Coming Soon to a Capitol Near You
January 6, 2024
Dear Friends and Neighbors,
Happy New Year to you and yours!

A new year means a new session. Alaska legislators are heading to Juneau from across the state to convene on January 16. Before the chaos begins, here are some previews of coming attractions.

Reps. Hannan, Story, & I have a pre-session town hall Wednesday night at 5pm at the Mendenhall Valley Library if you have questions or want to hear more. Or just come say hi!
Budget Styles of the Solvent and Publicly Accountable
Robin Leach built the best known part of his career sending “champagne wishes and caviar dreams” to viewers whose budgets allowed for toasting the new year with Miller High Life and splurging on the name-brand potato chips.
 
Alaska budget writers should be able to put healthy, balanced meals on the table when we get to work this session, but caviar is clearly off the menu. And looking down the road, there isn’t much in the way of canned food and dry goods in the pantry for the next time things get lean—you can forget champagne.

Let's dig in to the general fund budget a bit:
We'll probably get about $1.8 billion dollars from Alaska's oil this year. Prices have been quite good.
We take in about $500 million from the state tax on the largest corporations (mostly those traded on the stock exchange, plus a few others like banks and air carriers.)
The sustainable draw on the Permanent Fund will be $3.5 billion.
All together, with a couple hundred million dollars in alcohol, tobacco, and insurance tax revenue, that's a smidge over $6 billion coming in to the general fund.

We spend about $4.7 billion on running the government day-to-day. That's been basically flat for years now.
The capital budget varies a lot, but this year it's about $350 million in general funds.
Then there's many Alaskans' favorite government program, the PFD. Every thousand dollars we put on the check costs a smidge under $700 million statewide. So October's $1300 PFD ran Alaskans $880 million.
All together, that's about $5.9 billion in spending.

Add, subtract, and carry the one, and you'll see that as long as the price of oil doesn't crater, we'll have a dollop of savings at the end of June. But if we know anything about the price of oil, it's that it won't hold still.

When that's happened in the past, we've gone to savings. Today there's a little over $2.5 billion in the Constitutional Budget Reserve, so that option would get us through a year or two of moderately low oil prices. But what happens if we have both low oil and a problem making a withdrawal from the Permanent Fund?

In recent years, the spendable part of the fund—the Earnings Reserve—has gone down a lot. Much of that was because we moved $8 billion into the constitutionally-protected principal so it couldn't be spent on massive PFD checks. But the rest is due to a few years of lackluster earnings at the same time we've drawn steadily to pay for public services and moderate PFDs.

It seems unlikely the Earnings Reserve will go to zero. Markets rebound, investments turn over, and rent checks come in. But it's far from impossible.

What will keep us from having to liquidate our valuables to pay the bills like Willie Nelson in the 1990's? Certainly another stable revenue source would do it, but that's as unlikely in an election year as Jay-Z flying coach to the Mediterranean. Instead, look for legislators to think up short-term patches like pausing inflation-proofing the Fund or building our deferred maintenance backlogs on schools and state buildings to muddle through.

Those short-term approaches cost more in the long run. And they shouldn't be the Alaska way. They certainly don't have to be. We can protect the Permanent Fund, educate the next generation, and keep our communities safe while still having the lowest tax burden in the country. That's what I'm working toward in the second session of the 33d Alaska Legislature.

While Dom Perignon and Petrossian Beluga remain firmly out of reach, we should be able to balance Alaska's financial picture enough to eat healthy and stay out of the food bank line. So in my best Robin Leach British accent: For 2024, I'm sending you those Alaskan Amber wishes and herring egg salad dreams.
Rep. Story & I had a great conversation with the team at the Haines School: Principal Lilly Boron, Assistant Principal Jens Jacobsen, and Technology Coordinator and teacher Sam McPhetres.
The Following Previews Have Been Approved to Accompany This Newsletter
I like going to the movie theater early enough I see all the previews. I'm not really ready for the film until I can't quite remember what I came to see.

I couldn't come up with that many issues to preview for the second session, but here are the biggest coming attractions.

K-12 education funding. We got a desperately-needed one-time bump in funding last year. The governor vetoed half. His proposal for next year rolls that back—funding schools at $310 per student less than this year. I don’t think that’s going to fly with legislators because I don't think it'll fly with Alaskans. The governor also says he’s going to introduce education policy bills. The balance of how much we change the education landscape and how much we invest in teaching kids will be a huge focus.

Pensions for public workers. I’ve worked on this issue since the 24th legislature broke it. The lack of a real pension is crippling cities, road maintenance, law enforcement, schools, and countless other public jobs. High turnover both lowers the quality of the work and costs more. I'm backing Sen. Giessel's bill to return a modest pension to Alaska public workers. It's in the Senate Finance Committee, where I expect we’ll make some tweaks and move the bill to the Senate floor pretty early in session. Its fate in the House may be a big issue between the bodies this year.

Those two are oldies but goodies. Here's a new one: Railbelt energy. Anchorage is looking at a critical shortage of natural gas in the next few years, both for heat and electricity. The state also has a huge opportunity: the federal Inflation Reduction Act is providing $200 million for badly needed transmission upgrades in the Railbelt electrical system. Better transmission means cheaper, more environmentally friendly energy from renewables like Bradley Lake Hydro, Delta wind, or Chugach gas can replace diesel and coal-generated electricity. So things get both cheaper and more environmentally friendly.

That, in turn, helps PCE communities. Power Cost Equalization is tied to the electricity rates in Anchorage, Juneau, and Fairbanks. Replacing costly diesel-fired power in Fairbanks would lower bills for Alaskans in every PCE community.

The state needs to put in some work to make this feasible though. Good transmission won’t matter if a patchwork of operators keeps making it prohibitively expensive to move electricity around the Railbelt. Luckily, the rest of the country has solved that problem, so there are models we can follow.

We also need to spend a lot of money. The $200 million in federal funds need a 1:1 match. That’s a big price tag and its fair to ask whether the state should help of whether local ratepayers should bear the full cost. I expect energy to be a major topic this session and I’m already having conversations with others here in Southeast on where investments in our electrical systems will bring the most benefit.
All my best,
Did someone forward you this newsletter and now you want your very own copy?
Did you fall into it through the series of tubes but now you want it sent straight to you?
Events & Happenings Around District B
Juneau Free Swim
The Juneau Central Labor Council is hosting a free swim to all Juneau families Saturday, January 6th from 12:30-4:00pm. Don’t forget your goggles!

Juneau Dance
On Sunday, January 7th, head to the Alaska Club downtown for free international folk dance lessons! No cost, and no partner necessary.

Gustavus Kid’s Night
It’s Kid’s Night at the Community Center this Wednesday, January 10th! Open to kids K-5—consider dropping off a donation or shareable snack with your kid!

Gustavus Saturday Market
Head to the Community Center on January 13th for the second Saturday market! Open from 12:30-3:30pm.

Skagway Music
Every Saturday from 3-5pm, swing by the Skagway Library and noodle on the provided instruments—including a mandolin, ukulele, guitar, banjo, and piano!

Skagway Cooking
Head to the Skagway Library on January 18th at 5pm for a cookbook book club followed by dinner! All skill levels welcome—passion for cooking required!

Haines Arts
Swing by the Chilkat Center for the Arts for the annual Northern Lights Showcase this Sunday, January 7th! $10 admission, students free.

Haines Stories
Head to the Haines Library for story time Monday, January 8th! All ages are welcome.
Is there an event in our district I should know about? Please call or email!
Want to Send Snail Mail?

Alaska State Capitol
Room 514
Juneau, AK 99801

You Can Call:

800 550 4947
907 465 4947


Contact My Staff,
the people who power the work:

Aurora Hauke
907 465 5051

Ella Adkison
907 465 6419

Cathy Schlingheyde
907 465 6827