Legislature quietly brings back Permanent Fund legislation

Legislators continue to plug along in Juneau as the calendar approaches May and their constitutional deadline to finish their work in the middle of that month.

Much of the activity in the past couple weeks has been on relatively minor bills and resolutions as House and Senate leaders quietly negotiate the state’s finances.

The Republican-led Senate on April 18 joined with the Democrat-led House in unanimously passing House Joint Resolution 21 by Fairbanks Democrat Rep. David Guttenburg urging the federal government to stay out of the state’s recreational marijuana business. A couple days later, on April 20, when levity would’ve suggested passing the marijuana resolution, legislators again unanimously passed a resolution aimed at the feds; this time asking for help in developing an Arctic deepwater port in Western Alaska.

Sen. Peter Micciche’s Senate Bill 4, legislation to reduce requirements for occupational license requirements for barbers, hairdressers and others with student loans, was approved April 24.

While those matters are undoubtedly important to those they impact, the last legislation approved with broad implications was House Bill 287, Rep. Paul Seaton’s proposal to fund the K-12 education early. It was sent to Gov. Bill Walker’s desk April 18.

While it didn’t pass the Legislature early in the session as intended, HB 287 is still ahead of the operating budget, which remains unresolved as part of the ongoing discussions over a longer-term fiscal solution.

A key aspect to the passage of HB 287 is that the Democrat-led House approved the Senate’s version of the bill. It calls for flat education funding in the upcoming 2019 fiscal year, but also provides for a $30 million increase to the primary school funding mechanism, the base student allocation, in fiscal year 2020 (the school year that begins in 2019).

The House Majority coalition had been pushing for a $25 million increase for fiscal year 2019 after several years of flat BSA funding, which Democrats have noted has forced school districts to absorb fixed annual cost increases, namely health care.

However, the Senate’s version of HB 287 also included a contingency that the extra money in 2020 is dependent passing Senate Bill 26, the seemingly forgotten bill passed by both chambers last year that would formally establish an annual percent of market value, or POMV, draw from the Permanent Fund Earnings Reserve Account to pay dividends and support government services.

Senate leaders did an about-face by making the extra education funding dependent on the passage of SB 26 after repeatedly criticizing the House Majority and the Walker administration for leveraging one issue against another, but the fact that the House agreed to the proposal is a sign of progress on the centerpiece of any plan to resolve the state’s multibillion-dollar budget deficits.

Subsequent to HB 287 passing, the House and Senate Finance Committee co-chairs held a April 21 conference committee meeting on SB 26. While the meeting lasted all of two minutes, it initiated the process of resolving the differences in the versions of the legislation each body passed last year.

The House’s SB 26 tied approval of a Permanent Fund draw to passage of an income tax, while the Senate made it contingent on a reducing the government’s spending cap to a more substantive level.

Meanwhile, formal conference committee negotiations over the operating budget have been put on hold. But given the House and Senate budget plans are more similar than they are different — each side has fiscal year 2019 unrestricted General Fund spending in the $4.5 billion range — a major hang-up over the budget seems unlikely.

Finally, the capital budget has received no attention since the administration submitted it to the Legislature in January, which indicates legislators could pass a minimal and noncontroversial capital budget that spends little more state money than is needed to secure more than $1 billion in federal matching transportation construction grants in a day or two after other big issues are resolved as they did last year.

Such “bare bones” capital budgets have become the norm since 2015 despite the fact that the state’s deferred maintenance liability continues to grow to upwards of $2 billion, according to the Department of Administration.

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Elwood Brehmer can be reached at [email protected].