Lawmakers consider legislation to restore funding cut by governor's vetoes
The House Finance Committee is calling for a do-over with the state’s budget through legislation that could potentially restore funding to the programs affected by Gov. Mike Dunleavy’s vetoes.
HB 2001: What is it and how would it work?
On Monday, the committee discussed House Bill 2001. The legislation would not only restore the funding Dunleavy’s vetoes took away, but would also leave slightly more than $900 for a Permanent Fund dividend.
House leaders say it’s hardly the final word on restoring the more than $450 million in vetoes from the operating and capital budgets or the dividend’s size. They add that the dividend amount can still grow by tapping into a few savings accounts.
With this bill, the committee says it’s adhering to a law passed last year that limits how much the Legislature can draw from the Permanent Fund’s earnings account, which pays for the dividend.
“If you want all your services or if you want the budget that we passed, it’s going to cost this much in your PFD,” said House Finance Co-chair Jennifer Johnston, R-Anchorage. “If you want your full PFD, then these services and more will not be provided. There isn’t an unlimited amount of funding. I think we made it very clear today that if you break that structured draw, you are breaking the law.”
UA's downsizing decisions
The University of Alaska Board of Regents delayed declaring a "financial exigency" that would have allowed administrators to bypass usual procedures for laying off personnel and eliminating programs.
The decision was made largely in part to HB 2001.
"I'm sorry, this never should have happened," Sen. Click Bishop, R-Fairbanks, tearfully told the board. "You met the call of former governors to double down and meet the workforce needs of the state, and that’s what you’ve done. This is nothing short of a travesty."
Dunleavy’s line-item vetoes cut over $130 million from UA’s state-funded operating budget. On Monday, board members heard from lawmakers who support the university system.
“It is an impossible position that the university is in,” Rep. Andy Josephson said. “We advocated with passion and reason, and even with the support of legislative leaders, we came up short.”
With HB 2001 on their minds, the board voted to table any decision until their next meeting on July 30. Though, regents acknowledged the longer they take to make a decision, the more difficult it will be for the university system financially.
UA President Jim Johnsen said he's already spoken to the universities about deciding what programs to cut, buts even if UA follows the governor's advice by eliminating all duplicate programs, the cuts still don't add up.
“We are in this together,” said Johnsen. “Our community advocated for us like never before. By a margin of four-to-one, Alaskans support UA. We have tremendous public support and support from the legislature.“
In a press conference on Monday, Dunleavy said he plans to meet with Johnsen later this week to discuss the issue.
Alaskans speak on vetoes and the PFD
Alaskans came to testify about HB 2001 at the Anchorage Legislative Information Office on Monday. The beginning hours of the session featured testimony about restoring money to the state budget and lowering the amount of the Permanent Fund dividend.
Many of those who testified talked about how the cuts would affect Alaskans across the state. Alan Mitchell, a self employed energy and economics consultant, called the governor’s cuts “heartless.”
“Our state’s fiscal problem is not a crisis of resources,” Mitchell said. “It really is a crisis of leadership.”
Mitchell said his family came to Alaska in 1963 because his father was a university professor. Mitchell was particularly worried about cuts to UA, which he said would lead to higher tuition and a loss of programs.
“In my mind thousands of young Alaskans will choose not to go to college because of that. I think that of those who do go to college many more will go out of state and many more won’t return,” he said.
Natasha Gamache said she was worried about how the cuts would affect people who are homeless.
“We are going to increase homelessness while decreasing the places that can provide those services,” she said. “Where do you expect these people to go? “
Page Hall, who testified that she has a homeless adult son who had been turned down for services, said a full PFD check would go a long way towards getting him permanent shelter.
Hall went on to say that the PFD had helped her family more than government in numerous ways.
“The first permanent fund put running water and a safe wood stove in my home. Another years’ bought a boiler after 12 years of wood heat,” said Hall. “Another, our first computer for my kids schooling, all of my kids by the way, one computer. Another paid for a college semester.”
Hall said she wouldn’t mind paying some kind of taxes if it meant the government could issue a full PFD. Several others at the hearing said they also would pay taxes if it meant some government services could be restored.
Will there be a new tax?
Under Dunleavy's vetoes, homelessness in Anchorage is projected to spike dramatically. The Brother Francis Shelter said it could be forced to reduce its services from 240 beds to about 100.
When asked about the effects his vetoes could have on homeless services Monday, Dunleavy suggested municipalities should pick up the slack, and could consider new revenues to do so.
"There are ways for the City of Anchorage to raise revenues too to deal with items that are city specific," he said.
A reporter reminded Dunleavy he campaigned on a promise of no new taxes, saying, "if municipalities are gonna have to increase property taxes to counter balance that, how does that not translate to a new tax for homeowners?
"It may translate to a new tax at the local level," Dunleavy responded. "In my campaign, we were referring to statewide income taxes. Statewide taxes is what I was referring to. Some of these items and some of these services that were mentioned earlier, some of these municipalities might have to pick them up."
During KTVA's gubernatorial primary debate, Dunleavy said there would be money for government and a full PFD, without taxing Alaskans.
"I will continue to advocate that we do have enough money, under the old calculation, to distribute a full PFD and still have money for government," said the then candidate. "We don't have to tax folks and we don't have to take their permanent fund."
In response to the vetoes, Anchorage Mayor Ethan Berkowitz discussed a possible increase in taxes during an interview last week.
"There's gonna be a whole host of consequences," he said. "The question about property taxes because the state is backing away from bond debt reimbursement could lead to about $210 for an average size home, depending on what the school district does and how the city is able to accommodate it."
The validity of HB 2001
Lawmakers have been far apart on spending and the size of the dividend. Now in their second week of the 30-day special session, they are still at odds over where to meet.
While the House and Senate presiding officers and most majority members chose to convene in Juneau, saying the venue choice rests with the Legislature, many lawmakers have shown up in Wasilla, where Dunleavy called them.
It’s this difference that had committee member Rep. Colleen Sullivan-Leonard, R-Wasilla, questioning the validity of HB 2001.
“The call was the Permanent Fund dividend, not a déjà vu let’s do this all over again with another budget bill,” she said. “We’ve done that. We’ve been there. I can’t support this, Mr. Chairman. Again, I challenge the legality of this.”
The hearing lasted about 45 minutes, then the committee devoted the afternoon and early evening hours toward public testimony. More public testimony will be held in Wasilla on Tuesday and Fairbanks on Wednesday.
When Dunleavy met with reporters, he said believes his team and lawmakers are on track to an agreement.
“I, like the others involved in the discussions, realize that we all have to come together, which means some movement into the middle so that we can meet,” Dunleavy said. “We’re working through some of these issues. in order for there to be an agreement, there has to be some give and take.”
Dunleavy said both sides are in constant talks and all parties will eventually have to make concessions.
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