Government

Lawmakers return to the Alaska State Capitol on Tuesday and, as always, they’ve got a long agenda to tackle, from health care and energy to the state’s persistent budget struggles.

Alaska Public Media’s state government reporter, Eric Stone, will be tracking the session in Juneau. He joined Wesley Early on Alaska News Nightly to give a sense of what the session will bring.

The following transcript has been lightly edited for clarity.

Wesley Early: So, Eric — lots to do, only four months to do it. What are lawmakers prioritizing ahead of the session?

Eric Stone: Well, Wesley, as you said, there’s a lot to do. And there will always be some surprises. But what’s not a surprise is how difficult the budget will be this year. We heard a lot last year about how this might be a painful year.

Maybe this will set the tone — last year, we had a $1,000 Permanent Fund dividend, the smallest ever when you adjust for inflation. And this year, what I keep hearing is that even a $1,000 dividend will be a challenge. Here’s Fairbanks Republican Rep. Will Stapp — he sits on the House Finance Committee.

Rep. Will Stapp, R-Fairbanks: At the current level of spending and revenue, I don’t see how that’s possible without large savings draws, and I don’t know how people are going to feel about that.

ES: This has been an issue for years, of course. Lawmakers and the governor have worked to cut state spending in a variety of areas, though there’s some dispute about how much there is left to cut.

Stapp says he’d like lawmakers to take a closer look at department budgets with something known as zero-based budgeting. Basically, rather than starting from a baseline of “what did we spend last year,” this would be starting at zero and building the budget from scratch. Stapp included an amendment in last year’s budget asking the governor’s office to try that for one department of their choice, but he says as far as he can tell, that didn’t happen.

So he says he’s renewing his efforts this year.

Stapp: Because you don’t really want to tell people the state needs a lot more money in terms of taxes … when you can’t really articulate where the money goes initially and what the money does.

ES: Gov. Mike Dunleavy’s budget, as usual, contains what he calls a statutory PFD, $3,800 or so. But that, and the expenses they have to catch up on from this current year, mean that the governor’s budget would require spending more than half of what the state has in savings.

But it’s a bit incomplete. The governor has said he plans to introduce a fiscal plan. Last we heard, when he released his budget in December, it was still a work in progress. But the governor has his last State of the State speech this session — usually those come pretty early in the session, so a fiscal plan would be something to watch for there. Then again, a few years ago, Dunleavy said he was planning to introduce a sales tax and never did.

Democratic Anchorage Rep. Andrew Gray says he hopes Dunleavy does propose some kind of tax.

Rep. Andrew Gray, D-Anchorage: He’s not running for reelection, so he can afford to take that risk …. He could, going forward into the future, have established a reliable source of revenue to fund our state. I mean, there could be no more worthy legacy for him. It would be monumental.

ES: Gray says he’d prefer an income tax — he says that would be fairer to low-income Alaskans — but if the governor proposes a sales tax, Gray says he thinks lawmakers would have to find a way to get it passed. He says he thinks lawmakers on both sides would be willing to discuss just about any solution to secure the state’s financial future.

But it’s an election year, and a fiscal plan requires some hard votes, so it’ll take some gumption for lawmakers and the governor to actually come together rather than kick the can down the road yet again.

WE: Alright, so we have the perennial budget debate with a bit more urgency this year. That’ll be something to watch. What else is on your radar?

ES: This one came up recently — health care. You might have heard of this Rural Health Transformation Program. That’ll send more than a billion dollars to the state over the next five years to, essentially, improve health care. There are a bunch of restrictions on how it can be spent, and most of that decision-making will happen inside the executive branch in the Department of Health.

But Health Commissioner Heidi Hedberg said on a call with reporters recently that there is a role for the Legislature to play. To make Alaska’s grant application more competitive, the state said it would do a bunch of things by the end of 2027. Those include expanding what pharmacists are allowed to do, and joining a variety of “license compacts” for EMS workers, nurses and a few others. The deal is, if you’re licensed in some states, you can also practice in Alaska without a need for retraining.

That’s an issue the Legislature has not made a focus in past years, though there are some pending bills. And Gray says he could see those scrambling caucus lines.

Gray: In terms of where people land and what they support, I think that it’s not going to be clear-cut. It’s not going to be a majority-versus-minority. I think that that it’s going to be all over the place.

ES: But Gray, who is also a physician assistant, says he supports the policy changes.

Stapp, for his part, says he’s on board — he says he’s still reviewing what all is needed, but he says from what he’s seen so far, he doesn’t see why those policy changes will be a problem.

WE: Finally, Eric, what about the Alaska LNG project? Are you expecting movement on that front?

ES: That one is interesting. The gas pipeline developer, Glenfarne, has yet to announce what’s known as a final investment decision — a green light to move forward. Lawmakers heard last year from its consultants about a variety of changes they could make to ensure the project is profitable enough and stable enough to go forward. We could see some movement on that — for instance, Gov. Dunleavy says he’d like to see lawmakers offer some property tax relief to the gas line project to help it pencil out. And a lot of lawmakers say they support efforts to help the gas line move forward — but I think they’ll approach that question with some caution. They don’t want their home communities to get taken to the cleaners, so to speak.

Landslides, storm-driven floods, infrastructure-damaging permafrost thaw and intensifying wildfires are among the expensive disasters that scientists link to Alaska’s rapidly changing climate.

Now a state legislator is proposing to levy a 20-cent surcharge on every barrel of Alaska-produced oil to fund programs that respond to and prepare for disasters related to climate change.

Rep. Andy Josephson, D-Anchorage, introduced the measure, House Bill 247, in advance of the legislative session scheduled to start on Jan. 20.

To explain why the state needs such a fund, Josephson ticked off a list of recent disasters in Alaska that imposed heavy costs — and, in some cases, killed people. Those events, which include deadly landslides in Southeast Alaska, landslides that have blocked roads, severe flooding in Western Alaska last October from the remnants of Typhoon Halong and similar damage in 2022 from the remnants of Typhoon Merbok, all had some links to climate change that is caused by greenhouse gas emissions from fossil fuel burning, he said.

“It’s a true statement that a lot of the disaster dollars we need right now are related to climate change. That, in my opinion, is sort of inarguable,” he said.

Disasters like those that have occurred in recent years are expected to continue in the future, he said: “We’re in a new normal.”

The bill is logical from a fiscal standpoint, Josephson said.

As of now, the state’s disaster relief fund is “basically a sub-fund of the general fund,” and it gets whatever lawmakers are able to appropriate, he said. But if there is a new stream of money as proposed by his bill, “we would free up those dollars we’re otherwise spending in the disaster relief fund.”

At 20 cents per barrel, the proposed surcharge would raise about $30 million a year, he said.

In comparison, Gov. Mike Dunleavy in December proposed that lawmakers approve a $40 million appropriation for the state’s existing disaster relief fund. The need could increase from that total if the Trump administration fails to reimburse 100% of the costs for Typhoon Halong relief rather than the normal 75%. The Biden administration in 2022 approved 100% reimbursement for Merbok-related costs.

As introduced by Josephson, the bill would give the Alaska Department of Environmental Conservation oversight over the money generated by the surcharge. It would distribute fund money in the form of grants to local governments and other entities for purposes like disaster response, disaster preparation and upgrades that make infrastructure better protected against climate change.

The surcharge idea has precedent in Alaska. The Department of Environmental Conservation already administers another fund with money coming from a per-barrel fee on oil produced in the state.

After the 1989 Exxon Valdez oil spill, the state began levying a 5-cent-per-barrel surcharge on oil that goes into the state’s Oil and Hazardous Substance Release Prevention and Response Fund. The fund itself was created by the legislature in 1986, with the surcharge established after the disastrous Prince William Sound spill.

That surcharge and rules concerning the fund’s operations have been modified over the years, broadening the purposes for which the fund can be used and boosting DEC’s reporting requirements, according to the department.

In its current configuration, each 5-cent-per-barrel surcharge sends 1 cent into a spill response account, to be used for spills that have been officially declared disasters. The other 4 cents goes into a spill prevention account, which can be used to address spills that have not been declared disasters, among other functions.

In 2015, refined petroleum products were added to the program. The state added a small surcharge, 0.95 cents per gallon, on refined fuel projects sold, transferred or used at the wholesale level, according to the DEC.

The idea of a similar levy to raise money for climate change preparedness and response is not new.

Rick Steiner, a retired University of Alaska marine conservation professor who founded and leads an environmental organization called Oasis Earth, has been advocating for the approach for several years.

“The legislature has so far seemed unable or unwilling to connect the dots between the many climate-related disasters we are experiencing — typhoon Merbok, wildfires, landslides, floods, coastal erosion, permafrost thaw, storm damage, infrastructure damage, subsistence impacts, commercial fishing impacts, etc..– to see the larger picture of the threat and costs these interrelated climate disasters pose,” he said in a letter to lawmakers sent last September. “The money to address these issues will have to come from government.”

In advocating for what he called an Alaska Climate Resilience Fund, Steiner said funding issues have become more pressing because of federal cutbacks.

The climate-response surcharge idea is not unique to Alaska, either.

Hawaii has put its version of a climate surcharge into law, a measure that seeks to raise money for responses to future disasters like the deadly 2023 Lahaina wildfire on the island of Maui.

In May, Hawaii Gov. Josh Green, a Democrat, signed a bill that increases the state’s hotel and lodging tax by less than a percentage point. The increase is applied to the state’s Transient Accommodations Tax, known at TAT. The governor said the increase would amount to an additional charge of about $3 on a $400-a-night hotel room fee. It is expected to generate about $100 million a year, according to state officials.

Hundreds of health care workers and government officials descended on Anchorage this week for the kickoff of a five-year, $1.3 billion program aimed at reimagining medical care across Alaska.

The money comes from the Rural Health Transformation Program created by President Trump’s signature tax- and spending-cut legislation passed last summer — the same legislation that pares back Medicaid.

The problem the funding seeks to solve is no secret, the state’s former chief medical officer, Dr. Anne Zink, said on a call with reporters and state officials. Zink is working with the state Department of Health on the program, she said.

“We consistently see that people who live in rural areas — Alaska and beyond — have worse health outcomes with increased cost,” she said. “This is an opportunity to rethink the way that care is delivered to make sure, no matter where you live, you have access to quality, timely, effective care.”

States across the country are racing to develop plans to spend the influx of cash. They have until October to obligate the first tranche of cash and another year to spend it.

Alaska is building its version of the program around six goals, from improving maternal health, preventive care and access to healthcare to strengthening the workforce and rethinking how doctors and hospitals charge for care.

That last point — what the state is calling “pay for value” — is a big one. Most medical care is what’s known as “fee for service,” for example, when a patient goes to a doctor and pays the doctor for their time, whether they get healthy or not.

With pay for value, the idea is to pay for results.

But given the fragmented nature of health care in Alaska, where many patients have to travel hundreds of miles from home for care, “the realities of making that transition take time,” said Deputy Health Commissioner Emily Ricci.

“It’s very challenging, and it will look different for every community and every provider and the provider types,” Ricci said.

Another example: Say you have a rash. You go to the doctor. The doctor sends you to the dermatologist, who sends you to the pharmacy for a medicated lotion.

Does your primary care provider know what your dermatologist prescribed? Does your dermatologist know your regular doctor tried that same medication with the hard-to-pronounce name six months ago?

And does anyone know if you eventually get better?

Maybe not. And that’s an issue standing in the way of a transition to value-based care that the state would like to address, Ricci said.

“How can we use this funding to begin now, over the next five years, building out the infrastructure, the concepts, the protocols, the data that providers need in order to kind of make that transition?” Ricci said.

So technology is one focus for the first of what the Department of Health said will be a series of workshops in Anchorage.

The meetings — known as “convenings” — are an effort to get as many stakeholders involved as possible, from cities and tribes to hospitals, medical providers and vendors, Health Commissioner Heidi Hedberg said.

“This funding is really to support what the community and region need,” Hedberg said. “Every community, and every region, needs something different.”

Alaska will receive roughly $273 million per year for five years as part of the $50 billion nationwide program. Hedberg calls it “generational.”

But the elephant in the room, of course, is that the same tax cut legislation that created the program could also push many Alaskans away from the health care system, said Alaska Hospital and Healthcare Association head Jared Kosin.

“I see the bright side and the good things looking ahead,” Kosin said. “I talk about coverage disruptions with these enhanced premium tax credits expiring. We talk about coverage disruptions with the tightening of Medicaid eligibility right around the corner.”

State officials have downplayed the spending law’s impact on Alaskans on Medicaid. But Kosin is worried the changes will push health care costs up, he said, because when people can’t pay, hospitals have no choice but to shift those costs onto those who can.

Kosin said he’s also concerned that the transition to a new administration after Gov. Mike Dunleavy’s term ends in December could throw a wrench in the state’s plans.

State officials, though, say they’re building sustainability into their plans. Ricci, the deputy health commissioner, said that the state Health Department was “acutely aware” of the challenges involved in standing up a program that will span at least two governors’ administrations over half a decade.

“The key to that, I think, is bringing in the communities and the partners and the healthcare entities into the discussion from the beginning and into that structure,” Ricci said.

Put more simply, “this is a project for Alaskans by Alaskans,” said Zink, the state’s former chief medical officer.

“The sustainability will be dependent on Alaskans,” she said.

Alaska Public Media’s Rachel Cassandra contributed reporting.

An Alaska Superior Court judge has ruled that a state law limiting live shows at breweries, distilleries and wineries in Alaska is an unconstitutional violation of the First Amendment and the Alaska Constitution’s protections for free speech.

Judge Adolf Zeman issued his decision Wednesday in a two-year-old lawsuit filed by three alcohol manufacturers against the state of Alaska’s alcohol regulator two years ago.

“The speech restrictions fail the tests of strict and intermediate scrutiny, and such suppression of speech by the state cannot stand,” Zeman wrote at the conclusion of his 25-page order.

Until 2022, alcohol manufacturers were prohibited from having entertainment — including TVs, dancing, games and live music — on site. That year, as part of a sweeping modernization of the state’s alcohol laws, breweries, distilleries and wineries were allowed up to four live events per year if approved by the Alaska Alcohol and Marijuana Control Office, the state regulator.

Bars continued to be allowed an unlimited number of live events without permit; the difference in limits was billed as a political compromise necessary for the reform to pass the Legislature and become law.

Three companies — Zip Kombucha, Sweetgale Meadworks and Cider House, and Grace Ridge Brewing Company — filed suit to overturn the four-event limit, raising free-speech and equal-protection claims.

They were represented in court by a national group, the Pacific Legal Foundation. While the plaintiffs eventually dropped the equal-protection argument, the free-speech debate continued through written arguments.

Zeman ultimately concluded that the state failed to show how restricting live entertainment at breweries and distilleries, but not bars, would protect public health or safety.

“This court recognized that the challenged speech restrictions were once a critical piece of a grand compromise … however, political compromise is not recognized as a substantial government interest for the purposes of restricting speech under the First Amendment. Neither is the codification of preference for one industry actor over another,” he wrote.

While Zeman overturned a law limiting live entertainment, he upheld a law forbidding breweries, distilleries and wineries from having pool tables, dartboards and similar games, “because they are not speech.”

He also gave nodding approval to a law that restricts brewery, distillery and winery operating hours and serving sizes to less than what’s allowed for bars.

“The Legislature has, and can further address public health and safety risks associated with alcohol consumption in breweries and wineries by limiting the amount of product that can be served, the hours during which they can operate, or by reducing the cap for the number of brewery or winery licenses allowed in a given community,” he wrote.

Alaska Cabaret, Hotel, Restaurant & Retailers Association, or CHARR, a trade group representing all kinds of alcohol retailers — including bars and package stores — did not return a request for comment before the reporting deadline for this article.

An appeal to the Alaska Supreme Court is possible by either side. Representatives of the Alaska Alcohol and Marijuana Control Office and the Alaska Department of Law said those agencies were still analyzing the decision.

“AMCO does not have an opinion on the ruling and is discussing the matter with agency legal counsel,” said Jenae Erickson, acting public information officer for the Alaska Department of Commerce, Community and Economic Development, the parent agency of AMCO. “At this time, we can’t definitively state how the order will be implemented, or what Alaskans can expect. When AMCO has appropriate guidance, an advisory notice will be released.”

Donna Matias, an attorney with Pacific Legal Foundation who represented the plaintiffs, said she is “really pleased” with the decision and said Alaska limits on live events are “actually very unusual” on a national level.

“It was a political compromise, but the legislature really never had the breweries’ First Amendment rights to use as political bargaining chips,” she said, “and I think the court in this opinion recognizes that very explicitly.”

Lee Ellis, head of the government affairs committee for the Brewers Guild of Alaska, said by phone that the guild had been pushing for a legislative solution to the issue, “but we’re happy to see those entertainment live-music restrictions are finally lifted. I think it’s a win regardless, and we look forward to offering a lot of opportunities for small-time musicians to further present their craft.”

One of those musicians is Juneau singer-songwriter Marian Call, who also works as executive director of MusicAlaska, a group devoted to boosting Alaskan musicians.

Call hosted a Christmas concert in a Juneau distillery before the end of the year, one of four events allowed at that space last year.

She said her group applauds Zeman’s ruling.

“Musicians have a superpower — we can enter an empty room and fill it with people. We create economic activity out of nothing but sound waves. Many businesses benefit from our labor, but none more than restaurants, bars, and the alcohol industry at large,” she said. “Limiting music professionals’ opportunities to work as a part of the SB9 compromise was inappropriate and, as the Superior Court has now ruled, unconstitutional, since musical performance is a form of speech.”

Call said MusicAlaska would love to see Thursday’s ruling bring more music to all kinds of venues — bars, breweries and those that don’t serve alcohol at all.

“Alaskan musicians’ desire and ability to host music events is not a limited resource,” she said, “and the more we get to work, the more Alaskans get to play.”

The Alaska Court of Appeals took up the case of a Whittier woman Thursday who was indicted in 2023 on felony charges of voter misconduct.

Like others born in American Samoa, Tupe Smith is a U.S. national but not a U.S. citizen. Smith says she thought that meant she could vote in local elections but not presidential elections.

When filling out voter registration forms in the past, Smith and her lawyers say a Whittier city official told her to check a box that said she was a U.S. citizen, even though Smith knew she wasn’t, because the forms did not have a box for U.S. national.

That led to an investigation by Alaska State Troopers, who arrested Smith in late November 2023.

Voting rights advocates have linked Smith’s case – and a similar, separate case that includes some of her family members in Whittier – to national efforts by conservatives to end birthright citizenship in the United States. The advocates say the plight of people born in American Samoa highlights a group that is already being denied the right to vote.

After a grand jury indicted Smith in early 2024, her lawyers asked a Superior Court judge to toss the indictment, saying a trooper who testified to the grand jury had misled them on the issue of whether Smith intentionally checked the box saying she was a U.S. citizen.

The judge denied the request. But in a rare move, the Alaska Court of Appeals accepted Smith’s appeal before the Superior Court judge’s final decision and on Thursday heard oral arguments from one of her lawyers, as well as an attorney for the state.

Now, one of the main sticking points is whether the words “knowingly” and “intentionally” mean the same thing in regards to a person making a false statement on a voter registration form.

While some people might use the terms interchangeably, doing something “intentionally” requires a higher mental state – in legal terms, mens rea, or “guilty mind” in Latin – than doing something “knowingly.”

Smith’s attorney, Whitney Brown, told the three-judge Appeals Court panel Thursday that the words do not mean the same thing. In writing the law on voter misconduct, Brown said, the Legislature used both terms differently and therefore they should be understood differently.

“The record also reflects that if she had known she was not supposed to vote, she would not have done so,” Brown said. “So the state has just shown no evidence of an intent to mislead or deceive. So we believe that the court, in this instance, can take the extra step of just dismissing the indictment.”

The state wants the Appeals Court to send the case back to the Superior Court for a final decision. The state’s attorneys argue that the words “intentionally” and “knowingly” can mean the same thing.

“It’s not that she didn’t know what she was writing was false. It’s that she thought she was supposed to write something that she knew was false for these specific purposes, and that’s a little bit different,” Assistant Attorney General Kayla Doyle told the Appeals Court judges.

Doyle agreed with Brown that it was a difficult, but important, case. And there were multiple puns made in Thursday’s oral arguments – intended or not – about how intentional the Legislature had been in including the word “intentional” in the law on voter misconduct.

The Appeals Court will make a decision in the case at a later date, though it’s unclear when that will be.

With the second regular session of the 34th Alaska Legislature beginning on Tuesday, it’s a good time to check in with members of Juneau’s delegation to talk priorities, predictions and plans for the session.

Sen. Jesse Kiehl (D-Juneau) spoke with KTOO’s Mike Lane about what he expects to see this year.

The following transcript has been lightly edited for clarity.

Mike Lane: We’re in the studio with Sen. Jesse Kiehl. Welcome Senator. 

Sen. Kiehl: Well, thank you. 

Mike Lane: How are you feeling about going into the second regular session?

Sen. Kiehl: Well, I’m, I’m excited to have everybody come back to the capital city. It’s always, always good to have colleagues from around the state gather at the Capitol and get to work. And also, you know, catch up a little bit. Some of these folks are even friends.

Mike Lane: Is there anything that you’re looking forward to or not looking forward to in this particular session?

Sen. Kiehl: Well, I think that the biggest question is going to be, what issues catch fire and get the most traction? Crucially, the thing you always have to do has got to be a budget, right? The Constitution limits us to one year at a time. Gives us some duties — public safety, public health, managing our resources, education, couple other things. And so we we have to pass and fund a budget. And one thing I’m not looking forward to is making that balance. That’s going to be, without a doubt, one of the biggest and most difficult issues in front of the Legislature this year. That’s not new. The Governor, who has for all of his terms, stood squarely in the way of any kind of fiscal plan with a reasonable possibility of happening, has said that this year he’s proposing one. If the governor proposes something that is serious, if the governor proposes something that has a kerosene snowballs chance in Hades of passing, then that will be, I think, the primary issue of the session. If it’s something that can’t get the votes, won’t get the votes Alaskans aren’t going to support, then we won’t probably spend huge amounts of time and effort on that. I’m a fiscal plan guy. We need to stabilize the state’s resources, stabilize the state’s ability to do the basic things we all need a government to do, infrastructure, safety, education, et cetera, can’t do them on your own. And so we have a structural deficit. And with the price of oil down and looking to maybe go down further, balancing the books is going to be really brutal this year, without some revenue.

Mike Lane: With that said, are there any other pressing or urgent issues that you believe are being overlooked at this time?

Sen. Kiehl: Well, I don’t know about overlooked, right? The other thing that has the potential to take a huge amount of time is this, this 50-year dream of a gas line, and if that project gets cash or customers, if it’s got customers with a balance sheet who will sign on the line? Yes, I’m in to buy gas that comes through this pipeline. Well, then we have some very serious and major issues as a Legislature that we’re going to have to work on to make sure that gas line can happen.

Mike Lane: All right, fair enough. And we touched very briefly on the budget. Where do you believe cuts are necessary?

Sen. Kiehl: We have done a lot of cutting already. We have done a huge amount, and so we are always looking at the most efficient way to deliver government services. But Alaskans, by and large, want the services the state provides. It just comes down to that. So we’re going to dig in. We’re going to get down to the nitty gritty and talk to everybody and figure out, what is the more effective, efficient way to deliver that necessary government service, what’s the most efficient, effective way to do that. We’re talking about saving 10s of 1000s or hundreds of 1000s of dollars a year max, and that counts. We’re going to work on it. But it’s not hundreds of millions of dollars. It’s not a budget deficit. And so we will always do those things, because we always need to do the best we can for Alaskans, but that’s not going to solve our budget issue.

Mike Lane: My last question. How can Alaska secure the PFD for the next five to 10 years? 

Sen. Kiehl: Fundamentally, the most important thing we’re going to need is some additional revenue with a moderate new revenue stream, or probably it’s a couple of little streams — right? — that come together to a moderate amount. We can stabilize, we can provide public safety, good education, infrastructure. We can run roads and ferries and airports, do the things that the Constitution requires us do, that Alaskans need us to do and still have a PFD going forward.

Mike Lane: And Senator, is there anything I didn’t ask you that you’d like to touch on?

Sen. Kiehl: I’ll just say it is such a privilege to represent the capital city. This town welcomes legislators, welcomes staff from all over the state. Agree with them, disagree with them. They’r here serving the public. They’re serving their constituents. They’re here to do a job for all of Alaska. And I’m always proud of the capital city welcoming my colleagues from around the state. I’m looking forward to that happening again this year. It’s going to be a hard session. I hope it’s a productive one.

Mike Lane: It is the second regular session of the 34th Alaska Legislature, it begins Tuesday the 20th of January. Senator, thanks for joining me. 

Sen. Kiehl: Thanks so much for having me.