2019 Session Update
Legislative Consultants in Alaska (Wendy Chamberlain/Heather Brakes)
February 4, 2019
The Legislative Session convened on January 15th in Juneau. The Senate quickly organized, swearing in its newly elected members, and seating its Committees. However, the body is only partially functional as the House is mired in a complete stalemate with (1) 20 Republicans in one Caucus; (2) 19 in another Caucus – 16 Democrats, 2 Republicans, and one Independent; and (3) one Republican choosing not to join either group at this point. Twenty-one members are required to elect a Speaker, seat Committees, and conduct any business. Meanwhile, the Senate Finance Committee has been holding hearings to hear from the Administration on forecasted revenues, expenditures, oil production, the Permanent Fund, state debt, and retirement systems unfunded liability.
The Governor is not waiting on the House to organize instead moving full steam ahead on his agenda. He ran on (1) reducing state spending to balance the budget; (2) strengthening public safety including repealing SB 91; (3) providing a fully funded dividend payment annually and repaying the dividends that had been reduced by Governor Waller and the previous Legislature over that past three years.
The budget that the Governor introduced on December 14th was a status quo placeholder however, it did provide for a fully-funded 2019 permanent fund dividend at $3,000. A fully-funded dividend at approximately $3,000 per person would require approximately a $1.9 billion appropriation.
The Administration has testified that due to less oil revenue coming into state coffers, projected at $2.2 billion for FY 20, a fully-funded dividend, and a status quo budget there is approximately a $1.6 billion deficit.
Two Supplemental Budget requests for the current fiscal year were introduced this week. Supplemental budgets typically address unforeseen, emergency costs, short funding in budgets passed during the prior Session.
SB 38 addresses the November 30 earthquake and disaster funds seeking approximately $30 million in state funds and $46 million in federal receipts.
The notable reallocations in SB 39 Operating Supplemental bill was the proposed reduction of $20 million for the schools approved during last year’s Session and the reallocation of the some rural public safety funds proposed to be reallocated for other public safety services.
The Governor and his new Budget Director, Donna Arduin, have been preparing a new budget reflecting his vision of a slimmer state Operating Budget.The Governor has until February 13th to present that amended budget to the Legislature. It is expected to have significant reductions to state spending as well accompanying legislation to repeal programs or services, raise user fees, implement enterprise-funding (if its that important to you then you can pay for it), and privatization of assets and services.
The Governor also introduced three Constitutional Amendments this week, indicating they were designed to underpin his long-term fiscal plan by putting decisions into the hands of voters instead of state politicians:
- SJR 4New or any increases to existing taxes will require voter approval and ratification by the Legislature prior to being implemented;
- SJR 4Enshrining the Permanent Fund dividend formula in the Constitution making it a fundamental right of Alaska residents;
- SJR 6Enactment of a spending cap that permits minimal increases.
These Constitutional Amendment proposals require two-thirds of each body (14 in the Senate and 27 in the House) to pass and be placed on the ballot in 2020. It is an extremely high hurdle given the current make-up of the Legislature.
Crime & Public Safety
The Governor has introduced four public safety bills to repeal provisions of SB 91 and strengthen penalties and close loopholes in the criminal justice system.
SB 32 repeals provisions of SB 91 related to the classification of crimes, sentencing, and probation of offenders. Measures in this bill will increase sentencing and probation lengths for most offenses, create additional tools allowing the State to identify repeat offenders and those that threaten others, strengthen penalties for drug traffickers that prey on Alaskans through the distribution of drugs, and finally, creates efficiencies within the criminal justice system – giving prosecutors and courts the tools they need.
SB 33 repeals pretrial service provisions of SB 91 and places the authority and discretion back in the hands of the Courts to determine bail and release conditions. Additionally, it authorizes the Commissioner of Corrections to monitor and enforce pretrial conditions as the Department does with probation and parole services, reenacting the third-party custodian system and electronic monitoring systems, which were in place prior to SB 91. It prohibits an individual from obtaining jail credit for time spent on electronic monitoring before trial.
SB 34 repeals provisions of SB 91 dealing with the sentencing caps on technical violations of probation and parole, repealing statutory early termination of probation and parole, reducing earned compliance credits, amending discretionary parole eligibility, and repealing good time credit for time spent on electronic monitoring.
SB 35 makes several amendments to current law to address Alaska’s high rate of sexual assault and sexual abuse of minors, including recognizing changes in technology, clarifying the sentencing ranges for sex offenders, parole eligibility for certain offenders, and tightening sex offender registration requirements.
The Governor introduced two bills proposing to pay prior years’ dividends that were reduced by the Legislature and former Governor in 2016, 2017, and 2018.Senate Bill 23 is the appropriation of the funds while SB 24 proposes the payments be made over three years as to not draw all the funds out of the Permanent Fund Earnings Reserve Account all at once – allowing the funds to continue to be invested by the Permanent Fund Corporation and continue to accrue additional earnings.
The bills propose each resident eligible for a dividend this year and who received a dividend in the prior three years would receive:
$1,061 for the amount not paid out in the 2016 dividend;
$1,289 for the amount not paid out in the 2017 dividend; and
$1,328 for the amount not paid out in the 2018 dividend.
The payment of back dividends is approximately $2.4 billion. Should these bills pass the appropriation would be pulled from the Earnings Reserve Account of the Permanent Fund. The current balance of the Permanent Fund is approximately $60.4 billion:$43.8 billion in the Principal and $16.6 billion in the Earnings Reserve Account.While the Earnings Reserve Account is available for appropriation while the Principal is Constitutionally protected from appropriation requiring a vote of the people to do spend.