May 14 Capitol Report

Operating Budget Heads to Senate, Permanent Fund Deal Proposed, UA Regents Confirmed

May 13 was the 115th day of the Legislative Session. Lawmakers and staff worked through the weekend to try and complete their work by the constitutional regular session limit this Wednesday. The Operating Budget has been transmitted to the Senate and big decisions about the PFD and federal funding remain. We are also expecting action on legislation to expand Middle College programs and reauthorize the TVEP program. Your Government Relations Team is actively engaged in the Capitol. UA Interim President Pat Pitney and Vice President Michelle Rizk are also in Juneau working with legislators to advocate on behalf of our university.

Operating Budget Passes House

The House of Representatives has passed the FY22 Operating Budget. During a marathon floor session last Monday, lawmakers worked through dozens of amendments before approving the budget. The slim margin between the House Majority and Republican Minority caucuses made the floor debates lively, and led to both close votes and adoption of numerous minority amendments.

During the debate, Rep. Sarah Vance (R-Homer) introduced an amendment adding budget intent language regarding firearms on university campuses. The amendment failed by a vote of 19 to 20. You can watch the floor debate on the issue here

The Operating Budget has been transmitted to the Senate and referred to the Finance Committee. Things will be moving fast, and we expect the Senate to release its version of the budget as early as this afternoon. The budget will ultimately be finalized by a conference committee to reconcile the differences between the House and Senate versions of the bill.

Parnell Appointed UAA Chancellor

UA Interim President Pat Pitney has announced the appointment of former Alaska Governor Sean Parnell to serve as Chancellor of the University of Alaska Anchorage. Parnell served as Alaska’s tenth Governor from 2009 to 2014. He previously served as Lieutenant Governor and represented Anchorage in the Legislature from 1992 to 2000.

Chancellor Parnell’s deep commitment to higher education is well known across our state. As governor, Parnell sponsored and implemented the Alaska Performance Scholarship program, providing financial aid to graduating Alaska high school students who meet academic criteria. In doing so, he worked with the Legislature to establish a $400 million endowment funding the scholarship, as well as needs-based grants to enhance higher education and job training opportunities in Alaska.

During his tenure as Governor, Parnell oversaw substantial investment in our university. This included construction of the Alaska Airlines Center, new facilities for engineering and health sciences, expansion of our community campuses, and robust funding to address UA deferred maintenance. He also signed legislation helping preserve Alaska Native Languages and advance UA’s educational mission. Welcome Chancellor!

Permanent Fund Compromise Proposed by Governor

Governor Dunleavy has announced a constitutional amendment regarding use and protections of the Alaska Permanent Fund. At a press conference yesterday, the Governor put forward a proposal to place both the PFD and the allowable use of the Permanent Fund for state government into the constitution. Annual dividends and funding state services would come from a 5% structured draw, the amount of which would be calculated through a 5-year average of the Permanent Fund’s value. This endowment model of management is frequently referred to as Percent of Market Value (POMV), and currently happens via Alaska Statute.

The package would also move $17 billion from the Permanent Fund Earnings Reserve Account into the corpus of the fund, making it off-limits for appropriation. The compromise provides for $3 billion from the earnings reserve to be transferred to the Constitutional Budget Reserve, where it can only be accessed by a three-quarters vote of each body of the Legislature. As part of the deal, the Power Cost Equalization program, which provides utility assistance to rural communities, would also be protected in the constitution and its endowments of $1.1 billion moved into the corpus of the Permanent Fund. The Governor’s office released some initial calculations forecasting what these changes could mean for the PFD amount, revenue available for state services, and PCE funding. You can find that information here.

While discussions about use of the Permanent Fund, the dividend, and related issues have circulated in the Capitol for several years – this proposal is a monumental policy call. Approval will require a two-thirds majority vote by each body of the Legislature, and we can expect this proposal to be hotly debated by lawmakers. Those discussions began Wednesday afternoon, with the Senate Judiciary Committee holding a hearing on the amendment (SJR 6), and advancing it to the Senate Finance Committee for further consideration. You can view the hearing here. If enacted by the Legislature, the proposed constitutional amendment would be put to voters at the general election in 2022.

UA Regents Confirmed by Legislature

Last Tuesday the Legislature convened a joint session to consider Governor Dunleavy’s appointments to members of his cabinet and numerous state boards and commissions. The annual occurrence is called for in Article 3, Section 26 of the Constitution of the State of Alaska, which requires confirmation for the heads of state departments and most state boards.

The lengthy session confirmed three new members of the Governor’s cabinet, as well as more than 100 individuals serving on state boards. UA Regents Dale Anderson, Ralph Seekins and Scott Jepsen were approved with overwhelming support. Lawmakers did reject three of the Governor’s nominations to the Board of Fisheries, the Alcoholic Beverage Control Board and the Alaska Mental Health Trust Authority Board of Trustees. The joint session ratified the Governor’s selection of Lucinda Mahoney (UAA ’07 MBA) to serve as Commissioner of the Alaska Department of Revenue. She becomes the fourth UA alumni to serve in Governor Dunleavy’s cabinet. You can watch the brief debate on the UA Board of Regents appointments here.

Did You Know?

Every day matters during the Legislative Session! The length of the Legislature’s regular sessions are set by the Constitution of the State of Alaska. Article II, Section 8 calls for lawmakers to adjourn no later than 120 consecutive calendar days from the date it convenes – unless extended by the Legislature or the Governor in an extended or special session. The specific length of session came under close scrutiny years ago during the 14th Alaska Legislature.

As lawmakers worked late into the evening May 12, 1986 (day 120), it became clear the Legislature would not finish its work on time. Right before proceedings spilled over into the early morning of May 13, both the House and Senate voted to stop the clock and back-dated the final bills as having been passed on May 12. A lawsuit was filed, Alaska Christian Bible Institute v. State of Alaska, seeking to invalidate this legislation as being improperly considered outside of a session of the Legislature (past 120 days). Superior Court Judge Shortell, and later the Alaska Supreme Court, ruled that the constitution stipulates a 120-day regular session from the day lawmakers convene – therefore the first day of session is not counted and the laws enacted were upheld. Thus, today the Alaska Legislature has a 120-day session which lasts for 121 days!