With the legislative session well into its third month, things are starting to get more intense. The budget is nearing its way to the House floor. The drama surrounding the controversial pay increase came to a head in the Capitol on Monday. The Spring Revenue Forecast came out this week, showing sharply declining revenues with lower oil prices. A constitutional amendment for term limits was introduced in the House by a bipartisan group of freshman representatives. A bill overhauling the state’s oil tax system was introduced by the Senate Rules Committee. And a bill introduced by Governor Mike Dunleavy (R – Alaska) on sex trafficking was fiercely criticized by sex workers during a House Judiciary Committee hearing.

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House budget looks a lot like Dunleavy’s – minus statutory dividend

The following is an excerpt from this week’s edition of the Alaska Political Report. You can click here for more information about the Political Report. A subscription is $1,299/year per organization. Discounted pricing is available for non-profits and government entities. Our coverage of the budget starts with the governor’s proposed budget in mid-December and we track everything in detail through the entire process. If you have any questions or would like to subscribe, please email jeff@akpoliticalreport.com.

The Alaska House, under its new, mostly-Republican majority, continues to advance its budget forward, and it seems increasingly clear that members are focused on big-picture items like schools spending and the Permanent Fund dividend and are unlikely to find places to trim spending on other state programs.

In the latest version of the House’s proposed budget — a substitute unveiled by the finance committee this week — leaders are continuing to shy away from cuts to state agencies, with a couple of exceptions. One is that the committee left out a proposal by Republican Gov. Mike Dunleavy to spend $2.6 million on extending “postpartum” Medicaid coverage for new parents, from two months to 12 months. Expect this proposal to remain in the mix, however — it could be reinserted back into the budget during the House’s amendment process, or in the Senate.

Other than that, the current House budget proposal — which, again, may evolve through the finance committee and floor amendment process — is almost identical to the governor’s when it comes to state agencies.

But the House majority has now made one big break from Dunleavy: In its committee substitute this week, it’s proposing a 50-50 dividend, rather than the governor’s statutory proposal. That means that the majority is sticking to the endowment-like approach adopted by the Legislature and proposing to spend half of the state’s revenue this year on dividends — an amount that equates to some $2,800 per person.

Dunleavy’s proposal would spend $3,950, or $2.5 billion in total, on dividends, setting the number based on a state law that pegs the size of the checks to the Permanent Fund’s investment returns. The current House proposal would set aside $1.8 billion for dividends.

Separately, the House is advancing legislation that would add $175 million to schools spending for the upcoming year — an 11%, or $680-a-student, increase to the current formula that sets aside $5,960 per child.

Those proposals underscore the tensions between the different categories of spending in the state budget — a problem that will likely continue to bedevil lawmakers as they move through the process. Higher spending on dividends leaves less money available for education — and increased spending in either of those areas will further drain Alaska’s savings accounts.

We’ll continue tracking the budget process — stay tuned.

Pay Raise Drama 

After the Compensation Commission amended their original report to also give legislators a pay raise, drama ensued in the Legislature. While a few members of the Senate expressed disapproval with the increase and the process, Senate leadership has made it clear they are good with the raises for themselves, the governor, lieutenant governor, and department heads. But the feelings are more mixed in the House. Speaker Cathy Tilton (R – Wasilla) sent a letter to the Senate inviting them to a joint session to take up a veto override of the bill Dunleavy vetoed that rejected the pay increases in the original report. But the Senate declined.

During Monday’s floor session, several Republicans in the House majority expressed an interest for a joint session, worried about how the pay raise would look. An attempt to convene a joint session was tabled by a vote of 22-17. Take a look at the yes votes. The three Bush Caucus members {Representative Josiah Patkotak (I – Utqiagvik) was absent but likely would have voted yes} along with three Republican members broke ranks and voted yes with the House minority. Watch this group carefully. This very well may end up being a new majority if things fall apart.

Other Happenings 

The Spring Revenue Forecast came out this week, and its not pretty. With revenues projected to be down due to falling oil prices, and little savings as a cushion, things are going to get very contentious. Even with the House Finance Committee going from a full dividend (approximately $3,900)  to a 50/50 amount (approximately $2,600), there is still a deficit. That is before any new money for education or retirement is added. And forget about any meaningful capital budget. The Senate Finance Committee is talking about a 75/25 dividend (approximately $1,300), but even that would cost more than $800 million. The one clear takeaway this year is the full dividend is dead.

An interesting group of nine freshman representatives introduced a constitutional amendment for term limits. The lifetime limits are six for the House (12 years) and three for the Senate (12 years). But lots of people don’t like it, especially in the Senate. For a constitutional amendment to go the voters, it must pass each body with a two-thirds vote (27 House, 14 Senate). The other thing people are concerned about is opening up Alaska’s Constitution. The amendment process could get loose!

Senator Bill Wielechowski (D – Anchorage), the Senate Rules Chair, introduced a bill this week that would change many elements of the state’s oil and gas tax system. It basically does three things: changes the law so Hilcorp would pay a corporate income tax (they are an S corporation and the the law does not currently tax S corporations), reduce the per-barrel credit from $8/barrel to $5/barrel, and stop allowing capital spending on new projects to be deducted from the production tax from fields that are already producing. The bill was only referred to the Senate Finance Committee, bypassing the Senate Resources Committee. Look for this to become a big fight between legislators, with the industry also weighing in.

Public testimony on Governor Dunleavy’s sex trafficking bill was heard in the House Judiciary Committee on Friday (3/26/2023). Many people are concerned with the language in the bill about prostitution. Representative Sarah Vance (R – Homer), who chairs the committee, said she is working on a committee substitute to deal with that. But many testifiers either didn’t get the message or didn’t care. One woman talked about “your war against whores!” Several women who testified against the bill said identified themselves as sex workers. One said, “I enjoy sex and I have some difficulties that prevent me from holding a quote unquote job.” A strip club owner also testified against the bill. It will be interesting to see how this bill ends up.

This Week’s Loose Unit 

This week’s designee was clearly identified on Thursday afternoon. This week’s Loose Unit is Representative Jamie Allard (R – Eagle River). On Thursday afternoon I got a tip that something very loose was happening at Allard’s office on the fourth floor of the Capitol. The info was vague – Allard had apparently called security about some union member in her office. I went right to the Capitol, but I had missed the drama. Several people nearby said there was yelling, but were not sure what happened. Based Jamie Allard’s documented past behavior, whenever I hear about her being involved in an altercation I assume she was either the instigator or at fault. And that is what turned out to be the case here.

Eventually, I found out who the person in question was. Her name is Greta Wade, a nurse and healthcare representative with the Laborers Local 341. Wade was in Juneau meeting with legislators. She told me she had a meeting setup with Allard that was moved twice. Wade said many of her members live in Allard’s district, and she wanted to talk to her about their issues. When Wade went in for the third time, she said Allard saw the Laborers 341 logo on her jacket and said, “I don’t meet with laborers!” Maximum loose. Keep in mind Wade said who she was and who she was with when she setup the meeting. Wade was taken aback by the whole thing. She must not have been aware of Allard’s visceral hatred of Senator Kelly Merrick (R – Eagle River), whose husband Joey Merrick runs the Laborers 341. Allard was clearly triggered when she saw the logo. A legislator setting up a meeting with a person and then kicking said person out of their office is classic Loose Unit behavior.

After leaving the office, Wade said she went back in to get the card of Allard’s staffer who wasted her time by rescheduling the meeting twice. Allard got further triggered, and went down to the second floor to get security. Allard should have stopped by the third floor and looked on the wall. She would have seen Wade’s grandfather Hugh Wade, Alaska’s first lieutenant governor (then referred to as secretary of state). Talk about loose behavior. When security arrived and heard what happened from Wade, they apparently saw no need to be there. Allard also seemed to have gone to Suzanne Downing for damage control. Downing wrote a ridiculous account of what happened to try and give Allard cover. Downing claimed to have seen security footage, which she one hundred percent did not. Wade was cool enough to come on my podcast to tell me what happened. You can listen to that here, or anywhere you listen to podcasts.

If you have a nomination for this week’s Loose Unit, or if you have any political news, stories or gossip (or any old pics of politicians or public officials) please email me at jeff@alaskalandmine.com.