Analysis: What to expect from the 2018 legislative session

The Legislature “gaveled in” its 2018 regular session last week and got right down to work. Labor and Commerce Committees in both the House and Senate were briefed by an economists’ panel on the state of the economy; the Senate and House Finance committees got busy reviewing Gov. Bill Walker’s proposed FY 2019 budget, and the Senate Resources reviewed activity in the state’s small forest industry.

This week, beginning Jan. 22, the House Finance subcommittees have started their work going into the details of agency spending. Basically, the governor has introduced a maintenance-type budget that will keep most state programs intact.

Measuring all state dollars the budget would trim spending by about $100 million to about $4.7 billion compared with the current fiscal year, but unexpected developments like a heavy forest fire season next summer could change that.

The state also administers federal programs, such as in highway and airport construction as well as certain health and social services and environmental protection programs. That spending is in addition to what the state itself funds.

Typically the Finance subcommittees make their recommendations in late February, clearing the way for the full House Finance committee to move the operating budget to the Senate in mid-March. That’s the usual schedule at least. By tradition the House develops the operating budget and the Senate does the capital budget.

On the over-arching issue of 2018, the fiscal gap and a plan to deal with it, don’t expect much. It’s an election year and legislators running for reelection don’t want to have to vote on a new tax or actions that would “cap” the Permanent Fund dividend or even, explicitly through a bill, tap Permanent Fund earnings to support the budget.

Some Fund earnings will certainly be tapped this spring for the FIO 2019 budget because the state’s main ready cash reserve, the Constitutional Budget Reserve, will be tapped out. That action will occur as part of the budget approval at the end of the session, however, and will be more indirect.

As far as a fiscal “plan” is concerned, one set in statute, most people in the state capitol expect the Legislature to “kick the can” on the fiscal issue further down the road – to after the 2018 elections, at least. That includes the governor’s proposal for a three-year employment, or “wage” tax, even though the tax bite would be most, at a maximum of $2,200 per person yearly.

Things will get a lot busier in the state capitol this week. The House Fisheries Committee will take up a new version of House Bill 199, a salmon habitat protection bill. The bill was introduced at the end of the 2017 regular session, when one hearing was held. In its original form the bill mirrored a proposed voter initiative that would enact the law by a ballot proposition, but the initiative is in the courts.

If enacted, the initiative, or HB 199, would set up a more restrictive procedure for permitting of construction projects in wetlands or which affect streams and water bodies.

Lawmakers will also review progress this week on the Alaska LNG Project, a proposed large-diameter gas pipeline built from the North Slope to a planned liquefied natural gas plant at Nikiski, near Kenai.

The Matanuska-Susitna Borough has complained to federal regulatory agencies that the Alaska LNG team erred in their process of evaluating sites for the large LNG plant and in the evaluation of Mat-Su’s Port MacKenzie compared with the Nikiski site. In fact, the Alaska LNG team examined the wrong location on upper Cook Inlet.

The borough asked Alaska Gasline Development Corp., the state agency now leading the gas project, to correct the analysis but AGDC has not done so.