Legislators rush to resolve key bills
With about a week left in the 2012 state legislative session, bills are piled up in the Finance committees of both the state House and Senate and, typically, the most pressing business is left to the last minute.
As is customary, some bills that are priorities of leaders in the House and Senate are being held “hostage” in the other body to gain negotiating leverage.
For example, the House has Sen. Johnny Ellis’ bill extending the state film tax credit in its Finance Committee, where lengthy hearings are being held in a subcommittee. The bill passed the Senate last year.
Similarly, the Senate has House Speaker Mike Chenault’s bill to expand powers of the Alaska Gasline Development Corp., a state corporation planning an in-state gas pipeline, on a slow track.
That bill passed the House March 27 but was assigned to three committees in the Senate. A hearing in the first committee, the Senate Community and Regional Affairs Committee, was set for April 3 but was cancelled.
The Senate Finance Committee hopes to finish work, at last, on its version of an oil tax reform bill the weekend of April 7 and 8, but there seems little prospect that the House will be able to give the bill adequate review before the adjournment deadline at midnight, April 15. House Speaker Chenault expressed that view in a briefing April 2.
The Senate bill is very different than the oil tax bill passed by the House last year but House leaders said the form of the bill isn’t as important as whether the Senate bill would reduce taxes sufficiently to encourage investment.
There’s talk that the Legislature may go into overtime to complete work on the oil tax, but that’s speculation at this point.
Meanwhile, another important bill, the state capital budget — which pays for construction work — is due to emerge from behind closed doors soon, according to Sen. Bert Stedman, R-Sitka, co-chair of the Senate Finance Committee.
Unlike the oil tax, there likely will be a rough consensus already in place between the House and Senate on the capital budget before it appears to the general public.
In a March 2 briefing by Senate leaders, Stedman said informal talks are being held with House leaders on the capital budget bill. The House Finance Committee, meanwhile, has been holding hearings and working on its approach to the capital budget, but will wait, as is the custom, to work on the Senate bill when it comes over from that body.
The normal legislative procedures will take place with the capital budget once it surfaces, with hearings held in the Finance committees. The Legislature’s tradition, however, is that the key decisions are made in private and these late-session hearings are largely a formality, mainly a forum for advocates to make last-minute pitches for projects or programs that have been left unfunded in the capital budget.
If there are big differences between the House and Senate over projects to be funded, and this isn’t yet known, the capital budget could go to a conference committee. There’s always a chance that could happen, but with time so short, Stedman and his House capital budget counterpart, Rep. Bill Stoltze, R-Chugiak, will likely try to resolve differences informally to speed things along.
Stedman said there is an agreement with Gov. Sean Parnell — who can veto line items from the budget bill — for spending not to exceed about $2.9 billion, including federal funds, an amount roughly similar to what legislators approved last year in the capital budget.
The senator also said there is agreement not to exceed $450 million on a port projects general obligation bond package that would appear on the state general election ballot in November.
If approved by voters, the bonds would fund a variety of port projects around the state, including more work on the Port of Anchorage expansion. The port bonds authorization bill is still being worked on.
The operating budget bill is moving along smartly. The House has passed its version of the bill and the Senate approved its version April 4, which is close to the House plan that passed March 15.
With this bill, which funds state agency operations, a conference committee is customary to work out differences between the bills, which appear to be relatively minor this year, said Sen. Lyman Hoffman, D-Bethel, the Senate Finance co-chair in charge of the operating budget.
One difference is that the Senate is proposing $12 million for state funding for tourism promotion while the House has proposed $16 million, Hoffman said. This shouldn’t be difficult to resolve, the senator said.
The Senate version of the operating budget is $22 million below Parnell’s proposal for operations spending, Hoffman said, but the bill assumes status quo in school funding, an issue yet to be resolved.
Overall, the Senate has held agency operating increases to about 3.6 percent, compared to the 7 percent annual agency spending growth in recent years, Hoffman said. The governor’s proposed operating budget is about $8.86 billion, including federal funds and agency increases similar to those allowed in the Senate version of the bill.
If the House agrees to increased funding for education in some form, it would add to the total in the operating budget.
School, retirement funding
On the school funding proposals, the House Finance Committee is still working on bills passed by the Senate that would grant a three-year, $33 million annual increase in the Base Student Allocation, a formula under which state funds are distributed to school districts.
School districts around the state are pushing hard for increases in the BSA to offset inflation and higher fuel costs. House leaders are sympathetic but may want to provide targeted funding, one year at a time, rather than put an increase into the formula itself.
The final form of a House proposal on school funding has yet to emerge and this will be another critical end-of-session issue to be resolved.
Hoffman said the Senate operating budget also includes special appropriations to state pension funds to deal with the estimated $11 billion-plus unfunded liability for pensions to current and future public employee retirees.
So far the bill provides a $500 million appropriation to the Public Employee Retirement System, or PERS, for state and municipal workers, and $500 million for the Teacher Retirement Program, or TRS, for teachers and school district workers, Hoffman said.
“These are significant amounts but they are not enough to address the problem,” of the unfunded liability, he said.
These amounts are likely to be increased before adjournment. There is hallway talk of the PRS appropriation being increased to $2 billion and the TRS funding to $1 billion, Hoffman said.
After all the budget work is done, there is still likely to be a healthy surplus in the state treasury, both from the current fiscal year 2012 budget, which ends June 30, and projected for next year.
Some of this is likely to be appropriated to the two state pension funds to deal with unfunded liability and the remainder will likely be deposited in the two state reserve accounts, the Constitutional Budget Reserve and the Statutory Budget Reserve.
These funds already hold about $12 billion in liquid assets, and deposits of fiscal 2012 and 2013 surpluses would add to the reserves.