State Government

The Legislature made it to the end of its regular 90 day session just after midnight this morning (Monday) – passing and sending to the governor several dozen bills over the final two days. However, the issues seen as critical at the start of the session, turned out to be footnotes at the end. Dave Donaldson reports.

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Legislators and the public prepared for a session this year focusing on oil taxes, school funding, and an instate gas line. Budgets were not of concern – the state has plenty of money.

At the end, the Legislature spent the money – $12-billion – but failed to find a fix for oil taxes, a permanent solution to education funding, or a way to get gas to market.

The Senate spent much of the session on its response to the governor’s tax plan that passed the House last year. It would have drastically reduced oil taxes in an attempt to increase North Slope production and throughput in the Trans-Alaska Pipeline. The Finance Committee came up with a tax plan that could not get enough support to get to a vote. And with two days left before adjournment – apparent success. A bill that encouraged new development but left existing, or “legacy” fields untouched. Anchorage Republican Lesil McGuire said the goal was not to let the “perfect” get in the way of the “possible.”

“This is an awesome bill,” McGuire enthused. “I am excited to be here today to present this bill. And I am proud of the work the members of this body have done. This is truly, in my opinion going to create a stampede for Alaska.”

The bill was simple. It expanded a plan to encourage new development away from the North Slope – by putting it in place on the North Slope. It passed the Senate on a 17-3 vote.

But House leaders killed it by bundling it with a bill on movie tax credits. Fairbanks Republican Steve Thompson found five bills to roll into one.

“SB23 will encourage commerce with credits for the film industry, new oil and gas development in unexplored regions and the commercialization of natural gas to Alaskans, quite possibly by Alaskans,” Thompson said.

Before passing the bill out to a floor vote, members took out the tax. That passed the House with a 36-3 vote. The Senate tried again, coming up with its own three-bill package. The goal by that time was saving the movie tax credit bill – oil taxes looked dead. A point not lost on Fairbanks Democrat Joe Thomas.

“We did not hang on to at least some opportunity for credits and incentives at Prudhoe Bay for new oil for either existing producers and certainly the new producers,” Thomas said. “And I think we made a gigantic error in at least not trying to push something over there.”

More money to educate Alaska’s kids was one of the last things brought out for a vote in the closing hours of session. And, as was attempted with oil taxes, it was stuck onto another bill that gave lawmakers little input into the final product.

The House majority took the Senate’s idea of creating a way for the state to pick up pupil transportation costs and added a 50 percent increase in funding for vocational programs. It then offered to increase money to communities that could choose to increase their share of paying for their schools. It also added a plan by Democrats to open up the educational system for input from parents. Anchorage Democrat Pete Peterson supported the majority’s plan, saying it was a compromise that was better than no school funding increase. However, he said some school cuts are inevitable.

“It’s unfortunate, but there will have to be some cuts in major areas across the state,” said Peterson. “And I would like to see, if I had my druthers, the base student allocation funding connected to inflation so we wouldn’t have to come back year after year and haggle about what kind of increase – or if there’s going to be an increase in education funding.”

The House and Senate agreed on how to handle the governor’s scholarship program – coming up with a compromise in the final hours that doesn’t give the awards to students who get a GED, but does give more time to students who have trouble getting the courses they need.

The governor is giving lawmakers another chance. He’s called a special session to begin Wednesday – dealing with an oil tax, an instate gas line, and tougher penalties for sex trafficking.

The Alaska Senate – on a 14-6 vote Saturday – passed Juneau Senator Dennis Egan’s bill giving public employees a choice of pension systems. But it was too late for the measure to be taken up in the House.

Senate Bill 121 would have allowed public employees to choose either a defined benefit plan – also known as a traditional pension – or a defined contribution plan, like a 401(k) retirement account.

During the Murkowski administration the legislature narrowly did away with the state’s defined benefit program for all new hires since July 2006. At the time, lawmakers who voted to stop providing a traditional pension to new employees pointed to the Public Employees Retirement System’s unfunded liability, which was between $5- and $6-billion dollars. Today it’s more than $11-billion.

In order to ensure that wouldn’t be the case with a new defined benefit system, Egan said SB121 would make public employees contribute more to their retirement.

“Most employees will have to be eligible for Medicare before the system helps pay for retiree health care, and they’ll always pay a share of retiree health care premiums,” said Egan. “Let me emphasize, Mr. President, to make the new system cost neutral, employees will share the risk of health care costs rising in the future. That’s a risk worth taking, I believe. And I believe it’s fair to Alaskans.”

Sitka Senator Bert Stedman said he wasn’t quite convinced the bill would eliminate the risk of unfunded liabilities to the state. But Stedman said the conversation about the state’s PERS system and other benefits provided to public employees is evolving.

“The polarized discussion, I think has moved behind us,” said Stedman. “And we are continually moving forward trying to improve our benefit structure, and our pay structure, and our working conditions, and just the desirability to work as firefighters, or work for the State of Alaska, or as policemen, across the state.”

Stedman, along with Senators John Coghill, Fred Dyson, Cathy Giessel, Charlie Huggins and Tom Wagoner voted against the bill.

Even if SB121 had passed both chambers of the Legislature, it was strongly opposed by the Parnell administration.

Juneau Senator Dennis Egan’s bill giving public employees a choice of retirement systems cleared the Senate Finance Committee today (Friday).

During the Murkowski administration the legislature did away with the state’s defined benefit program – also known as a traditional pension – for all new hires since July 2006. Instead, the state’s Public Employee Retirement System went to a defined contribution plan, or a 401(k)-style retirement account.

Senate Bill 121 would allow public employees to opt for either program. The Finance Committee moved the bill this morning. Egan and Senators Joe Thomas of Fairbanks and Lesil McGuire of Anchorage recommended the full Senate pass the bill. Co-chair Lyman Hoffman had no recommendation and the other co-chair Bert Stedman recommended the bill be amended.

Unions and groups representing retired people say the current PERS system has hurt public employee retention, and forces workers to assume all the financial risk for retirement planning.

The Parnell administration opposes the bill, claiming that any defined benefit program would expose the state to too much risk.

Egan has said the goal was to make the bill cost-neutral.

If SB121 passes the Senate, it would still have to get through the House. The Legislature is scheduled to adjourn on Sunday.

In a conversion recorded on Wednesday and aired in two parts on Thursday and Friday, Rebecca Braun of the Alaska Budget Report considers the capital improvements projects budget, a bill to fund immunizations for adults and children, possible adjournment this weekend, and memories of the late-Representative Carl Gatto.

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House Speaker Mike Chenault says it’s important the oil tax debate not drag on past the legislative session, so he’s willing to stay in Juneau until the work is done.

Monday is the 84th day of the 90-day session. The House has not yet received the Senate’s oil tax bill.

“I think it’s very important for Alaska’s future to resolve this tax issue, not drag it out over the summer, and also not to drag it out to next year or the following year,” Chenault told reporters Monday.

Work on the oil tax continues in Senate Finance Committee. Senate President Gary Stevens has said the Senate won’t be rushed on an issue of such great importance to Alaska’s economy.

Chenault today raised the potential for Gov. Sean Parnell to call lawmakers back if they don’t finish their work by Sunday.

Over the weekend, Senate Finance finished the $2.8 billion capital budget. While Chenault says the houses have determined the size of the budget, they haven’t discussed the projects. He says that will happen before the capital budget comes over from the Senate. He also expects the House to add about $300 million in projects to the budget.

Juneau’s share of the Senate version is nearly $56.5 million in state general funds, federal funds and general obligation bonds. The bonds would cover improvements to Glacier Highway from mile 4 to mile 6, and to Mendenhall Loop Road.

State general funds and federal receipts would cover Douglas Island Office Building renovation, State Office Building parking garage repair, and maintenance to a number of state buildings in Juneau.

Funds also are in the budget for LED lighting on Egan Drive, work on Aurora Harbor, and other Juneau road projects. The Senate version includes $49 million for SLAM – the new Alaska State Library, Archives, and Museum facility, considered a statewide project.

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Governor Seal Parnell is asking Alaska Native leaders to lobby the Legislature in support of his education initiatives.

He addressed officials of the Tlingit-Haida Central Council, Sealaska Corporation, Alaska Native Harbor Seal Commission and other groups at Wednesday’s Native Issues Forum in Juneau.

Parnell asked for support of his merit-based performance scholarship program, which began last year.

He said he’s willing to include a needs-based component. But he opposes using the program for students who pass the high school equivalency exam, earning what’s called a GED.

He said that would create a double standard.

“You have one class of kids that were counting on it and earning it and another class of young people who don’t have to go through the same rigor, yet are being given a scholarship. And that’s not something I support. There are other ways to address that. But certainly not to incentivize getting a GED rather than get a high school diploma,” he said.

Parnell also asked for support of his kindergarten-through high school school funding plan. That would give Alaska school districts a one-time payment to help cover inflation. He criticized Senate plans for a several-year increase.

The governor was asked if his administration would enforce tribal child-support orders. A judge recently told the state to turn over about $50,000 garnished from permanent fund dividends to the Tlingit-Haida Central Council. The money went to custodial parents.

Parnell said his administration will work with tribes. But his support was qualified.

“You should expect that we will continue to work on a daily basis as we do with the tribe on these matters to the best of our ability. And we will also work through and abide by lawfully obtained orders,” he said.

The governor was also asked to push for more support of subsistence rights.

He said his administration would manage fisheries for long term sustainable harvests. But it would not match federal standards, which place a higher priority on subsistence.

“What I can pledge to you is that we will listen, we will treat the cultures with respect … and we will work with the federal government so much as it is within our power to do so, from a lawful, legal perspective, from what we’re sworn to uphold,” the governor said.

Parnell also pledged to provide a village public safety officer to communities that want one. And he said he would try to help tribes with rising VPSO administrative costs.