The Legislature’s 2021 regular session came to an end at midnight on May 19th. While the Legislature has been called into a special session to finish the state’s budget most of that work should wrap up in the next few weeks. A conference committee of six members, three from each body of the House and Senate, has been appointed to review the budget proposals from each chamber and try to reconcile differences and come to an agreement between the two.
Please take a moment to read through my latest newsletter on the state's budget.
The Senate’s fiscal year 2022 (FY22) budget bill combines the state’s operating and capital budgets. The Senate’s version of the budget would fund essential state services and pay out a projected $2,300 PFD. Additionally the Senate’s budget includes a $4.0 billion transfer from the Permanent Fund’s income savings account, the Earnings Reserve, to the corpus of the Permanent Fund to protect more of the value of the fund from overspending. Serving on the Senate Finance Committee, I supported this transfer proposal. The transfer would prevent politicians from accessing that money if it sits in the Earnings Reserve—where it is otherwise spendable through a simple majority vote—by safeguarding it with the Fund’s non-spendable, income-generating principle.
The House and Senate’s versions of the budgets differ in both various items funded and funding levels. One of the most significant differences between the two plans concerns funding for the PFD. When the House passed its budget on the House Floor, it did not include payment of PFDs. The conference committee will now have to take up those differences and negotiate the PFD payout for Alaskans. The committee’s proposal will then be presented to each body again to seek concurrence of the members before it can be transmitted to the Governor for his potential vetoes of funding and signing into law.
Sen. Wielechowski speaking during Board of Fisheries Confirmation debate
There were 41 amendments introduced on the Senate Floor by the members of the body. Here are highlights of a few that I offered as well as some that were adopted into the Senate’s version of the budget.
The Alaska Long Trail
I’m excited to report that the Senate accepted my amendment to fund segments of the “Alaska Long Trail”—a project that will eventually establish a 500-mile recreational trail from Fairbanks to Seward. The Alaska Long Trail will join the ranks of many world-famous hiking and recreational trails like the Appalachian Trail, the Pacific Crest Trail, Peru’s Inca Trail, and Spain’s El Camino de Santiago. Many sections of the Long Trail that are proposed for connection already exist, and the route is almost entirely on public lands, enormously reducing its complexity and cost. My amendment funds $13.2 million toward multiple segments of the trail, spanning from Fairbanks to Girdwood.
Not only will this project be great for Alaskans to enjoy, I expect this will be a boon to tourism and our economy as people from all over the world will have another reason to visit Alaska and experience our truly amazing outdoors. In addition, this significant capital project will create many jobs for Alaskans and business opportunities for Alaskan entrepreneurs for the length of the trail. And I should mention—we were able to leverage federal American Recover Plan Act (ARPA) funds for my amendment, which is permissible for use toward tourism revitalization and improvements to visitor infrastructure and attractions.
I was also very pleased that I was able to unanimously pass an amendment to fund a one-time bonus payment to Alaskans receiving Unemployment Benefits as of May 19, 2021, who subsequently find employment and work full or part-time hours. The program is meant to incentivize Alaskans who are able to jump back into the workforce where they are needed.
An Alaskan who works full-time will receive a $1,200 bonus after one month of work, while an Alaskan who works part-time will receive a $600 bonus after one month of work. The program will be available until the funds run out. I’m hopeful that the administration will implement this program as it was intended by the adopted amendment.
Federal Pandemic Unemployment Compensation
You may have heard in the news recently that the Governor unilaterally decided to discontinue accepting federal supplemental unemployment insurance benefits, Federal Pandemic Unemployment Compensation (FPUC), that was established last year to pay an additional $300 per week to Americans eligible for Unemployment benefits. The benefit was fully funded by the federal government. This program impacted 38,686 Alaskans who have since lost the supplemental benefit due to the Governor’s action.
I offered an amendment to reinstate FPUC. If my amendment passed, it would have brought in over $219 million into our economy though the end of the program this September. That is a substantial amount of money that would have helped struggling Alaskans and small businesses all across the state. Unfortunately my amendment failed by one vote at 10-10.
Proposed Budget Cuts
In total I proposed nearly $850 million in cuts to the state’s budget for items that we should not fund and cannot afford. Here are the highlights of a few of the cuts I proposed.
Oil Tax Credits
I offered two amendments to the budget dealing with cutting oil tax credits. I offered the first amendment in the Senate Finance Committee. My first amendment successfully reduced $114 million in funding for “cashable” oil tax credits to instead pay the statutory minimum payment of $36.9 million. I offered this amendment because the state cannot continue to pay out unjustified oil tax credits to wealthy corporations while we eliminate state services and make cuts to the PFD. These oil tax credits are discretionarily funded—meaning there is no legal requirement to pay them— and this amendment passed the Senate Finance Committee. I’m hopeful this amendment will save the state tens of millions of dollars once the conference committee has negotiated this budget item.
I also offered an amendment on the Floor which would have eliminated the per-barrel “deductible” oil tax credit for FY22 that primarily applies to the largest and wealthiest major oil producers. These credits are expected to cost the state $762 million in FY22 alone, have already cost the state $5.1 billion since their inception, and are projected to cost the state $9.2 billion over the next nine years. I have fought these credits since their enactment in 2013 under SB 21; I believe their existence in law was one of the worst blunders the state has made with respect to its oil tax policy. No one stood to oppose the amendment, and I was disappointed when it failed by a vote of 5-15.
Matanuska-Susitna Borough Pavement Rehabilitation
I offered an amendment that would have reduced the budget by $10 million in funding for the Matanuska-Susitna Borough for its discretionary use on pavement rehabilitation projects throughout the borough. Generally our large municipalities are responsible for generating revenue to pay for their own road maintenance. The Governor added this item to the budget just days before the Senate would have to vote on it, leaving us very little time to vet the proposal.
I found this hastily-added, special consideration for the Mat-Su Borough unfair to every other municipality of the state, because they were not afforded the same special treatment. I’m certain that given their reduced revenues over the last year, every community would have appreciated similar funding for road rehabilitation costs. However, my amendment did not pass.
West Susitna Road Access
I offered another amendment that would have cut the budget by $8.5 million by eliminating another study on constructing a West Susitna road access. As with the Mat-Su pavement rehabilitation funding, the Governor added this budget item just a few short days before the Senate voted on the budget. This area is well understood as there have been multiple studies conducted by the federal government, the Alaska Railroad, as well as the Alaska Department of Transportation dating back 123 years.
The proposed road would span over one hundred miles and would cost over $350 million to construct. Even the mayor of the Mat-Su Borough is on public record demonstrating his non-support for this project. The primary benefactor of this road would be a mining corporation based out of Australia. Given its long history of studies, the price tag of this project, and the fact that the funding was added last-minute to benefit a foreign corporation, I believe this budget item is a large, unreasonable expense that was lobbied by special interests. However, my amendment to delete the funding ultimately did not pass.
The Governor announced two separate 30-day special sessions this summer. The first special session, which began last Thursday, is expected to include finishing legislative work the budget, including funding the FY22 PFD, as well as work on the Governor’s 50/50 POMV PFD constitutional amendment and constitutionalizing funding for statewide Power Cost Equalization. The second special session, which will begin in early August, has been called by the Governor to address a constitutionalized appropriation limit, prevent new taxes without voter approval, potentially allocate federal ARPA funds, and examine “potential measures to increase state revenues.”
Serving on the Senate Finance Committee, I will continue to closely monitor actions on the state’s budget and will continue my work throughout the summer attempting to shape the state’s fiscal future, with a goal of improving Alaska’s long-term viability and economic outlook.
As the regular session comes to an end, my staff and I will be returning to Anchorage to work from the district office until we are needed again in Juneau this summer. If you would like to have an in-person meeting or have any questions or concerns about the content of this newsletter or other issues, please send an email or give my office a call at 907-269-0120.
Alaska Senate Democrats | Capitol Building, 4th Avenue & Main Street, Juneau, AK 99801