April 13, 2007

By Bradner's Alaska Legislative Digest

The 2009 session has just days to go - midnight on Sunday, April 19 is the required deadline for adjournment. It's likely that not many bills will pass, as we've said before. At this point we don't see anything likely to cause a big blowup, although it's still possible this may happened over the federal stimulus money (the governor and the Legislature disagree on using it).

In the final days of the session several bills will be in play, however, including an increase in the state minimum wage, an extension of the suspension of the state motor fuel tax, an extension of a higher $1 per kilowatt/hour Power Cost Equalization support for residential consumers in small communities outside the state's larger population areas (the higher support rate is due to "sunset" this summer, reverting to a 52 cents/kilowatt hour support.) One bill that seems to be on everyone's "must have" list is legislation that would have the state provide a financial guarantee to Alaska Student Loan Corporation so it can sell its bonds. The corporation has been unable to sell revenue bonds (which are pledged against the corporation's assets, its portfolio of past student loans) in the current bond market. Some form of guarantee from the state would help. The bond sale is needed so the corporation can fund college and university loans for the 2009-2010 academic year.

One important bill that will be held for interim work, and action next year, is the governor's proposal to create a jointly-owned railbelt utility entity that would finance and build badly-needed new generation capacity. Legislators say the proposal is complex and does not yet have unified support of the six railbelt utilities, and therefore needs more work. There seems to be consensus that something needs to be done. though.

The budget is the only required action of the Legislature. As this is written the operating budget is in conference committee. The Senate has passed its version of the capital budget to the House, which will add its projects. The capital budget will then go to conference committee. The final agreements on the operating and capital budgets are traditionally among the last items of business before adjournment. There are no clear estimates of the likely draw on the Constitutional Budget Reserve, and the amount won't likely be known for a while. The working assumption has been that $2.5 billion will be needed from the CBR to cover deficits in the FY 2009 (current year) budget and that for next year, 2010. The required amount may be less, however. At present the CBR holds about $6.5 billion.

There is still considerable tension between the Legislature and the governor over federal stimulus funds. The Legislature is certain to include these funds in appropriation bills, and the governor may veto them. Alternatively, she may instruct state agencies not to apply for the funds, a step that must be taken under the federal law. Thus, even if the Legislature appropriates the funds the governor has the ability to stymie the action, beyond possible veto. The governor maintains some of the operating funds have "strings" attached which would require continued state funding when federal support ends. The Legislature says there are no strings.

Mike and Tim Bradner publish the Alaska Legislative Digest and Alaska Economic Report. More information on both can be obtained by emailing timbradner@pobox.alaska.net