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State Senator District E

Senate Majority Leader

 

Senator Cathy Giessel Newsletter

UPDATES



Issues affecting

your family, community and jobs.

December 14, 2023

 

Dear Friends and Neighbors,



Finance and Revenue forecasts are due by December 15 from the Governor.

As is stated often, budgets reflect values.

 

Items in this Newsletter:

·     Legislative Finance December Newsletter

·     APFC Performance Update

·     State of Alaska Epidemiology Bulletin

·     ANC Airport South Terminal Parking Garage Update

·     Commuter Rail Community Event

·     ALPAR Holiday Tree Recycling

·     Current Topics: Education, Economy, Minerals, Health Care, Politics

·     Resource Values, Permanent Fund

·     Alaska History

Fiscal News

An update from Legislative Finance

 

 

December 8, 2023

 

December 2023 Newsletter

 

This will be the final newsletter from the Legislative Finance Division until after the conclusion of the legislative session. The Governor's FY25 budget and the Department of Revenue's Fall Revenue Sources Book will both be released next week by Friday, December 15. LFD will publish the Overview of the Governor's Budget by the first day of the legislative session, January 16.

This issue attempts to answer a very common question: why do we have a mental health appropriations bill?

 

Why Do We Have a Mental Health Appropriations Bill?

 

Every session, along with the operating and capital appropriations bills, Alaska has a third appropriations bill: the comprehensive mental health bill. This bill includes both operating and capital appropriations. The budget process mostly treats the operating and mental health bills like a single bill because the mental health bill reflects funding that is part of the State's operating budget. Operating budget reports and transactions combine the funding in both bills, and the operating and mental health bills move through the legislative process in tandem. So why do we have this extra bill? The answer requires some historical background.

 

History of Alaska's Mental Health Trust

 

Prior to 1956, there were no mental health support services available in the territory of Alaska. Mentally ill or disabled Alaskans who were not under the care of a family member or guardian were charged and convicted as criminally insane and "at large" and sent to live at a private psychiatric facility in Oregon.

In recognition of the need to provide funding for mental health services, Congress passed the Alaska Mental Health Enabling Act, which transferred the responsibility of providing mental health services from the federal government to the Territory of Alaska and simultaneously created the Alaska Mental Health Lands Trust (Trust).

The Act provided a mechanism for the selection of one million acres of federal land to be conveyed to the Territory in a trust and then later to the State under the Alaska Statehood Act in 1958. As set forth in the Act, the purpose of the Trust was to ensure that the lands were publicly managed in a manner that would generate continuous income, and prioritized the use of those funds to support the cost of delivering a comprehensive and integrated mental health program in Alaska.

The legislature holds the fiduciary responsibility to manage the land for the benefit of Alaskans with mental health disabilities. However, by 1982 the most valuable land had been transferred to individuals and municipalities, or designated as forests, parks, and wildlife areas, and only thirty-five percent of the land trust remained in State ownership and unallocated for another use. Frustrated by the arguably mis-managed use of the Trust assets, Alaskan Vern Weiss filed a lawsuit on behalf of his son, alleging that the State had failed to provide appropriate mental health services. Soon Weiss v State of Alaska became a class action suit as other beneficiaries joined as additional plaintiffs.

In 1984 the Alaska Superior Court ordered that the original trust be restored, and the ruling was upheld by the Alaska Supreme Court in 1985. The Supreme Court concluded that while the restoration of the trust to its original holdings was unrealizable, the Trust should be reconstituted to match the value and desirability of the original lands to the maximum extent possible.

Over the next decade there would be multiple attempts at reaching settlement between the parties via legislation, until a final settlement was reached in 1994 to reconstitute the Trust with 500,000 acres of original Trust land and 500,000 acres of replacement land, plus $200 million in cash to establish a mental health trust fund. The settlement further created the Alaska Mental Health Trust Authority (AMHTA), an independent State organization with a board of trustees who are appointed by the Governor and confirmed by the legislature. The settlement established a mental health trust income account, consisting of land income and a percent of market value draw from the principal of the trust fund, which is managed by the Alaska Permanent Fund Corporation. Additional cash assets are managed by the Department of Revenue and the Trust Land Office is managed by the Department of Natural Resources.

 

Mental Health Funding Process

 

The settlement authorized AMHTA to expend funds from the mental health trust income account without further legislative appropriation. The funds from this account are commonly referred to as the Mental Health Trust Authority Authorized Receipts, or MHTAAR (code 1092). While MHTAAR can be spent without further appropriation, the legislature must appropriate any MHTAAR funds that are provided to State agencies.

Following the 1994 settlement, AS 37.14.005 directs the legislature to make appropriations for the State's integrated comprehensive mental health program in a separate appropriation bill that is limited to that purpose.

The mental health bill includes appropriations of general funds tracked with fund code 1037 General Fund/Mental Health, as well as some taxes designated for mental health purposes. The bill also reflects any MHTAAR funds that are provided to State agencies. The legislature can authorize the provision of MHTAAR funds to State agencies as outlined by the Trust, but does not control the fund source itself, so it cannot increase MHTAAR funding or appropriate it for another purpose.

AMHTA uses a zero-based budget process for MHTAAR's programmatic appropriations and the Trusts recommended appropriations to State agencies. In budget reports, MHTAAR funding is reflected with a specified timeframe, often using a temporary increment (IncT) to specify the planned duration in fiscal years. Other fund sources in the bill may be reflected in the base budget.

APFC Performance: Reflecting on the First Quarter and Market Conditions

 

At the end of October, APFC reported a -1.81% return rate, which reflects the performance for the first 4 months of the fiscal year and overall market conditions. Despite the negative return, APFC performed better than the passive index benchmark of -6.29% and the performance benchmark of -2.65%.

 

“The performance benchmark represents the aggregation of individual asset class benchmarks at their target weights and therefore represents the best measurement of the quality of staff’s investment decisions versus broad investable indices in the case of public markets and average industry performance in the case of private markets,” remarks APFC Marcus Frampton.

 

Frampton expanded on the Fund's performance, "while four months is a brief measurement period, we are pleased with the Fund’s performance through October. The bulk of the Fund’s outperformance in this time period was driven by our underweight position to public equities. Additionally, within asset classes, five of the Fund’s seven major asset classes have started the fiscal year with benchmark outperformance in their respective areas.”

Ted Stevens Anchorage International Airport

December 2023

 

South Terminal Parking Garage Construction Complete!

 

As most of you know by now, the rehab of the South Terminal Parking Garage is complete! One last THANK YOU to the traveling public for their immense patience as this very necessary structural reinforcement was completed. 

Current Topics

Russia steps up Arctic route trade with new icebreaker. RigZone

Russia has completed the second reactor and ship for nuclear-powered transport in the Arctic Ocean. Russia's State Atomic Energy Corp., or Rosatom, announced this week the completion of a second RITM-200 reactor for the nuclear-run icebreaker vessel Chukotka, as well as the completion of the second vessel on the Northern Sea Route more efficient.

(My comment: The Northern Sea Route goes through the Bering Sea, past Aleutians. The U.S. is way behind in icebreakers and nuclear power.)

 

Let's be honest about what's going on with snow removal. ADN

Dunleavy and his administration’s service cuts— in service of big Permanent Fund dividend distributions — have diminished the Department of Transportation and Public Facilities’ ability to keep up with winter road maintenance. This reality was plainly stated in the Alaska DOT maintenance budget summary for fiscal 2023, months before last year’s December storms would make its words prophetic: “Low (employee) counts make managing long winter schedules difficult, threaten continuity of operations at airports, lower the overall level of service provided by (Maintenance and Operations), and decrease the capture of federal funds for summer maintenance programs. 

 

Long-Sought Alaska Grain Reserve Launches. AK Biz Mag

The State of Alaska is investing $1 million for an Alaska Feed Grain Reserve Program to improve food and animal feed security for Alaskans.

 

 

Education

What a tour of Anchorage schools taught me. ADN

The numbers bear out what teachers and education advocates have said for years: Alaska’s teacher wages have dropped and it is the only state in the country without a defined pension for teachers.

 

 

Energy

HEA rates to increase Jan. 1. Peninsula Clarion

Homer Electric Association announced Friday evening that it will be raising its base rates by 3.5% starting next year, citing inflation and supply chain disruptions.

(My comment: It’s only a matter of time before Chugach has to take same steps as Cook Inlet gas supply is less and less available (“behind pipe” is the term used). The delay in addressing this is costing you and me. It has been set aside in favor of big PFD checks, instead of hydro projects, upgrades to weak transmission grid, and other sources of energy. I urge us to take action on those 3 issues. They will take time to implement (time we’ve wasted over last 10-15 years), but we have to stop believing in rescue by fairy dust and unicorns!)

 

Energy task force rejects Dunleavy plea for "moonshot" plan to cut electric rates to 10 cents by 2030. Dermot Cole Reporting from Alaska

(My comment: Ten cent/ kilowatt electric rates are beyond reach. But lower costs energy could be available if we take action. )

 

 

Economy

The three sectors where jobs grew. Axios

83% of the jobs created — 166,000 jobs — were in health care, government and leisure.

 

Alaska Airlines is pitching an 'eco-friendly' alternative to the mileage run this year. How green is it? Alaska Public Media

Alaska Airlines knows mileage runs are a habit for Alaskans who care about their reward status. This year, in an effort to cut down on these superfluous flights — and their carbon impacts — the airline rolled out a new offer: instead of booking a flight, members can earn elite-qualifying miles through the end of the month by buying something called sustainable aviation fuel, or SAF.

 

 

Politics

Assembly questions state and city officials on snow plowing. ADN

Holland said one of the main hindrances on state operations is a 70% vacancy rate in Anchorage among vehicle mechanics servicing its fleet, an especially big problem given how high-needs much of the heavy equipment involved in snow removal is.

 

EPA wants to get the lead out of aviation gas. Alaska's U.S. senators say it's a bad move for the state. Alaska Public Media

Alaska’s U.S. senators are trying to block the Environmental Protection Agency from launching a procedure that would lead to the regulation and eventual removal of leaded aviation gasoline.

 

Alaska's top court says public agency can't decline guardianship appointments. ADN

The Alaska Supreme Court’s decision marks another chapter in a monthslong attempt by the state Office of Public Advocacy to respond to its chronic understaffing by reducing its caseload — first by seeking to offload dozens of cases to a private guardianship agency and then by refusing to accept new appointments from the court for months.

(My comment: The Legislature needs to step up, reestablish a sound hybrid defined benefit retirement pension and increase pay scales. This is the path to recruitment and retention of the attorneys we need.)

 

 

Health Care

NIST develops human urine standard for more accurate diagnosis of kidney disease. NIST

When you go to a doctor’s office, whether for an annual checkup or for specific symptoms, your doctor might ask you to provide a urine sample for testing at a clinical lab. The test can check for kidney disease and conditions that affect kidney function, such as diabetes and urinary tract infections.

To diagnose these conditions correctly, your doctor needs accurate measurements of key compounds in urine. 

 

Negotiations to decide insurance status of Alaska patients of Providence affiliates. Alaska Beacon

Premera Blue Cross Blue Shield of Alaska posted a notice on its website dated Nov. 16 saying the medical, behavioral health and imaging groups of Providence Health & Services Alaska in Anchorage and Palmer are ending their contracts on Dec. 31.

 

Cigna-Humana deal off the table. Axios

Cigna is walking away from its ambitions to acquire Humana with a cash-and-stock transaction after the two companies couldn't agree on price and other financial terms.  Such a deal would have created a health insurance giant valued at roughly $140 billion and further consolidated the pharmacy benefit manager industry. It also likely would've come under intense antitrust scrutiny.

 

Probe unveils record-sharing with police. Axios

Pharmacy chain records are often shared across locations in different states. So law enforcement in states with abortion bans could seek the records to determine whether a person received reproductive care in another state.

 

 

Support for curbing facility fees. Axios

As more states weigh limits on "facility fees" hospitals can charge for outpatient care, new polling from a patient advocacy group shows widespread opposition to these tack-on charges.  More than three-quarters of voters support banning extra fees charged by hospitals for services at their off-campus clinics and doctor's offices.

 

Lawsuits challenge insurers' AI. Axios

The suit makes Humana the second major health insurer to face legal action over its use of an AI tool to allegedly restrict medically necessary care for Medicare Advantage patients.

 

Alaska child care task force finalizes first report for a sector in crisis. ADN

The task force's initial recommendations are focused on assisting providers and call for the removal of barriers for licensing and background checks to strengthen the workforce. While those suggestions have been widely welcomed, many in the child care sector have said that significant new state investment remains essential, including wage subsidies.

Alaska Oil Resource Values

 

Alaska North Slope crude oil price (12/13/23): $76.31

FY24 budget (beginning 7/1) is fully funded at forecast $73/barrel oil.

Price on 9/30/23: $87.99

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 (12/13/23): 481,110 bpd

 

 

Oil gains over 2% but records seventh weekly decline. Reuters

Oil prices rose more than 2% on Friday after U.S. data supported expectations of demand growth, but both benchmarks fell for a seventh straight week, their longest streak of weekly declines in half a decade, on lingering oversupply concerns.

 

There's lots of gas in Cook Inlet - here's why some companies aren't drilling. Alaska Beacon

Leaders of Alaska’s biggest gas and electric utilities say they don’t want to risk customer money to invest in uncertain drilling efforts, when imported LNG appears reliable and competitively priced.

 

Climate summit's historic agreement. Axios

This is the first COP agreement to mention moving away from fossil fuels to avoid the worst impacts of climate change — though it still does not include the term "phase out."

 

News study sheds light on how much methane is produced from Arctic lakes and wetlands. Phys.org

 

Critical Minerals in the Arctic: Forging the Path Forward. Wilson Center

This July, the Wilson Center—in collaboration with the University of Alaska, the Department of Energy’s Arctic Energy Office, and RAND Corporation—convened a two-day dialogue about critical mineral development in the North American Arctic. The dialogue produced a series of six briefs, each with policy recommendations from each of the working group topics. These briefs will be shared with policymakers in Washington, DC, and across the North American Arctic.

 

Rocks may hold key to storing intermittent renewable energy, expanding its use. Sandia National Laboratories

The system consists of rocks held in a bed that can be heated or cooled with air to store thermal energy. “We’ve learned that gravel from landscaping companies can be successfully used for the system without requiring extensive washing or preparation,” said Nathan Schroeder, a Sandia mechanical engineer.

 

Japanese refineries close as the country's petroleum consumption fails. EIA

We forecast consumption of petroleum products in Japan will decline by 3% between 2023 and 2024 to 3.3 million b/d. Japan’s petroleum consumption declined by an average 2% per year through 2022 from its peak of 5.7 million b/d in 1996, largely because of demographic and economic changes. The oil intensity of Japan’s economy, measured as barrels of oil consumed per $1,000 of gross domestic product, has been declining.

 

 

Precious Metal Prices

Dec. 13, 2023

Gold - $2043.36

Silver - $24.12

Platinum - $955.99

Palladium - $1049.00

 

Alaska Permanent Fund

website

 

Fund value December 13 - $77,629,600,000

PFD payout from ERA, Fiscal years 1980-2024: $29.7 Billion

Cost of PFD in Oct. 2022: $2.2 B

Cost of PFD Oct. 6, 2023: $881.5 Million



Alaska History

 

Dec. 10, 1951 - Anchorage International Airport opened.

 

Dec. 11, 1951 - First commercial flight over the North Pole from Fairbanks by Alaska Airlines

 

Dec. 12, 1971 - City and Borough of Sitka established

 

Dec. 14, 1989 - Mount Redoubt volcano eruptions began

Feedback is always welcome.

Have a great week!

 

Cathy 

 

Personal Contact:

907.465.4843

sen.cathy.giessel@akleg.gov

 

My Staff:

·     Chief of Staff: Jane Conway (from Soldotna)

·     Office Manager: Paige Brown (from Anchorage/Girdwood)

·     Resources Committee Staff: Julia O'Connor (from Juneau)

·     Legislative Analyst: Angela Rodell (from Juneau)

 

 

Copyright © 2023. All Rights Reserved.

Senator Cathy Giessel's Newsletter | 12701 Ridgewood Rd, Anchorage, AK 99516