Legislative update with Sen. Gary Stevens: the state budget
With just about four weeks to go in the Alaska Legislature’s session this spring, lawmakers are working hard to figure out solutions to some of the state’s biggest issues, like what to do about funding for education and the retirement system.
From now until the session’s close, KBBI is checking in with Republican Sen. Gary Stevens, who represents District C, which includes the southern Kenai Peninsula, Kodiak and Seward, for the latest in the session.
On Thursday, KBBI’s Hope McKenney spoke with Senate President Stevens about what he’d like to see out of the state’s budget and how Alaskans can participate in the budget process, as well as which big Homer project he thinks likely won’t get state funding this year.
To give public testimony on the state budget, you can email email@example.com, call (844) 586-9085, or you can visit the Legislative Information Office — or LIO — on West Pioneer Avenue in Homer, on Main Street Loop in Kenai, or on Railway Avenue in Seward.
HOPE MCKENNEY: What are the big items on the agenda this and next week for you all there in Juneau?
SEN. GARY STEVENS: Well, the biggest items, of course, are the budget issues: the operating budget and the capital budget. And right now the operating budget, of course, it starts with the House and comes to the Senate. So the House is supposedly going to have a vote either today or Monday on finalizing the operating budget, which is really big, really important. So that should take place soon and I'm anxious to get it over here so we can deal with it and make changes to it.
The House put in $174 million for education, one time, outside the BSA, I'd much prefer to see that money within the base student amount -- it makes more sense that way. Outside, you can't count on it in the future. So that's where the House is right now. And so they've got $174 million dollars, one time education fund and the Senate right now, we are scheduling the operating budget testimony starting on Thursday, April 20. And it's important for folks to know that when it gets to the Senate, that operating budget will will have public testimony, so folks need to realize they can email us, they can call in from their own phone, or they can testify at the LIO in our community. So I hope folks will turn out and let us know what they think about that operating budget.
The capital budget is something that we are in charge of, we started and sent it over to the House. But the reality is that with the financial straits we're in, the operating capital budget is going to be undoubtably less than last year. We have a spring forecast on oil, and that doesn't look good at all. The spring forecast shows a decrease of oil revenues to the state of $246 million in fiscal year 2023. And then of another $679 million less in fiscal year 2024. So oil, even though we hear that oil may go up, when it goes up, it goes down. But the forecasts are not good right now and show that we have a lot less revenue than we had hoped to have. I did speak with the Homer Harbormaster -- the folks in Homer who I know really want some funds on the [Homer Harbor Expansion Project]. It's not going to happen this year, I'm afraid. I had to break that bad news to them. But, you know, so this year is not the opportunity for anybody to get much money in our capital budget other than federal funds that we are matching. So long answer your question, but that's where we are.
MCKENNEY: Yeah, so you touched on this, but there is a lot of discussion of Alaska's structural deficit, with not enough money coming in to balance funding public services. And the current revenue forecast recently released had hundreds of millions of dollars less in revenue for the next year. So what are your thoughts, if you could elaborate, on the best way the legislature can address this and balance the budget at this point?
STEVENS: Well, that's a really good question and the answer to it is gonna make a lot of people very unhappy. We have a bill called 75/25, which means that 25% of the POMV would be used for dividends and 75% would be used for running government. That's where we are right now. That could change. The governor wants the 50/50, which would be a few-thousand-sum-dollar permanent fund dividend. At 75/25, it'd be around $1,400. And the reality is, we simply can't do everything. If we wind up with a large permanent fund dividend, like around $3,000 or so, then there's simply no additional funds for education or for much anything else. If we do 25%, you know, people would of around 1400 or 13 $1,400, then there is money to do additional funds for education and the other things that people want. So that's where we are, you know, it's where we've always been. You know, you can't do everything and folks need to realize that.
MCKENNEY: So you mentioned that the Homer Harbor Expansion Project probably will not be getting money from the state this year, but possibly next year. What are some of the other big projects that are kind of coming across your desk that you're having to say no to?
STEVENS: Oh, it was just lots of them. I mean, everyone has lots of needs. We've not had an adequate capital budget for several years. So we're really behind -- all sorts of projects all around the state are needed. So that's just where we are right now. There have been a lot of suggestions. The House on Ways and Means Committee has come up with this sort of bizarre plan of giving credits to corporations, and at the same time having a sales tax on the citizens of Alaska. That just does not make good sense to me. Why would you say, we're going to add to your sales tax, say 2% on your milk that you buy in Bethel. It's gonna be very expensive for folks the additional 2%. And the other issue out there is that the cities and boroughs already have a sales tax. So we haven't heard from municipalities yet, but I know we will, you know, if that ever makes headway. That's in the House in the Ways and Means Committee. So we'll see what happens. I would just guess it doesn't make it across the House floor. But it would be very hard to find support in the Senate, I think, for a sales tax. The simple solution is this 75/25, which gives people a reasonable dividend and then pays for government services. The governor is not behind that. And so we'll see. I mean, he has not come up with his own plan to tell us oh, if you want a $3,000 PFD, how are you going to pay for it? And the governor really has not made any sound suggestions on that.
MCKENNEY: So you said the Senate Finance Committee is holding public testimony on the operational and capital budgets, probably on Thursday and Friday? Why is it important that people participate in that?
STEVENS: Oh, it's good for people to know what's going on. It's good for them to let us know what they think. And so, you know, as I said, you can email us, you can telephone us, you can go to the LIO, that is important. We do need that public input. We need to know if we're making decisions here that people are going to find reasonable and acceptable.
MCKENNEY: Okay, so like you said, there's just about four more weeks in this legislative session. How are you feeling about how things are going? The progress you all made?
STEVENS: Well, I'm feeling really good about the Senate organization. We have held together, we have stuck to our guns, what we want to do. The two things we organized on is adequately funding education, and beginning to work on a pension plan for our teachers and firemen and policemen and state employees. I do have to say that that pension plan is probably not going to pass this year. But this is a two-year session. It's a very complex issue. We want to make sure we don't put ourselves in jeopardy, put the state in jeopardy and provide a pension plan that simply is unaffordable. So that's what we're working on. We're trying to find the resolution to that. That will probably take well into next year before we resolve that. Hopefully, we can resolve it at that time. The issue of education funding, you know, we're sort of arguing about that right now. I'm not necessarily sure where it's going to truly wind up. The Education Committee here in the Senate has come up with $1,000 BSA increase -- end of the BSA, so the end of the formula for 2024 and increasing that by $348 in 2025. And then an inflationary figure.
So the Senate's plan from the Education Committee is now in Senate Finance. I think that'll be changed somewhat. I think that'll be reduced. It won't be $1,000 figure, but it'll be less than that. The House has increased the BSA to $680 in their Education Committee, and another $120 in the year 2025. So about an $800 increase in two years. That bill has moved on to House Finance. So those two bills on education that are quite different in the dollar amount, but they're in both Senate Finance and House Finance, and we'll see how they come out of that. And then as you know what will happen, it will probably have a difference of opinion on education funding that will go to Conference Committee to be worked out to find a compromise that both sides can agree to. So you know honestly, what we're saying is between $800 low on the House side to $1,000 high per student on the Senate side, and the reality is it'll probably be a compromise in between somewhere.
MCKENNEY: Well, thank you so much, Senator. Is there anything else I should have asked you or you'd like to share right now?
STEVENS: You know, I think we talked about everything that's really important right now. As I said, we've got a little more than four weeks to go, so, you know, my personal goal is to keep my caucus together and not to have a split up along the way, but also to end on time. So we will go to 121 days and hopefully have everything accomplished that we need to accomplish