The first legislative session of the 33rd Alaska legislature is now a wrap, and I wanted to give you some highlights from the budget, updates on select legislation, and a rundown of some work that still needs to be done.
The Budget Breakdown
For the first time in many years, the Legislature passed a balanced budget that does not draw from our depleted savings account. In fact, the budget has an $84 million projected surplus. The budget also includes the largest one-time increase in education funding in state history. The Senate passed legislation to make this education increase permanent, and I am hopeful the House will take action on this next session to avoid more teacher layoffs and school closures.
The PFD will be around $1,300 per person. If oil prices are higher than expected, a supplemental PFD of up to $500 will be paid out next year. Here is the reason why the PFD is lower this year: for decades oil revenue paid for about 90% of our state budget. In 2013, oil taxes were cut by billions per year with the promise that we would get more jobs, more production, more state revenue, more investment, and a growing PFD. Oil now only funds about 15-25% of our state budget, and oil jobs, production, and investment are all way down. This year alone, the state will allow roughly $1 billion in oil tax credits while getting nothing in return. With this massive cut in oil revenue, the budget has been balanced for the last 6 years by cutting the PFD. This year is no different. The Senate introduced legislation to claw back some of these oil tax credits, but we still don't have enough legislators who support this change. We should not be giving away our oil for far less than market value. It is clear to me that if no action is taken to fix our broken oil tax structure, the PFD will likely be gone within several years.
I am hopeful that either through a special session this fall or through continued work next legislative session, we will find a way to grow our economy, increase jobs, and keep more wealth in Alaska while making sure we have a balanced budget into the future. Adjustments to our broken oil tax structure will play a critical role in that.
Overview of Bills
SB 99: Financial Literacy
Senate Bill 99, Financial Literacy,has passed the State Senate in a unanimous 20-0 vote. This bill creates a financial literacy curriculum requirement for all high school students in Alaska to help them learn important topics such as student loans, managing a budget, avoiding fraud and scams, and more. The bill allows school districts to either offer a stand-alone class or spread the curriculum out over different classes. We received many letters of support from all over Alaska including from students, teachers, school board members, and the Superintendent in Anchorage.
SB 99 will now head to the House Education Committee for the 2024 legislative session.
SB 114: Oil Tax Credits
One of the most important pieces of legislation the Senate is working on to address a fiscal plan is Senate Bill 114, a bill that would adjust tax credits for the oil industry. SB 114 would add around $600 million in revenue by reducing the sliding scale oil tax credits from $8 to $5. It also ties those credits directly to investment.
For the last 10 years, Alaska has spent our enormous savings reserve and gone from a state of prosperity to a state that can barely keep the lights on without cuts to education, the PFD, and critical infrastructure. Senate Bill 114 is a compromise, bi-partisan effort to reverse that. It’s not a silver bullet, but it is an essential piece of the solution to Alaska’s fiscal crisis.
The great part about SB 114 is it incentivizes investment. By tying per barrel credits to investment, it will incentive $100s of millions in more investment on the North Slope and hopefully reverse the decline of Alaskan jobs lost in the last 10 years.
Senate Bill 114 is a Rules Committee bill from Senate Leadership and is currently in Senate Finance.
SB 122 – Modernizing Corporate Income Taxes
The Senate Rules Committee, which I chair, introduced this bill to bring Alaska’s corporate income tax structure into the 21st century and ensure that out-of-state online businesses pay taxes on their Alaska income. Currently, Alaska’s corporate income tax rules allow out-of-state businesses to say that income made from online sales to Alaskans does not count as Alaska income and places Alaska-based businesses at a disadvantage. This billmakes two reforms to level the playing field between in-state and out-of-state online businesses and ensures online income is properly subject to the corporate income tax. Through a recent update in Senate Finance, this bill also includes closing the S-Corporation corporate income tax loophole. Closing this loophole and leveling the playing field among oil-producing companies making $4 million or more profit a year would help raise another $120 million or so a year in revenue. SB 122 is in the Senate Finance Committee.
SB 135: Work and Save Bill
This Session, I introduced another billelated to financial security for Alaskans. Senate Bill 135, The Alaska Work and Save Bill, will help small businesses in Alaska streamline retirement programs for their employees. Senate Bill 135 establishes an auto-retirement program and is similar to programs that are offered in 16 other states with great success. It helps Alaskan individuals save while reducing red tape and bureaucracy for small businesses. Thank you to the Alaska AARP and other groups and individuals helping push this important legislation.
If you would like your name or business added to our list of support, please email my staff at nick.moe@akleg.gov.
SB 152: Community Solar
One bill I am particularly excited about is the Community Energy Facilities Bill, SB 152. This bill is based on a push from local groups asking for more community solar options in our state. Community Solar is popular in many states and allows an individual or project to sell subscriptions to utility customers so they can share the benefits in terms of reduced cost, increased reliability, and benefits to the environment.
SB 152 is a version of ‘Virtual Net Metering’ legislation that has increased in popularity across the country over the last several years. Currently, 13 states have virtual net metering programs in law, and several more allow programs in regulation.
Developed in collaboration with local groups, SB 152 also opens the door to securing millions in new federal funding dedicated to supporting community energy programs in the future.
More On the State Fiscal Plan
You may have heard the news that the State of Alaska is facing a $900 million budget deficit and desperately needs to restructure its budget and revenue to be solvent. On top of the budget deficit, a Base Student Allocation (BSA) increase in education funding is needed to keep up with the rate of inflation and keep our schools open.
The Alaskans I represent in East Anchorage have been consistent with what they would like to see out of a fiscal plan. Out of the hundreds of people who took my annual survey, more chose reducing oil tax credits over every other revenue option for the state.
If you would like to make sure your voice is heard on matters relating to a fiscal plan, please reach out to my office. I'm happy to pass your message along or direct you to where you may be most effective.
Speaking of the state's fiscal plan, take a moment to watch oil and gas attorney Robin Brena's testimony in Senate Finance regarding the need to keep oil wealth in Alaska: https://fb.watch/kppN5hEt1-/
Carbon Offsets Bill
The Governor's carbon offset bill, SB 48, has now passed the legislature. I offered several amendments that passed in the Resources Committee that helped increase transparency, supported a public process, and added legislative oversight.
I am cautiously optimistic that carbon offsets will have a positive impact on our state and be a much-needed source of new revenue in the future.
Muldoon Construction
Construction season is here and you may have already noticed the construction crews at work on Muldoon Road between Debarr Road and 36th Avenue.
"This is a preventative maintenance project for resurfacing Muldoon Road from Debarr Road to East 36th Avenue. This project includes resurfacing, roadside hardware, drainage improvements, intersection improvements, and ADA improvements as necessary."
Here are some driving tips for navigating around road construction this summer:
Moderate speed
Watch for construction signs
Pay attention to flaggers
Give our construction workers a wide berth
I am glad to be back in the district for the summer. Don't hesitate to reach out if I may be of assistance.
