Capitol Report - March 18, 2022

March 18, 2022

Lawmakers consider budget increases after receiving positive Spring 2022 Revenue Forecast

This week marks the halfway point for the constitutionally mandated 121-day legislative session. During the week lawmakers received an updated picture of the state’s finances and President Pitney spoke with Senate Finance Committee members about the university system’s current operations and our budget requests.

On Tuesday, the Department of Revenue released the much-anticipated Spring 2022 Revenue Forecast. The Revenue Forecast includes the department’s spring forecast of oil price, oil production, and state revenue. Lawmakers traditionally utilize the forecast as a fiscal outlook for the upcoming two years - it helps determine the bottom line lawmakers are willing to consider for the proposed budget. The updated forecast released on Tuesday projects that with updated oil prices, the state’s undesignated funds will climb by $3.6 billion over the next two years - an increase of $1.2 billion in FY22 and $2.4 billion in FY23 from the totals projected in the Fall 2021 Revenue Forecast. The newly released forecast was developed using Alaska North Slope crude (ANS) estimates of $91.68/barrel in FY22 and $101 in FY23, an average price based on the five day window between March 9-13. 

With the revenue forecast in hand, the House Finance Committee is now resuming conversations on the operating budget. With a potential budget surplus, legislators will have to decide how to best manage the excess. Conversations include funding deferred maintenance and critical infrastructure, boosting relief payments and PFDs, or putting dollars into the State’s savings accounts.  Notably, some legislators have shared that they are skeptical of the projected oil prices and are considering oil projections closer to $80/barrel. Even at $80/barrel, the state would still collect $6.7 billion in revenue in FY23 - a $770 million increase from last fall’s projections. The House Finance Committee will start considering amendments to the budget next week.

Positive revenue projections may bode well for the university system. On Monday afternoon, President Pitney presented a University of Alaska overview to the Senate Finance Committee. She reminded lawmakers of the drastic reductions the system has endured in the last decade. She shared the priorities for our universities moving forward and the strategies for meeting those goals. She highlighted the system’s budget requests and discussed the campuses’ deferred maintenance needs. Senators requested that President Pitney provide the committee with a list of the system's top $70 million in deferred maintenance priorities, a $20 million increase over the $50 million list of priorities initially provided. Senators expressed their concerns about the impacts of inflation if the university system does not tackle its deferred maintenance needs now.

Next Week’s Calendar

Monday, March 21

  • 1:30 p.m. - House Finance: House Bill 281: “Appropriations: Operating budget/loans/funds” & House Bill 282: “Appropriations: Mental Health Budget”
  • 3:30 p.m. - Senate Resources: Senate Bill 177: “Microreactors”

Tuesday, March 22

  • 9:00 a.m. - House Finance: House Bill 281: “Appropriations: Operating budget/loans/funds” & House Bill 282: “Appropriations: Mental Health Budget”
  • 1:30 p.m. - House Finance: House Bill 281: “Appropriations: Operating budget/loans/funds” & House Bill 282: “Appropriations: Mental Health Budget”

Wednesday, March 23

  • 9:00 a.m. - House Finance: House Bill 281: “Appropriations: Operating budget/loans/funds” & House Bill 282: “Appropriations: Mental Health Budget”
  • 9:00 a.m. - Senate Finance: Senate Bill 94: “Education & Supplemental Loan Program”
  • 9:00 a.m. - Senate Education: Senate Bill 225: “Teacher Registered Apprentice Programs”
  • 1:30 p.m. - House Finance: House Bill 281: “Appropriations: Operating budget/loans/funds” & House Bill 282: “Appropriations: Mental Health Budget”
  • 1:30 p.m. - Senate Labor & Commerce: Senate Bill 234: “Broadband: Office, Grants, Parity”

Thursday, March 24

  • 9:00 a.m. - House Finance: House Bill 281: “Appropriations: Operating budget/loans/funds”, House Bill 282: “Appropriations: Mental Health Budget” & House Bill 229: “Alaska Higher Education Investment Fund”
  • 1:30 p.m. - House Finance: House Bill 281: “Appropriations: Operating budget/loans/funds”, House Bill 282: “Appropriations: Mental Health Budget” & House Bill 363: “Broadband: Office, Grants, Parity”

Friday, March 25

  • 9:00 a.m. - House Finance: House Bill 281: “Appropriations: Operating budget/loans/funds” & House Bill 282: “Appropriations: Mental Health Budget”
  • 1:30 p.m. -  House Finance:  House Bill 281: “Appropriations: Operating budget/loans/funds”, House Bill 282: “Appropriations: Mental Health Budget” & House Bill 283 “Appropriations: Capital, Reappropriations, Supplemental” 
  • 1:30 p.m. -  Senate Labor & Commerce: Senate Bill 232: “Intellectual Property of Employees” & House Bill 133: “Alaska Education Savings Programs/eligibility”

Saturday, March 26

11:00 a.m. - House Finance: House Bill 281: “Appropriations: Operating budget/loans/funds” & House Bill 282: “Appropriations: Mental Health Budget”

 

Federal Updates

In this edition of the Capitol Report, University of Alaska Federal Relations Director John Latini provides a brief overview of legislative happenings in Washington D.C.

Federal FY22 Appropriations Process Completed

Earlier this month, Congress passed and President Biden signed into law H.R. 2471, the Consolidated Appropriations Act, 2022. This $1.5 trillion consolidated legislation includes all 12 appropriations bills that fund the federal government. With passage and the President’s signature, this completes the FY22 federal budget and appropriations process, despite being well into the federal fiscal year already. A general summary of the consolidated measure can be found here and more specific information can be found here. The UA Office of Government Relations is working on a comprehensive summary of the Consolidated Appropriations Act which will be distributed at a later date.

For the first time in more than a dozen years, Congress included Congressionally Directed Spending (CDS), commonly referred to as earmarks, in the Consolidated Appropriations Act. UA secured nine earmarks for a total of approximately $20 million. UAF received five earmarks, UAA received three earmarks and UAS received one earmark. These federal funds will enable UA to conduct research on counter unmanned aerial system technologies to support law enforcement operations and preventing military suicides in remote areas including Alaska, and to expand the Alaska Native Science & Engineering Program (ANSEP). Senator Lisa Murkowski and Congressman Don Young were particularly supportive of UA’s earmark and general appropriations requests in FY22. Senator Dan Sullivan also worked to support UA by helping to secure funding for the Ted Stevens Center for Arctic Security Studies.

Federal FY23 Budget & Appropriations Process Outlook

Congress is likely to begin working on the FY23 budget and appropriations process right away. We expect the Congressional Appropriations Committees to release the rules governing the earmark and general appropriations request process for FY23 in the next week or two. The UA Office of Government Relations has received all UA’s earmark and appropriations priorities for FY23 and is working diligently to submit requests to the Alaska Congressional Delegation.

We expect the Biden Administration to release its FY23 budget request sometime between mid-April and mid-May but timing remains very fluid. Once the budget request is released, the UA Government Relations team will provide a robust summary of key priorities of interest to UA.

In the coming months, Congress will hold hearings and markup some of the FY23 appropriations bill that fund the federal government. However, given that Congress has not passed an appropriations bill on time in more than 20 years and it is an election year, we can expect a Continuing Resolution (CR) that will fund federal agencies at current FY22 levels until late November or December. The outcome of the midterm elections will be a key factor in determining when the FY23 budget and appropriations process could be completed.