Capitol Report

By Chris Christensen, Associate Vice President, State Relations

January 20, 2016

The Second Session of the 29th Alaska State Legislature is underway in Juneau, and the 90-day session will be a challenging one. My name is Chris Christensen, and I am the Associate Vice President for State Relations. This will be the 33rd session I have spent working with the legislature in Juneau, and my fifth year representing the university. I know the legislature and its members well, but each year brings new challenges and unexpected complications. 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 four 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

Our most important task each session is advocating for the university’s operating and capital budgets. That job has been made more difficult over the last few years by the dramatic reduction in oil revenues received by the state, the result of both declining production and a collapse in prices. In FY13, the state took in $6.3 billion in unrestricted revenues. By FY15, unrestricted revenues had declined to $2.3 billion. During FY16, the current fiscal year, it is estimated that the state will receive $1.8 billion in unrestricted revenues. In FY 17, unrestricted revenues are projected to be about $2 billion. This decline means that the state will run an estimated $3.6 billion deficit during the current fiscal year. When the legislature puts together the FY17 budgets this session, it will attempt to lower next year’s deficit by reducing state spending.

Governor Walker announced his FY17 operating and capital budgets on December 15. Those budgets propose that the state spend 3.1 percent less in unrestricted general fund (UGF) dollars than it is spending during the current fiscal year.

For the university’s operating budget, the governor is proposing a $25.6 million UGF decrease from the FY16 base budget, and a $9.8 million UGF increase for certain salary and benefit adjustments for employees. The net decrease from FY16 is $15.8 million, or 4.5 percent.

In his capital budget, Governor Walker is proposing that UA receive $10 million UGF for deferred maintenance. Unfortunately, there is no funding in his budget for the balance needed to complete construction of the new UAF engineering building ($34.8 million). In addition to the capital budget, the governor will be proposing a general obligation bond package to fund additional capital expenses. If enacted by the legislature, the bond package will be put on the ballot for voter approval in November. We don’t know at this time what projects will be included by the governor.

Governor Walker is also proposing the New Sustainable Alaska Plan, his blueprint for state government finances in the future. The plan proposes additional cuts to state spending; key investments in things like a gas pipeline and education; adjustments to the way that revenues are deposited into the various state accounts to reduce volatility; reductions to the size of the Permanent Fund Dividend; and the implementation of new taxes and increases in certain existing taxes. It is intended that the amount of cuts and new revenues generated by the plan would largely close the existing gap between revenues and spending.

At this point, there appears to be a large divide between the governor and the legislative majorities on the specifics of the New Sustainable Alaska Plan, and on how much more the operating budget should be cut this session. It’s an election year, and that must always be factored into the process. It will be an interesting session to watch.

The House and Senate Finance Committees are already starting to work on the operating budget. University President Jim Johnsen has been asked to appear before the House Finance Committee on Monday, February 8 between 1:30 –3:30 p.m. to give committee members an overview on UA and its operating budget. We will keep you updated as budget hearings are added to the schedule.

Here are some reference guides for your information and use. As the legislature updates them in the next week or two, we will post them on the State Relations webpage for easy access:

A roster of legislative members with contact information:

Legislators by district:

Committee assignments for the 29th legislature:

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

Thank you for supporting the University of Alaska!

For more information, contact Associate Vice President Chris Christensen at cschristenseniii@alaska.edu or visit www.alaska.edu/state .

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