Legislature in review, March 30

Legislature on a fast track with 20 days left. Blowup with Palin still possible over stimulus funds

By Bradners' Alaska Legislative Digest

The 2009 legislative session is now moving on a fast track with about 20 days left before adjournment. The budget is the only required bill lawmakers must pass, and it appears that very few other bills of substance will be acted on. One that has been given a priority, however, is a bill that would allow the state Department of Revenue to give a financial guarantee to revenue bonds sold by the Alaska Student Loan Corporation, an independent state corporation that funds college undergraduate and graduate student loans for Alaskans.

The student loan corporation normally sells its bonds on the strength of its portfolio of past student loans but has been unable to sell the bonds in the current financial market. Because the bond proceeds are needed to fund new student loans, the corporation has stopped taking loan applications for the 2010-2011 academic year. The legislation would allow the revenue department to develop some form of credit enhancement mechanism, such as a Letter of Credit, that would allow the bonds to be sold.

House Speaker Mike Chenault said the bill is being given a priority during the House Majority's regular Monday press briefing, March 30.

Operating budget could be in conference committee by end of week

On the budget bills, House Finance co-chair Rep. Mike Hawker said he expects to see the Fiscal Year 2010 operating budget in conference committee in the next five to six days assuming the Senate finishes work on its version of the bill this week. Hawker said there are no major differences emerging between the House and Senate versions that cannot be easily resolved. FY 2010 begins July 1, so lawmakers must finish the budget before they adjourn in mid-April.

Meanwhile, the House and Senate Finance committees are working on the FY 2010 capital budget, as well as the capital and operating budget items in the federal stimulus package. At the Monday briefing Hawker said the stimulus measures may be rolled into the regular operating and capital budgets, or may still be approved in stand-alone bills. That hasn't been decided, he said.

There are still serious concerns, however, over the possibility of Gov. Sarah Palin's rejection of some operating stimulus funds. The governor has said she will accept about two-thirds of the $900 million-plus in stimulus funds available to the state of Alaska that are capital budget items (transportation infrastructure, for example) but not about one-third that are operating in nature (mainly funds for education). The governor has expressed concerns about "strings" attached to the operating funds, or requirements for continued funding after federal funds are exhausted.

Hawker says Palin is wrong: no significant "strings" attached to federal funds

However, Rep. Hawker said Monday that in hearings held with state agencies and the public Friday and Saturday that there are no "strings" to any of the money with the exception of a small amount of funds for state trooper recruitment and training. There are two cases where minor changes in state statutes are needed to accept the federal money, but these are not substantial issues, Hawker said.

Hawker said he and other legislative leaders hope to discuss these issues with the governor in person Thursday (the governor did not attend a meeting scheduled last week) to determine where she really stands on these issues.

The Legislature seems intent on accepting as much of the federal money as possible, or at least doing a technical "acceptance" with the option of turning some funds back. They must put actual spending into appropriation bills, however, and there is concern that the governor may veto some of the stimulus funds after the Legislature adjourns.

There appears the potential for a major confrontation between the governor and the Legislature over the stimulus funds, with some legislators arguing that Gov. Palin is just posturing to appeal to a national conservative audience.

Governor appoints Tim Grussendorf to vacant senate seat, bypassing Rep. Beth Kerttula

Late last week the governor appointed Tim Grussendorf, a Juneau democrat, to fill the vacant seat in the Senate left open by the resignation of former Sen. Kim Elton, who has been appointed to a new position in the Department of the Interior. The governor passed over Rep. Beth Kerttula, now the House Minority Leader, who was the favorite candidate of Juneau's Democrats. Grussendorf will fill out Elton's term until the elections in 2010. Kerttula is almost sure to file for the seat in the 2010 elections, and to win.

Mike and Tim Bradner publish the Alaska Legislative Digest, a weekly report on the Legislature, and the Alaska Economic Report, a report on statewide business conditions. More information on both can be obtained by emailing: timbradner@pobox.alaska.net