Lessens from extreme-right conservative Judy Eledge, the race for School Board Seat B qualifies for an automatic city-funded recount as expected. We’ve also heard that the clerks have ordered a recount for School Board Seat E race where progressive Pat Higgins is outside the .5 percentage point margin in a crowded race against conservative Sami Graham. Graham, however, isn’t going to be required to pony up the $50 per precinct fee for the recount. We’re told it’s a “we gotta restore faith in the election process” sort of thing akin to the state’s freebie audit of Ballot Measure 2’s victory. Neat!
In the run-off news, ballots are in the mail. Be sure that when you’re signing, though, as that was the leading cause for ballot rejections the last time around with 850 ballots rejected because the signatures didn’t match what was on file. Voters have the opportunity to cure their ballots (about 600 took advantage of this for the April 6 election), but the advice is to think about your official driver’s license signature when signing.
Legislators and the governor seem to be seeing somewhat eye to eye on the Alaska Marine Highway System for once, and all it took was $76.8 million in federal relief aid. Under the funding proposal, the state would move the ferry system’s budget to the calendar year to provide more stability and clarity to passengers. From CoastAlaska via KTOO: Governor, lawmakers unveil plan to use $76.8M federal windfall to fund ferries for 18 months
U.S. Sen. Lisa Murkowski’s vote to confirm Vanita Gupta as associate attorney general is the twelfth time she’s broken with the party to support Biden’s nominees. From Alaska Public Media: Murkowski breaks with GOP 12 times to confirm Biden nominees
“Anchorage has totally mishandled the pandemic, just look at the Mat-Su where everything is completely and totally fine,” is a thing that a lot of Republicans have been saying, neglecting to understand the bigger and more complicated story of Alaska’s pandemic. From the ADN opinion section: Criticism of Anchorage’s pandemic response shows deep misunderstanding of the facts
And now for something along the same lines
No video essay this week. Instead, here’s ISER Economist Mouhcine Guettabi’s sober look at the economy, the stimulus and the state budget. The materials from the presentation are here.
Have an excellent weekend, y’all. Get out and enjoy that sun and slush.
Mmmm, I don't agree with the parenthetical in this sentence: "We’ve gotta settle the few things we agree on, some say, while others say it all needs to be solved at once (while conveniently not suggesting a plan to solve it all at once)."
While I don't agree with parts of it, Rep Wool's HB37 is a commendable effort at a fairly comprehensive approach. Coupling it with Sen Wielchowski's SJR 1 would represent a good faith effort at fully resolving the issue.