Legislative Challenges, Budget, 404 Primacy and lots more!

Senate Majority Coalition Website

State Senator District E

Senator Cathy Giessel Newsletter

UPDATES

Issues affecting

your family, community and jobs.

April 27, 2023

Dear Friends and Neighbors,

I appreciate the emails that I receive every day from constituents and readers of this newsletter.

I manage my own email, which means I am the only person in my office who reads and responds to emails.

(Some offices have staff doing that work.)

I can't respond to every single email, but I try to.

I am hearing a vast majority of you support:

· A dividend that is around the 25/75 split= about $1300

· A funded budget that provides adequate school funding

· Stop spending from savings; use only revenue that comes in annually.

· Some kind of new, annual recurring revenue (in other words, some tax)

· Most common: income tax, not sales tax (Almost no one advocates for sales tax)

· Income tax that is low and broad (captures high wage earners in large out-of-state workforce in oil, fishery, health care)

I hear you care about:

· Development of alternative energy sources

· Funding state services – education, public safety, parks/trails, roads

· Capital Budget requests for projects in our district.

This week’s challenges in Legislature:

· The House sent the Senate a budget that is underwater (not funded) by $600 million.

· We are trying to thread the needle of needs and amount of money we have.

· We need an average oil price of $87.38/barrel to cover all of this year (FY 23 ends June 30).

· Average oil price for FY 23 closer to about $80/barrel (you can see the shortfall)

· Senate is firmly committed to no spending from savings and no stealing from the Permanent Fund Earnings (POMV Spending Limit)

· Capital Budget is very small this year – none of the Capital Budget items requested by you and my office are going to be funded.

Revenue Forecast for coming year (FY24)

· 2022 oil price average = $91.41

· 2023 oil price average = $85.25

· 2024 oil price forecast = $73.00

Detailed Revenue Forecast Spring 2023 is here: https://tax.alaska.gov/programs/programs/reports/RSB.aspx?Year=2023&Type=Spring

New Revenue proposed by Senate:

· Corporate tax on S-corporations that make more than $4Million/year in oil/gas (tax rate 9.4%) = about $100 M/year

· Change oil tax deduction per barrel from $8 to $5 = $150 - 300 M/year

· Digital Business Corporate Income Tax (e-commerce) = $70-90 M/year

Capital Budget this year: infrastructure, deferred maintenance.

· Unrestricted general funds: $326.8 M

· Designated general funds: $68.1 M

· Other funds: $58.4 M

· Federal funds: $2 Billion

· Other duplicated funds: $93 M

Items in this Newsletter:

· Information on Alaska Permanent Fund Corp.

· Senate Floor and Committee Meetings

· Alaska's 404 Primacy Program

· First Alaska's Institute Summer Internship Program

· Current Topics, Economy, Health Care, Energy

· Alaska History

· Oil and Permanent Fund Resources

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Alaska Permanent Fund Corporation

Before you read the information below, remember these facts:

· The earnings from the Permanent Fund make up 32% of Alaska’s revenue this year.

· Federal money makes up 37%.

· Petroleum resource revenue makes up 23%

Permanent Fund Values News

The Statutory Net Income (SNI), or realized earnings of the Permanent Fund, is driven by decisions to buy and sell assets based on market conditions, opportunity, and active positioning.

Under the Fund's current two-account structure, the Statutory Net Income (SNI) flows into the Earnings Reserve Account, which is available for legislative appropriation.

Due to the challenging investment environment experienced so far in fiscal year 2023, the Fund's Statutory Net Income is lower compared to recent fiscal years. It remains lower than Callan's FY23 projection.

The FYTD SNI has been updated on the History & Projections Report to reflect actuals through March 31, 2023, and includes Callan's forecast projection (Lo-Mid-High) applied through the remainder of the year.

Considerations

Inflation-Proofing

Under the two-account structure, inflation-proofing the principal is needed to:

1) maintain enduring purchasing power and

2) ensure the intergenerational benefit of the Fund for all Alaskans.

APFC updates the inflation-proofing amount monthly based on the calculation outlined in AS 37.13.145(c). When fiscal year-end data is available, the inflation-proofing amount will be calculated and transferred to the principal in accordance with the language appropriation in the operating budget.

Statutory Net Income (SNI)

AS 37.13.140 (a) defines the net investment earnings held in the ERA. This realized income directly results from investment activity (decisions to buy and sell, as well as monthly cash flow income from leases, interest, etc.) and excludes unrealized gains and losses.

Statutory Net Income to the ERA for Fiscal Year 2023 to date = $1.6 Billion.

SNI is based on investment activity and is generated throughout the fiscal year. SNI can vary significantly from one fiscal year to the next. Current FY23 SNI is significantly lower than in recent fiscal years.

Senate Floor Session

Week of April 20-26

Senate Floor Session

DATE: 04-19-2023

SB 58-MEDICAID ELIGIBILITY: POSTPARTUM MOTHERS

The bill would expand Medicaid eligibility for postpartum (post-childbirth) mothers from 60 days to 12 months.

Vote: 16-0; SB 58 passed the Senate.

HB 78-AK COMMUNITY HEALTH AIDE APPRECIATION DAY

The bill would establish September 10th every year as Alaska Community Health Aide Appreciation Day.

Vote: 16-0; HB 78 passed the Senate.

Senate Floor Session

DATE: 04-25-2023

SB 98-POWER COST EQUALIZATION ENDOWMENT FUND

The bill would require the Alaska Permanent Fund Corporation to manage the power cost equalization endowment fund and publish certain reports related to the endowment fund.

Vote: 16-3; SB 98 passed the Senate.

Senate Floor Session

DATE: 04-26-2023

SB 87-LUMBER GRADING PROGRAM

The bill would create a lumber grading training and certification program.

Vote: 18-0; SB 87 passed the Senate.

Senate Committee Meetings

Week of April 20-26

Finance

April 20- HB 39, HB 41, SB 41- Public Testimony

April 21- HB 39, HB 41, SB 41- Public Testimony

April 24- SB 78- Hunt/Fish License for Nonresident Student- Invited and Public Testimony, SB 99- Financial Literacy Course in Schools- Invited and Public Testimony, SB 67- PFAS Use Firefighting

April 25- SB 41- Approp: Capital/ Supplemental

April 26- Overview: Alaska Gasline Development Corporation

April 26- HB 39- Operating Budget, HB 41- Mental Health Budget

Community & Regional Affairs

April 20- Overview: ANCSA 14(c)(3) and the Municipal Lands Trustee Program

April 25- HB 69- Reclassification of First Class Cities- Invited and Public Testimony

Education

April 24- SB 56- AK Performance Scholarship; Eligibility- Invited Testimony

Judiciary

April 21- SB 128- Commercial Salmon Fishery Closure- Invited and Public Testimony

April 26- Informational Hearing on Department of Justice Investigation of the State of Alaska's Behavioral Health System for Children

Labor & Commerce

April 21- SB 123- License Requirements: Comm. Drivers- Invited and Public Testimony

April 24- SB 51- Controlled Sub. Data: Exempt Veterinarian- Public Testimony, SB 94- Profession of Pharmacy, SB 108- Discrimination: Gender ID.; Sexual Orient. - Invited and Public Testimony

April 26- SB 88- Retirement Systems; Defined Benefit Opt.- Invited Testimony

Resources

April 21- SB 68- Public Notice for Water Rights- Public Testimony, SB 48- Carbon Offset Program on State Land- Public Testimony

April 24- HB 104- Extended Timber Sales- Invited and Public Testimony

State Affairs

April 20- SB 21- Strategic Plans for State Agencies- Invited Testimony, SB 95, HB 8, SB 62

April 25- Consideration of Governor's Appointees: Department of Corrections

Transportation

April 20- SB 127- Taxation: Vehicle Rentals- Invited Testimony

April 25- Overview: Ports and Harbors of Alaska: Part 1

Everything you wanted to know about

Alaska's 404 Program!

Read More!

Current Topics

Normal America. Axios

The new silent majority: People who don't tweet.

Months-long backlog for Alaska's aid programs triggers second lawsuit. Alaska Beacon

Short funding many state services over the last 10 years has resulted in deterioration of services Alaskans count on. An Anchorage resident filed a class action lawsuit this week seeking to force the state Division of Public Assistance to get cash assistance to vulnerable Alaskans in a timely matter.

Alaska Reads Act Regulations Adopted. Radio Kenai

The Alaska State Board of Education & Early Development (DEED) adopted regulations associated with the Alaska Reads Act on Wednesday, April 19th and approved regulations related to a Statewide Screening Tool to go out for public comment.

The ingredients of a happy life. Axios

Politics

Alaska Supreme Court, in landmark ruling, says partisan gerrymandering violates state constitution. ADN

In a landmark decision, the Alaska Supreme Court ruled Friday that partisan gerrymandering is unconstitutional under the Alaska Constitution's equal protection doctrine.

Alaska's latest innovation- the tax-and-spend Republican. ADN

You’ve heard a lot of talk about tax-and-spend Democrats. Now, courtesy of Gov. Mike Dunleavy and Rep. Ben Carpenter, we know what a tax-and-spend Republican looks like.

To avoid spending from savings, Alaska Senate ponders smaller dividend, shrunken school increase. Alaska Beacon

The Alaska Senate is preparing a state spending plan that includes a smaller Permanent Fund dividend and a diminished funding increase for public schools to balance Alaska’s annual operating budget without spending from savings or breaking a limit on spending from the Alaska Permanent Fund.

Economy News

Anchorage international airport jumps to third in world for air cargo. ADN

The Ted Stevens Anchorage International Airport continued to move up the global ladder in cargo shipments last year, jumping to third place and switching spots with Shanghai Pudong Airport in China, the airport announced earlier this month.

State sales or income tax? As Alaska lawmakers consider proposals, economists weigh in. Alaska Public Media

For the first time in recent history, Alaska legislators in both parties and the governor are talking about implementing a broad-based tax. New taxes aren’t likely to pass this session, but Alaskans could start paying statewide sales or an income tax in the next few years.

Healthcare News

Antibiotic-resistant microbes lurk in poop of Anchorage moose, UAA research finds. Alaska Beacon

Beware of Moose Nugget Jewelry! The moose that amble through Alaska's largest city are leaving more in their wake than piles of nugget-shaped feces.

Anchorage School District sees sudden rise in drug overdoses among high school students. ADN

Anchorage School District officials say at least 10 high school students have experienced apparent drug overdoses in less than a month- including three this week alone. I volunteer healthcare services in several of our Anchorage School District schools. Our young people are not understanding the risks of drug experimentation.

State approves construction of $48M skilled nursing facility in Anchorage. ADN

The state has approved a proposal for a $48 million, 150-bed skilled nursing facility in Anchorage, according to an online notice. The Certificate of Need law blocks too many important healthcare facility developments. I'm grateful that this one was approved. The "Senior Tsunami" makes this a critical facility.

Does insulin price reduction suggest a path forward for lowering costs? JAMA Network

Energy News

Interior Secretary Haaland defends Willow oil project, says US won't end oil drilling. ADN

Interior Secretary Deb Haaland defended her department's approval of the contentious Willow oil project on Friday, saying that despite President Joe Biden's campaign promise to end new drilling on federal lands, "We're not going to turn the faucet off and say we're not drilling anymore."

Alaska History

· April 24: Alaska Constitution Day. On April 24, 1956, the people of Alaska voted to ratify the Constitution of the State of Alaska. There is only one living Alaskan who was a delegate to that Convention; that is Vic Fischer. Today Mr. Fischer lives in Anchorage and will be 100 years old on May 24. He continues to speak and share stories about the Constitutional Convention in 1956.

· April 27, 2000: A 13 billionth barrel of oil transported to Valdez through Trans Alaska Pipeline System (TAPS)

· April 29, 1974: Construction begins on “Haul Road”, later named the Dalton Highway. The highway is named for James William Dalton, an arctic engineer involved in early oil exploration efforts on the North Slope.

Alaska Oil Resource Values

ANS crude oil price (4/26/23): $80.68

The current budget requires $89 per barrel to be fully funded.

Price on 9/30/22: $86.91

Price on 6/29/22: $116.84

Price on 3/8/22: $125.44

Price on 12/22/21: $75.55

ANS production (4/26/23): 486,428 bpd

A lithium plan with global repercussions. Axios

Chile’s move demonstrates how the energy transition could invert colonialist resource market power dynamics, as the demand for minerals like lithium empowers nations in the Global South.

Permanent Fund 4/26/2023: $76,696,400,000

Value 9/30/22 : $70,625,300,300

Value 8/31/22 was: $73,670,500,000

Value 4/30/22 was: $81,387,500,000

Principle - $61.7B

$52.1 B savings, royalties, other deposits

$9.6 B unrealized gains

(special transfers from Legislature - $4 B in 2021; $4.943 B in 2020)

ERA - $12.6 B (was $16.9B May 2022)

$3.5 B set aside for FY24 POMV

$4.2 B for FY23 Inflation Proofing

$ 2.2 B unrealized gains