Capitol Report January 19: The Legislature Returns

January 26, 2024

This week, lawmakers returned to Juneau to kick off the second half of the 33rd legislative session. During the session, legislators will review legislation introduced last spring and a host of new bills introduced this year. They will also review the FY25 state operating and capital budgets and the governor’s boards and commission appointments.

Budget

In November, the University of Alaska Board of Regents (BOR) met and approved a $337.7 million operating budget request for FY25. The request includes $14.7 million for compensation increases, $8.5 million for fixed cost increases, and $6 million for state and Arctic Leadership, and student support services. Including federal funds and other sources, the UA Board of Regent’s total proposed FY25 operating budget is $921.3 million.

In addition to the operating budget, regents approved one-time capital requests of $20 million for UAF to reach R1 research status, $6 million for the UAA health workforce expansion programs, and $7 million to expand the UAS mariculture program. The capital request also includes $10 million to continue economic development investment in the UAF Drone Program, and $2.2 million for the carbon capture and sequestration project.

In December, Governor Dunleavy introduced his proposed FY25 state operating budget. The proposed budget includes $319.1 million in unrestricted general fund (UGF) dollars for the university system, including $6.1 million towards UA’s requested 2.5% compensation increases and $4.5 million for fixed cost increases.

The governor’s proposed FY25 capital budget includes $10 million for UAF’s R1 research status efforts, $5 million for the UAF drone program, $2.2 million for the carbon capture and sequestration project, and $1 million for energy data storage.

The next step in the budget process is for the Legislature to review the governor’s proposed budget and deep dive into individual government agencies' requests. Finance subcommittees will review agency operations and develop revised budget proposals. Simultaneously, the Governor will assemble an amended request, which will be published in February.

Legislative Progress

The Legislature reconvened on Tuesday, January 16. Among the first orders of business was an effort to attempt to override the Governor’s FY24 vetoes. However, the action failed. Lawmakers will now review the Governor’s proposed FY25 budget and make their own suggestions.

In addition to the university system's annual operating budget and the one-time capital requests, UA is pursuing a legislative strategy for consistent annual state funding for its deferred maintenance backlog. This session, Representative Will Stapp (R-Fairbanks) introduced House Bill 236, creating a "University of Alaska Major Maintenance and Modernization Fund.” The proposed legislation could allocate $35 million annually to an approved list of deferred maintenance projects. The university has been working in concert with the Governor’s Office and Legislative leadership on the particulars of the legislation. The fund would create much-needed stability for the university system and allow for additional bonding for major maintenance projects.

On top of reviewing the state operating and capital budgets, the Legislature is also responsible for confirming the Governor’s nominees to various state boards and commissions. The Governor appoints nominees to the University of Alaska Board of Regents, who are subject to the same Legislative confirmation process. This session the Legislature will review two regent nominations: Seth Church of Fairbanks and Stephen Colligan of Wasilla. Both regent-appointees will meet with individual lawmakers and present their background to the House and Senate Education Committees before being subject to a joint confirmation vote in the spring.

Other university priorities:

Extending the Education Tax Credits program: The Education Tax Credit program, which has been in effect since 1987, allows businesses to write off contributions to qualified Alaskan educational institutions. The current tax credit sunsets January 1, 2025. Two pieces of legislation were introduced in 2023 to continue the program: Sen. Jesse Bjorkman (R-Nikiski) introduced Senate Bill 120 to extend the program, while Representative Justin Ruffridge (R-Soldotna) sponsored House Bill 144 to repeal the sunset entirely. Notably, HB 144 was rolled into Senate Bill 140, an education omnibus bill, in the House Rules Committee this Wednesday. SB 140 also contains provisions for funding internet in schools, increasing the base student allocation (BSA), and adding safeguards for students who are deaf or hard of hearing. Public testimony is scheduled for this bill on Saturday, January 20, at 10:00 a.m. The university supports the education tax credit language in SB140 and takes no position on the remainder of the bill.
Upgrading the Alaska Performance Scholarship: In 2010, the Alaska Legislature passed legislation that created the Alaska Performance Scholarship (APS). The scholarship aims to retain the brightest Alaska students here in the state. However, a 2023 APS Outcomes Report indicated that student eligibility has dramatically decreased since inception, and only 22% of eligible students utilize the scholarship. Borrowing from recommendations in the report, the Legislature has introduced multiple bills to address expanding the scholarship’s eligibility. House Bill 148, sponsored by the House Education Committee, provides for earlier scholarship award notice, allows for career and technical education credits to be applied toward eligibility, removes the standardized testing requirements, and increases student award level. Senator Dunbar is sponsoring the Senate’s “companion bill,” Senate Bill 56, which is identical to the House version. Both bills have been referred to the Finance committees of their respective bodies.
Reauthorizing the Technical Vocational Education Program (TVEP): In 2000, the Legislature established the Technical Vocational Education Program (TVEP), designating a portion of the Unemployment Insurance receipts for career and technical education. As the State’s largest workforce provider, the University of Alaska has been a major recipient of TVEP funding since the program’s inception. TVEP is currently slated to sunset on June 30, 2024. Representative Ashley Carrik (D-Fairbanks) introduced House Bill 55 to reauthorize the TVEP program.

To read the rest of this week's Capitol Report, visit Capitol Report 2024