Capitol Report

By Chris Christensen, Associate Vice President, State Relations

January 23, 2015

Last night, Governor Bill Walker gave his first State of the Budget speech to the Alaska Legislature. Governor Walker said that he was submitting new FY16 operating and capital budgets to the legislature, to replace those that were prepared by the last administration when oil prices were higher. He stated that the new operating budget would cut state spending by about 5 percent, with all agencies receiving general fund budget reductions. Cuts are even proposed for popular programs like K-12 funding and municipal revenue sharing. Walker also said that unless oil prices rebound quickly, the state will need to start discussing new taxes next year, because the savings accounts that cover deficits will be empty in three years.

In the governor’s proposed operating budget, UA receives a smaller cut than most executive departments. The average non-formula agency cut from the current fiscal year (FY15) is 6.5 percent; UA’s proposed cut from FY15 is 2.4 percent. This number does not include some increased costs that UA will be expected to cover (such as pay raises, new building operating costs, and utilities increases), which will make the effective budget reduction much higher than 2.4 percent.

In the governor’s proposed capital budget, UA has two items: $8 million in unrestricted general funds to continue construction of the UAF engineering building project, and $8 million in unrestricted general funds for deferred maintenance. There was nothing for UA in the previous version of the capital budget, so this is good news.

These new budgets will now be considered by the legislature. It is expected to make additional cuts to the budgets before they are voted on in April.

For more information, contact Associate Vice President Chris Christensen at cschristenseniii@alaska.edu

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January 21, 2015

The First Session of the 29th Alaska State Legislature is underway in Juneau. My name is Chris Christensen, and I am the Associate Vice President for State Relations. This will be the 32^nd session I have spent working with the legislature in Juneau, and the fourth year I have represented the university. I know the legislature and its members well, but each year brings new challenges and this one will be no exception. One thing I have learned in my time here is that there are many passionate advocates for the university, people who are willing to devote their time and energy to advancing its interests. You made my first three sessions with UA much easier, and I look forward to working with all of you again this year.

Over the course of the legislative session, you will be receiving this newsletter periodically to keep you up to date on what is happening in Juneau. When there are important hearings or opportunities to actively engage in advocacy for the university, we will also post it on the UA State Relations webpage: www.alaska.edu/state

The steep decline in oil revenues this year, coupled with the long-term reduction in oil production, has created a budget situation that will probably result in unprecedented cuts to the state budget over the next few years. When the legislature left Juneau last April, it anticipated that the budget for the current year, FY15, would result in a $1.4 billion deficit. In fact, the deficit is approaching $4 billion and collapsing oil prices keep pushing it higher. Think of the $4 billion deficit this way: the state’s FY15 general fund budget is approximately $6 billion. Two-thirds of the revenues needed to fund that level of spending are simply not there.

In recent years, the legislature has covered deficits by withdrawing money from savings. However, continuing deficits of the size we are running this year will drain the state’s savings accounts in less than three years. The legislature can’t reduce the size of future deficits by raising the price of oil, but it can reduce those deficits by cutting spending. That is what it will do this session. The question is, how much?

Governor Walker plans to introduce new state operating and capital budgets for FY16 in the next few weeks. These budgets will replace the budgets that former Governor Parnell prepared before he left office; much of the work on those budgets was done when oil prices were expected to be much higher and the deficit much smaller. It is anticipated that the new operating budget will contain cuts for all state agencies of five percent to eight percent. It is also anticipated that there will be no capital money for any projects that do not have a federal match, such as road projects.

We will update you when we learn how much Governor Walker proposes for UA’s budget in FY16. We will also provide you with more information on the best way to approach the advocacy process during this challenging session.

While waiting for the latest word from the governor, the House and Senate Finance Committees are already starting to work on the operating budget. University President Pat Gamble has been asked to appear before the House Finance Committee on Thursday, January 29 between 1:30 – 3:30 p.m. to give committee members an overview on UA and its operating budget. He will give the same presentation to the Senate Finance Committee on Wednesday, February 11 between 9:00 – 11:00 a.m. President Gamble will also appear before the House’s University Budget Subcommittee on Monday, February 2 at 5:00 p.m.� We will keep you updated as budget hearings are added to the schedule.

Here are links to some handy reference guides for your information and use. We will also post them on the State Relations webpage for easy access:

A roster of legislative members with contact information:
http://akleg.gov/docs/pdf/whoswho2015.pdf

Legislators by district:
http://akleg.gov/docs/pdf/DISTRICTS.pdf

Committee assignments for the 29th legislature:
http://www.akleg.gov/basis/committee/#tabCom4

BASIS – A great reference tool to locate specific legislation, bill sponsors, legislative actions, and a host of other reference materials:

http://www.akleg.gov/basis/Home/BillsandLaws

Thank you for supporting the University of Alaska!

For more information, contact Associate Vice President Chris Christensen at cschristenseniii@alaska.edu