The Alaska Legislature is back in session. Lawmakers in the House and Senate gaveled in this afternoon.
At the Capitol Tuesday, the atmosphere was a bit like the first day of school — lots of smiles and hugs, some what-did-you-do-this-summers. Blue delphinums and yellow roses adorned the dais in the House chamber.
Despite the sunny mood, though, there’s a cloud over this year’s session.
“We know we're facing even tighter revenue constraints than before. We know that demands will continue to rise, as they always have,” said Senate President Gary Stevens, a Kodiak Republican.
Lawmakers have the next four months to act on a multitude of issues facing the state, from energy prices and the possibility of a gas pipeline to the perennial question of how the state will pay its bills.
For years, Alaska has had a structural deficit: the state treasury takes in less money than it pays out. Last year, lawmakers approved a Permanent Fund dividend of just $1,000, an all-time low when adjusted for inflation.
So this year, members of the bipartisan majority leading the state Senate say raising revenue is their top priority. Sen. Lyman Hoffman, a Democrat from Bethel who co-chairs the Senate Finance Committee, said at a news conference Tuesday that even a $1,000 dividend would present a challenge this year with oil prices persistently low.
“One way or another, if we are going to continue to provide the services that people of Alaska have been accustomed to, that is the million dollar question,” he said. “Can we come up with revenue measures this session?”
Lawmakers and Gov. Mike Dunleavy have repeatedly butted heads on the best ways to raise money for state government and, of course, how to spend it.
Last year, Dunleavy vetoed the sole significant revenue-raising bill to reach his desk, saying he wanted lawmakers to make fiscal reforms part of a larger package. The bill would have tweaked the state’s corporate income tax structure to capture more revenue from out-of-state businesses. It wouldn’t have solved the revenue shortfall, though it would have eased the pressure a bit.
The state House and Senate plan to consider overriding that veto Thursday morning after a two-day delay at Dunleavy’s request, but it’s unclear whether lawmakers will be able to muster the necessary supermajority.
Palmer Republican Rep. DeLena Johnson, who leads the all-Republican House minority, says she’d like to see lawmakers consider something more comprehensive.
“I think we need to take up things as a whole, not as just individual items,” Johnson said.
And they may have a chance this year. Dunleavy told reporters in December that he’s planning to roll out a fiscal plan that would serve as a bridge to brighter days ahead. Growth in the Permanent Fund and a potential gas pipeline will eventually ease the pressure, but the coming years could prove a challenge, he said.
“I think the next five years, we're going to have to be real careful, and we're going to have to have in place things that will pay for government,” Dunleavy said at his holiday open house in December.
Dunleavy may provide some clues in his final State of the State address on Thursday.
But it’s not just fiscal issues facing the state this year. The possibility of a natural gas pipeline connecting the North Slope and Southcentral Alaska moving forward will also be a topic of interest, lawmakers say. The developer of the project, which has been a dream for decades and is now a priority for the Trump administration, has said it plans to make a final investment decision early this year.
That’ll be the top issue in the Senate Resources Committee this year, said committee chair Sen. Cathy Giessel, an Anchorage Republican.
“The Resources Committee will be looking at the resource itself and its impact and the project's impact,” she said. “Then, we'll be sending it on to the Finance Committee that will dig even deeper into the finances.”
And more urgently, lawmakers say they’d like to craft a funding package for a variety of infrastructure projects Dunleavy vetoed from last year’s budget. Trade groups recently sounded the alarm and asked lawmakers to quickly approve $70 million in construction funding, saying the vetoes risked as much as $700 million in federally backed construction projects.
House Speaker Bryce Edgmon, a Dillingham independent, said lawmakers plan to dig into the issue promptly.
“I think there's a lot riding on that decision, and I expect us to spend an ample amount of time, right from the opening moments, looking at it closely and figuring out what and how we're going to approach it,” Edgmon said.
And that’s still not all — there’s education, health care, elections, a state pension plan, all priorities for various legislators in the coming session.
What will get done, though, is an open question. Sitka Republican Sen. Bert Stedman says lawmakers likely won’t be able to address everything.
“We’ll have to prioritize that list,” Stedman said. “There's only so much bandwidth in the Legislature.”
They have until May 20 to get it done.
