Legislators work past deadline

In a phone call on Tuesday with Jenny Martin, Rep. Paul Seaton’s chief of staff, jackhammers could be heard in the background. That wasn’t the sound of legislators grinding out a budget and a fiscal plan, but crews working on a remodeling project in the Alaska Capitol Building, Juneau.

It also served as a reminder for a real deadline faced by the Legislature if it doesn’t pass a budget and adjourn by May 2. Either the state will have to postpone the building project or the Legislature will have to find a new place to meet. The Legislature went beyond and ignored the voter-mandated 90-day limit on Sunday.

“There is work being done. People are all over the building still,” said Doug Letch, a legislative aide to Sen. Gary Stevens, R-Kodiak.

Letch said he didn’t know if the Legislature would adjourn by May 2.

“I think everybody hopes it gets done as soon as possible,” he said.

As of Tuesday, the Legislature remained stuck on resolving a budget crisis it has faced since before the start of the session in January. It has yet to:

• Pass an operating or capital improvement budget;

• Agree on how it will fund those budgets, 

• Come up with long-term fiscal plan that will close an estimated $4 billion gap between a budget at current levels and oil revenues, and

• Resolve differences between the House and Senate on changes to oil and gas tax credits.

Seaton, R-Homer, and Stevens were busy with meetings this week and unable do interviews. 

A newsletter sent out by Seaton on Monday remains mostly current, said Taneeka Hansen, Seaton’s legislative aide. The budget remains in a House-Senate conference committee. The committee has agreed on some points of the operating budget, including:

• Cutting $35 million from the University of Alaska budget. That includes $15 million already cut in Gov. Bill Walker’s proposed budget for a $50 million total cut;

• Restored funding to the governor’s budget for the Public Broadcasting commission of $44,400 and $2 million to public radio; and

• Cut all funding for Parents as Teachers and Best Beginnings, both education and early childhood development programs.

For the capital budget, Senate version has a $1.5 billion capital project that includes these projects on the lower Kenai Peninsula:

• Kachemak Selo school construction;

• Homer Beluga Lake float plane base improvements; and

• Transportation surface rehabilitation for Pioneer Avenue.

A state income tax proposal on the table but not passed would set a 6-percent tax on what taxpayer pays in federal income tax. The latest version wouldn’t start collecting revenues until Jan. 1, 2019.

“If this bill passes and no other revenue proposals are adopted, the state will be out of money (revenue and savings) by the time we begin collecting this small income tax,” Seaton wrote in his newsletter.

Hansen said the state has about $12 billion in savings, including the Constitutional Budge Reserve. That would last three to four years.

“If we did something but not everything, it would get us there,” she said.

Another revenue proposal being considered is a change in Permanent Fund dividend distributions. House Bill 245, a modification of Walker’s Permanent Fund bill, takes what’s called a Percent of Market Value, or POMV, approach, to pay dividends. Under the current approach, dividends are paid based on a percentage of the 5-year average of the Permanent Fund investment earnings.

Under the new idea, the state takes a 5.25-percent draw from a POMV based on a five-year average of the Permanent Fund’s value. The idea is that the Permanent Fund would earn a projected 6.9 percent annually, so the draw is less than the fund’s annual earnings.

Dividends would — “may,” Seaton noted in his newsletter — be paid out of the general fund from a combination of 20 percent of a 5.25 percent POMV draw and 20 percent of money from resource royalties. The latest idea would fund the dividend at $1,000 for 2017, 2018 and 2019 regardless of the amount available under the calculation above.

The House rejected controversial changes in sexual health education passed as amendments by the Senate in Senate Bill 89. 

That bill originally addressed suspending state education testing, but the Senate added amendments that would require sexual health education be done by a certified teacher or under a teacher’s supervision and require local school boards to approve the curriculum. The House Health and Social Services Committee two hours of testimony on the Senate amendments. SB 89 with the amendments did not move out of the committee.

Hansen said the Senate can either accept the House rejection of the amendments, send the bill to a joint conference committee or let the bill die.

A Senate bill, SB 210, that would have removed a state mandate for senior and disabled property tax exemptions, was stripped of that provision. If it had passed, local governments would have the power to raise or lower the amount of the current $150,000 state-mandated exemption on assessments or eliminate it entirely. That bill now addresses revenue sharing to municipalities.

Seaton had introduced a House bill removing the state mandate for the senior exemption, but it never moved out of committee. Seaton introduced the end to a state mandate in response to a resolution passed unanimously by the Homer City Council and signed by Mayor Beth Wythe urging the Legislature let cities have control over senior exemptions.

Michael Armstrong can be reached at michael.armstrong@homernews.com.