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Hello from Juneau! Things are moving at a fast pace as we near the end of our session. The major items on the Senate’s agenda continue to be the gasline, education, retirement, and updating the election processes. Thank you for your continued efforts to provide public testimony on the bills and budgets. I appreciate hearing your comments and insights.
Gasline
Several weeks ago, the Governor introduced SB 280: Oil & Gas Property Tax. Recently, the Senate Resources Committee made some changes. I will provide a summary of both versions.
Governor’s version
In the Governor’s original version of the bill the gasline project would be exempt from state and municipal property taxes during “ramp up” (the start date of commercial operations through either 1 billion cubic ft. of gas per day or 10 yrs. after start, whichever comes first.) The bill also applies a volumetric tax as a replacement for all other property taxes. This volumetric tax would begin the day after the ramp up period ends. The rate would be 6 cents per 1,000 cubic feet of gas and would increase by 1% each year. Under our current property tax laws, the Dept. of Revenue estimates the state would receive over $8 billion in taxes from the pipeline in the next fifteen years. However, under the Governor’s bill, the state’s revenue would reduce to $829 million. Similarly, the five local municipalities through which the pipeline would cross are estimated to receive over $5 billion under our current tax laws, but under the Governor’s bill would only receive $728 million.
Our Senate Resources committee invited the five borough mayors to share their thoughts on the Governor’s bill. Click here to watch the hearing. These mayors shared their support for the gasline project but also their concerns noting that the Governor’s bill reduces municipal revenue too much for their communities to handle the increased need for housing, utilities, roads and emergency services that comes with major construction projects. All five mayors stated they recognize the need for some level of local tax relief for the project and are willing to work with the Governor to find the right balance.
Senate Resources’ version
The Senate Resources version of SB 280 maintains the Alternative Volumetric Tax (AVT) but breaks it down into three separate components taxed at separate rates during the different project phases. It also eliminates the “ramp up” and clarifies that taxes take effect when each major project becomes commercially operational. AVT revenue sharing is added at the three phases including benefits to the municipalities along the corridor, the North Slope Borough, the Kenai Peninsula Borough, and all municipalities via the Community Assistance Program. The AVT would sunset, and current property tax laws would be re-established, if the pipeline has not commenced by January 1, 2028 or its commercial operations have not commenced by January 1, 2032. Impact payments during Phase 1 would require the developer to pay $1 million per mile of pipeline constructed in the prior year. The legislature could then appropriate funds to municipalities experiencing impacts to services, roads and facilities due to pipeline construction.
The Senate Resources version of SB 280 also incorporates some areas of SB 275: Natural Gas Projects; Corp Income Tax bill which I shared in my last newsletter. SB 280 now includes provisions for transparency and legislative oversight and clarifies access to information by public agents, including legislators. This new version will also require AGDC to utilize in-state contractors and suppliers during construction, ensure public utilities receive priority over other supply sales if gasline capacity is reduced, and prevents AGDC from charging public utilities more than $12/Mcf prior to commercial operations of the LNG Export Facility or $5/Mcf after commercial operations begin. Click here for a presentation on the changes made to the bill.
The Senate Resources committee has been holding daily meetings for the last several weeks to ensure the state has the information it needs to understand potential long-term implications for Alaska’s economy and fiscal future. Click here to watch their past hearings and review associated documents.
Budgets
FY 27 Capital Budget
The Senate passed out their version of the FY27 Capital Budget this week adding $247 million in general funds due to the increase in oil revenue predicted by the spring revenue forecast. Much of these state dollars are used as matching for over $1.9 billion in federal funding. After hearing from school officials and students regarding the condition of our school buildings, funds were increased for K12 deferred maintenance including projects at West Homer Elementary and Mt. Edgecumbe. An additional $17 million was directed toward maintenance for university buildings and $3.7 million for court buildings. We anticipate the House will add additional school maintenance projects.
Funding was included for statewide programs that benefit our district including Village Safe Water, Housing & Weatherization programs, and workforce development programs including AVTEC in Seward. The Senate has also proposed sending cruise passenger head-tax funds to communities based roughly on their average visitor traffic from the last three years. Unfortunately, there will be no funds available this year for community projects through the state CAPSIS grant program or the Harbor Grant Matching fund.
Capital Budget highlights for District C include:
- $825,000 AK Marine Salmon Program
- $3.3 million Gulf of AK Chinook Salmon project
- $6.8 million Pacific Coastal Salmon Recovery Fund
- $27.5 million Marine Hwy fund for vessel shoreside facility maintenance
- $21 million Kodiak: Chiniak Hwy rehabilitation mile 15-31 for stage 1 & final design
- $925,000 Kodiak Short Trail
- $7.7 million Kodiak: Otmeloi Way Rehabilitation
- $375,000 Kodiak: Rezanof Drive Rehab mile 0-3.9
- $8.4 million Kodiak: Second St. Reconstruction
- $13.4 million Kodiak: Whitshed Road & Pedestrian Improvements final design
- $3 million Seward: AVTEC program expansion, equipment modernization, facilities upgrades
- $231,894 West Homer Elementary School - North wall improvement
- $703,125 Homer Airport Master Plan Update
- $2.79 million Homer All-Ages & Abilities Pedestrian Pathway
- $4 million Homer: Kachemak Bay Drive mile 0-3.5 Reconstruction
- $9.44 million Anchor Point – Homer: Sterling Highway mile 157-169 Reconstruction – Anchor Point to Baycrest Hill stage 1 & 2
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$4 million for Alaska Seafood Marketing Institute and the Alaska Travel Industry Association.
The Capital Budget has now moved to the House. I anticipate House Finance will have public testimony in the next several weeks. Our LIOs can help you keep track of these public testimony opportunities.
FY27 Operating Budget
The House passed out their version of the operating budget last week adding about $375 million to the overall budget.
Here are some highlights from the House version:
- $147 million in one-time K12 education funding
- $11 million in one-time Pupil Transportation funding
- Approximate $1500 PFD
- Added $10.3 million to fully fund school bond debt reimbursement
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$400,000 in-season genetics testing of western Alaskan chum salmon
- Restored $17.5 million to the Heating Assistance Program
- Added $5 million to community jails in the Dept. of Corrections
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Adds $10 million for the community assistance program, bringing the FY27 payout to $30 million. Additionally, there is a $20 million distribution to the fund so that the FY28 payout next year will also be $30 million
- Added $5.7 million to the infant learning program of which $3 million is to cover an expansion in coverage for developmental delays
- $430,000 was shifted from broadband assistance grants and redirected to fund two new building maintenance specialists in the Dept. of Education
- $15 million for Medicare rate increases for health care workers
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$7.5 million for childcare workforce recruitment and retention; $4 million for early education grants; $3.8 million for Head Start; $1.5 million for child advocacy centers
- $13.1 million for fire suppression
- Added $49.5 million to Alaska Marine Highway System (AMHS) as contingency in case federal grant funding is not available
- Note: AMHS to receive $410 million in Federal grants over several years, however funding is delayed until Sept. Of this amount, AMHS is requesting $161.2 million in operating and over $200 million for capital projects over a 2 yr. period
- AMHS Tustumena replacement vessel project is out for bid
The FY27 Operating budget has now moved to the Senate. Our Senate Finance Subcommittees have held their department closeout meetings and will share their recommendations with the full finance committee in the coming weeks.
FY26 Supplemental budget
The Governor signed the supplemental bill in mid-April. This budget provides funding for current year items such as disaster relief and other areas including the $70 million in matching funds for DOT Projects this summer.
You can review the Governor’s initial proposed budgets here: omb.alaska.gov. The House and Senate reports and budgets are posted here: legfin.akleg.gov.
Education
SB 23: Civics Education This bill will add civics curriculum and assessment into public school statutes. Status: House Finance Committee.
SJR 29: Constitutional Amendment to create the Education Fund This resolution would create an Education Fund as a separate fund in the state treasury. The legislature could appropriate money to the fund and money in the fund would also be invested. The legislature could appropriate money from the Education Fund only for public education. If passed by the legislature, this resolution would appear on the fall’s general election ballot. Status: House Finance Committee.
SJR 28: Supporting J-1 & H-1B Visa Programs This resolution supports the vital role of workers serving in our state under the J-1 and H-1B programs for specialty occupations which support our state’s economy and many of our school districts, including Kodiak Island Borough. Status: passed the Senate; transmitted to the House.
HJR 39: Waive Visa Fees for Teachers This resolution requests support from federal officials for waiving visa fees for teachers. Status: Passed House; now in Senate Education.
SB 277: Education Omnibus bill Recently, parts of SB 277 were rolled into HB 28. Click here to view these changes. The new version of HB 28 now includes: adding a one-time $43.7 million school energy relief payment to help offset high fuel prices and requiring school districts to provide an annual report to the legislature with details on correspondence programs they operate. Provides an increase to pupil transportation by approximately 10% and reading proficiency grants for school districts to support the Alaska Reads Act. Note that sections of SB 277 regarding correspondence schools were removed and not rolled into HB28 due to concerns shared during public testimony Status: Senate Finance Committee.
SB 278: Local Contributions by School Districts This bill would change the calculation for the municipalities Local Contribution amount. Currently the required local contribution of a city or borough school district is a 2.65 mill tax levy on the full and true value of the taxable real and personal property in the district, not to exceed 45% of the district’s basic need for the preceding fiscal year. This bill would include wordage stating that the local contribution also may not exceed the amount of the district’s required local contribution for the preceding fiscal year by more than 2%. Status: Senate Education Committee.
Other Legislation & News
I presented in person at ComFish in Kodiak last week and appreciated the discussions on how to address changes and make improvements to ensure the sustainability of our renown Alaskan fisheries. Additionally, I have heard from many of you regarding your concerns with public engagement at Board of Fish meetings. I recently signed on to a letter sharing these concerns with the Board and am working with other legislators to address needed reforms to the public process.
HJR 29: Ban on Russian Seafood Passed House and Senate; transmitted to Governor.
SB 135 Refund of Fish Business Tax to Municipalities Increases a municipality’s share of fish tax revenue up to 75% for ten years. It is the intent of this legislation that municipalities use the additional revenue to improve their harbor facilities. Status: Senate Finance Committee.
SB 130 Fisheries Product Development Tax Credit Amends the tax credit program qualifiers to include all species of fish and shellfish. Expands the range of technology that qualifies for credits; requires a quicker determination of credit eligibility from the Dept. of Revenue. Extends the sunset date to 2037. Status: passed Senate; now in House Finance Committee.
HB 117 Commercial Fishing – Set Gillnet Co-op This bill would allow two or more salmon fishery set gillnet permit holders to enter into a multi-permit cooperative operation with a maximum of ten permit holders per cooperative. The salmon harvested by these co-ops would be exempted from individual delivery requirements and could be stored together, delivered under one fish ticket, and sold by one member of the co-op or transporter. Status: Passed House; now in Senate Resources Committee.
SB 64: Election Reform This bill makes several changes to our elections to improve access for eligible voters while also protecting voter election data, improving voter list maintenance and ballot curing, and creating an online ballot tracking system. The bill passed both the Senate and House and has been transmitted to the Governor. The Governor has until April 30th to either sign or veto the bill, or let it become law without his signature.
HB 78: Retirement Systems; Defined Benefit Option This bill would bring back a defined benefit pension program for state employees to help with recruitment and retention of state employees in crucial positions such as public safety and teachers. Three changes were recently made to this bill in Senate Finance. The first change increases from 22% to 24% the share of retirement costs paid by municipalities and other non-state PERS employers. This change is estimated to shift $33.5 million from the state to the municipalities. The second change added a requirement that current Tier IV employees would have to work 12 months of PERS immediately prior to retirement in order to receive their retiree medical benefits. The third change uncapped the retirement contributions that are paid by employees. I am concerned the increase from 22% to 24% will bring challenges for municipalities who may have to increase sales or property taxes to cover this increase. Status: Senate Finance Committee.
Alaska Peony Producers: The Alaska Division of Agriculture, in partnership with the U.S. Department of Agriculture's Farm Service Agency, is providing a new financial assistance program to help eligible producers recover from peony rootstock losses caused by eligible weather events in 2023 and 2024. Click here for the application which is open through May 15.
For Updates on Legislation & Budgets
Senate District C’s Legislative Information Offices (LIOs)
Gavel Alaska: 360north.org
Live TV - AKleg: akleg.gov/LiveNow.
Bills & Laws: akleg.gov/basis/Home/BillsandLaws
Bill Tracking at akleg.gov/basis/btmf
Legislative Finance: legfin.akleg.gov.
Please keep in touch!
I appreciate hearing from you about legislation, budgets, and other state issues. Please do not hesitate to reach out to my office if we can be of assistance to you with state agency matters.
Phones:
907-465-4925 (Juneau)
800-821-4925 (toll free)
907-235-0690 (Homer)
907-486-4925 (Kodiak)
Email: Sen.Gary.Stevens@akleg.gov
View past newsletters and press releases: alaskasenate.org/stevens/
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