Cracks in the Piggy Bank Cracks in the Piggy Bank June 4, 2021 Dear Friends and Neighbors, With two weeks left in special session, it's all budget. We're very, very close, but we're moving very, very slowly. Rep. Story & I presented a Legislative citation honoring and remembering DeeDee Johnson for her decades of work supporting the Juneau business community. Cracks in the Piggy Bank The 630 page Statewide Single Audit for last fiscal year came out yesterday. Wait—don’t nod off yet! Auditors don't just catch uncrossed t's and undotted i's, they sometimes shine a light on shenanigans. And while I’ve seen worse audits than this one, I’ve definitely seen better. There are two really big things the auditors caught this year. Both messes started at the end of the last administration, then Governor Dunleavy doubled down. Big Issue 1: Let's take the billion dollar issue first: We lean hard on the Constitutional Budget Reserve to pay for things Alaskans need. We have for 25 years. So how does the money get in there? You'll be shocked to hear sometimes we argue with oil companies about how much they owe. These squabbles often go to court, so sometimes the cash comes in years after it was due. Our constitution says money from litigation and settlements relating to oil & gas taxes and royalties goes into the CBR. (Alaskans first created the reserve after massive oil tariff disputes meant there would be a giant slug of money coming in.) A few years ago, the Federal Energy Regulatory Commission made a decision lowering Alaska pipeline tariffs. Lower transportation costs means higher values to the oil companies and state, so a bunch of tax and royalty money was due. But the state inexplicably decided FERC settlements somehow don’t count. That let them keep over a billion dollars out of the CBR in the last three years—a huge dent in our savings. The auditors rightly cried foul. The governor knows he’s on shaky legal ground here. Tucked away unmentioned in one of his proposed constitutional amendments there's a tweak so tax and royalty money due after a tariff settlement wouldn't have to go to the CBR anymore. Why try to amend the constitution if you don't think you violated it? Big Issue 1.5: This mess goes even deeper. See, an oil company can't use a tax credit certificate to pay off settlements due to the CBR. By law, that takes cash. But it appears the administration took at least $15.3 million in oil and gas tax credit certificates to pay these bills. I say “looks like” and “appears” because the state refused to let the auditor see the files—NEVER a good sign. Hiding the ball from the auditors is a deeply sketchy move. Big Issue 2: This one's a Permanent Fund issue. The constitution says “at least” 25% of mineral money goes into the principal of the Permanent Fund. State law says for newer leases, those issued after 1979, it's more: 50%. A few years back, the governor and legislature didn’t appropriate the money (long story,) so the Walker administration put in only the 25% and ignored the higher number on the newer oil fields. The auditors, ironically (and unintentionally) sounding like a Dunleavy campaign ad, said to follow the law on the Permanent Fund. This one gets into a complicated legal fight about how dedicated funds work. Some good lawyers agree and disagree with the auditors on this one. But here's what's weird: In the last Legislature we tried to solve the problem by putting the disputed amount (about $200 million) into the principal of the Permanent Fund. Governor Dunleavy vetoed it. For all his rhetoric about PFD checks, he's not much for protecting the fund that produces them. And that's really the bottom line: the administration is unconstitutionally blocking money to replenish our savings account with one hand, while proposing massive overdraws from our investment account with the other. That’s just about the definition of unsustainable. I appreciate the philosophical stance that all taxes are always bad in every case no matter what. But when you've cut all you can, and you're getting audit findings (and hiding documents from the auditors!) to sneak a few more shekels into the general fund, it's time to reassess. Alaska needs a real fiscal plan, and it needs to include some revenues. Rep. Story & I were honored to join veterans, the National Guard, the D.A.R., and Admiral Moore to honor the fallen on Memorial Day. Seriously, Where’s the Budget? Another week, and still no budget. We should be done by now. The conference committee, which works out the compromise between the House and the Senate, met several times this week. Here are a few highlights: They agreed on an 18-month funding plan for ferries, so we can put out schedules for a whole calendar year, using one-time federal money to get us there. The committee supported fully funding school bond debt reimbursement, so the state will keep its word to local taxpayers. They kept the funding for DIPAC and Crystal Lake hatcheries to grow king salmon for sport fisheries. That was in some danger when a surcharge on fishing licenses expired. They denied the governor's request to roll all the money for managing commercial fisheries into a single pot. Different regions have different needs, and we have to hold the governor accountable for managing our resources across the entire state. The big pieces are settled, with one exception. Once we settle on a PFD amount, this special session is ready to end. All my best, Did someone forward you this newsletter? Did you fall into it through the series of tubes? Want more? SUBSCRIBE Events & Happenings Around District Q Juneau Youth Shelter Needs CBJ and T&H partnered to open a shelter serving runaway and homeless youth & young adults Shéiyi Xaat Hít (Spruce Root House) needs pantry items to get them going so please check out the list and donate what you can! Juneau Good Times Roll The ice in the Treadwell Arena is gone for summer, so it’s time for some Disco Roller Skating! Happening Fridays nights through the month of June starting today at 6 pm – bring your skates and show off those moves! Juneau market on the docks It’s summertime – which means fun in the liquid sun. Join the Fresh Air Markets at Marine Park starting June 5th. Bonus: if you’re a vendor there are still spots open! Juneau Seafood Champions Alaska meets Louisiana June 8th to raise money for the Southeast Alaska Food Bank – Great American Seafood Cook-Off winning Chefs Michael Brewer (LA) and Lionel Uddipa (AK) teamed up to create a world class five-course meal highlighting our world class seafood! Running for Local Office Ever considered running but not sure where to start? Learn with the Juneau League of Women Voters and CBJ – The webinar is on running in Juneau, but the lessons apply to communities & school boards across the state! Juneau Maritime Festival Juneau’s 11th Maritime Festival is happening June 19th – it’s a great way to catch up with neighbors, enjoy live music, eat delicious seafood, and much more. Free and open to all ages! Juneau True Crime June 19th is the first of the series of Capital Killers Historic Walking Tours with Ed Schoenfeld and Betsy Longenbaugh – two longtime Southeast Alaska crime reporters. Walk the streets of Juneau and dive into the deep and suspicious history. Benefiting the City Museum. Haines Lutak Town Hall Come out Thursday, June 24th at 6:30 pm to get an overview of the new Lutak Dock concept and discuss potential future phases of this major infrastructure idea. International Bike Relay The Kluane Chilkat International Bike Relay is going virtual this year – ride between one and eight of the 30-kilometer legs. Do it individually or by team – complete the challenge between June 12th-20th! Haines Treasures Abound On June 13th the Fort Seward Barracks Clean-up project will auction off historic treasures AND host tours. Come get your hands on things that have been stored in the barracks for decades! Haines 4th of July Great Scott! The Haines 4th of July theme is Back to the Future! – The parade starts at 12:30 pm and festivities will continue at the Southeast Alaska State Fairgrounds. It’ll be 1.21 gigawatts of fun! Skagway coloring the world with reading! Summer doesn’t always mean being outside. The Summer Reading Program is good both indoors and out! Log your reading and submit the results for a chance to win monthly prizes through mid-August! SE Alaska Cornhole Tournament in Skagway From backyard to competitive cornhole, all skill levels are welcome to compete at the Happy Endings Saloon June 11th – 13th. If you win it all you get two round trip tickets to Tampa, Florida to compete in the World Championships! Skagway Comic Book Day! Stop by the Elks Lodge June 5 from 11 am – 2 pm for Free Comic Book Day – with free pizza and door prizes for kids 16 & under. The event is open to all children ages 5 to 105 – swing by and take home some free comics! Skagway Summer Solstice Party The Skagway Elks are hosting fun under the midnight sun on June 19th: games, music, food, and a beer garden – need I say more?! Is there an event in our district I should know about? Please call or email! Snail Mail? Alaska State Capitol Room 419 Juneau, AK 99801 Call: 800 550 4947 907 465 4947 Email Me! ‌ ‌ ‌ Contact My Staff, the people who power the work: Edric Carrillo 907 465 6419 [email protected] Cathy Schlingheyde 907 465 6827 [email protected] Senator Jesse Kiehl | Alaska State Capitol, Rm. 419, 4th Avenue & Main Street, Juneau, AK 99801 Unsubscribe [email protected] Update Profile | Constant Contact Data Notice Sent by [email protected]