June 3, 2016

Budgets Passed

On Tuesday, the legislature passed a compromise budget package funded by the Constitutional Budget Reserve as is needed. This budget compromise is far from perfect, as are many compromises, but it allows us to keep Alaska open for business so that the fishing, tourism and business communities can continue to operate during the summer. The budget compromise ensures that we don’t face a crippling government shut down which would further damage the State of Alaska’s credit rating and hurt the thousands of Alaskan state employees and those who count on their essential efforts. In this special session update, I will describe these budgets generally as well as what is next in the special session.

Operating Budget

This year’s Operating Budget is 7% lower than last year’s while funding critical state services that keep our state open for business and protect children, elders and the disabled. Some of the items that were negotiated back into the budget were:

• a return of the $50 increase in the Base Student Allocation (BSA) for our schools;
• a smaller decrease in funding for the University which is an economic driver for our community;
• funding for early childhood education (including Best Beginnings and Parents as Teachers) which studies show will lead to less money spent on special education and other costs in the long-run;
• programs for seniors and families including Pioneer Homes and childcare benefits, and foster care; and
• public safety efforts including state troopers, domestic violence prevention and sexual assault offender tracking.

These programs will help keep Alaskans safe and meet the basic needs of some of our most vulnerable Alaskan children and seniors.

Capital Budget

This is Alaska’s smallest capital budget in more than a decade with just $132M in general fund spending, but it could have been even smaller. I co-sponsored several amendments to the capital budget which would have further shrunk the Capital Budget including one to remove unnecessary mega projects such as Ambler and Juneau Access Roads, Susitna-Watana Hydro-Dam, and the U-Med Northern Access road, and another amendment to reallocate funds from the U-Med Northern Access Road to the unfinished Engineering Building at UAF. These amendments failed to pass, but I still supported the Capital Budget because it makes it possible for Alaska to receive $1.3 billion in funding from the Federal Government which will translate to about 1,300 Alaska jobs.

Fiscal plan

We have been fortunate that over the past 30 years oil revenue has paid for around 90% of our state general fund budget. At current oil prices, oil revenue is only about 20% of our budget so we have a huge budget gap and the 10-year revenue forecasts don’t predict oil revenues will be able to entirely fund our budget again.

This week we voted to use the Constitutional Budget Reserve account to fund the balance of the budget.  It has about $8B in it and we may need to draw as much as $3.5B to balance this year’s budget if we don’t come up with other sources of revenue.  The Governor has asked the legislature to consider a broad range of revenue sources to help fill that budget gap on a permanent basis.   The Governor has been courageous in advancing his comprehensive fiscal plan and I want a sustainable fiscal plan as much as anyone. However, I cannot support new revenue measures while we continue to accrue about $775 million—or about $1,000 per every Alaskan—in oil tax credits annually. You have made it clear to me in your constituent survey responses that we must have oil tax credit reform prior to enacting new taxes on other industries and individual Alaskans.

Good News for Alaska’s Kids

On a happier news front, this was a good week for Alaska’s foster children with the passage of House Bills 27 and 200. Alaska has the second highest per capita number of foster youth in the country making it essential that we remove barriers to finding permanent placements for children. Both of these bills do just that.

HB 27, which I was proud to co-sponsor, emphasizes the state’s responsibility for finding permanent placements for Alaska’s foster children and prioritizes placing them with relatives when possible. The bill would also make it a priority for children to stay in the same school through the end of the term when moving from one placement setting to another in the same municipality.

HB 200, sponsored by Governor Walker, streamlines legal proceedings involving children in Alaska’s foster care system. The “one judge, one family” model will allow for more timely judicial decisions, helping foster children quickly return home or exit foster care through guardianship or adoption.

These bills are both excellent ways to do a better job for Alaska's children and are going to the Governor’s desk for his signature. You can learn more about them here.

As always, don’t hesitate to email me, or call me at 269-0123, if you have any questions, concerns or ideas for me. I am here in Juneau working for and representing you!

Best,

Ivy Spohnholz