Focus on budget shifts from House to Senate

Now that the state House has passed its version of a state operating budget it’s the Senate’s turn.

Senate Finance Committee cochair Sen. Natasha von Imhof, R-Anchorage, said senators are ramping up work on the spending plan with a goal of having budget subcommittees finished with recommendations by the end of the week, or April 19.

With those in hand, members of the Finance Committee will spend Easter weekend fashioning the recommendations into a proposed Senate version of the budget, which is to be presented Monday, April 22, von Imhof said.

That will give the public a first glimpse of the Senate’s priorities on funding for education and school bond debt reimbursement, which will indirectly affect the Matanuska-Susitna Borough budget and local tax rates.

Views on other issues important to the Mat-Su, such as funding for agriculture programs and health care fundes, will also be decided.

Last week the House restored, at the last minute, money that had been cut for state inspections of the one remaining commercial dairy in Mat-Su, which will allow the dairy to stay in business.

Mat-Su legislators including Sen. Shelly Hughes and Rep. George Rauscher played key roles in persuading the House Finance Committee to restore the money.

After the Senate’s proposed budget is presented the Senate Finance committee will consider amendments to make changes, which may take a week or more, von Imhof said. Given that, it’s likely that the committee will report its budget to the full Senate in the first week of May.

That leaves a number of days for passage by the Senate and a House-Senate budget conference committee to resolve differences between the House and Senate versions.

Von Imhof and Senate President Cathy Giessel, R-Anchorage, were guarded about what the Senate’s bottom line will be but it is expected that the Senate budget will cut deeper than $200 million trimmed by the House from current-year spending.

Giessel wouldn’t speculate on what legislators will do if Gov. Mike Dunleavy restores his deep cuts through veto actions. “We’ll cross that bridge when we get to it,” she said. The Legislature can override a governor’s vetoes with a three-quarters vote of its 60 House and Senate members, but getting 45 lawmakers to agree could be a challenge.

The Mat-Su delegation, with three senators and six House members will be decisive in any veto override action.

On other matters, Giessel said that the Legislature’s votes to confirm the governor’s cabinet officials and his appointments to boards and commissions will be held Wednesday, April 17. Legislators are vexed, however, that names of appointees were still being submitted to the Legislature late last week, giving lawmakers little time to vet the people being proposed by the governor.

“When the governor gives us names this late, it’s hard for the Legislarture to give a confirmation vote. It’s not an ‘us’ problem (the Legislature), it’s a ‘governor’ problem,” Giessel said.

Meanwhile, the governor’s crime bills and several anti-crime bills sponsored by legislators, will be at the top of the agenda once the major budget questions have been settled within the Legislature.

Consideration of Dunleavy’s three proposed constitutional amendments are also a priority, although only one of these, a spending limit put into the Constitution, is getting any traction in the Legislature.

One of the proposed amendments, requiring voters to approve any tax changes, has almost no support in the Legislature. Another amendment that would put a guarantee of the Permanent Fund Dividend in the Constitution, has more support but also opposition.

The Senate Finance Committee is meanwhile considering statutory changes, or revisions in state laws, that would establish a spending cap as well as a change in the formula for calculating the PFD.

Von Imhof said statue changes, which can be done this year, are a good way to test out the ideas of the governor’s two constitutional amendments before getting locked into language in the constitution.

Since constitutional changes must be approved by voters in a state general election, it would be 2020 before anything could be placed before voters, von Imhof said.

That gives the Legislature part of its 2020 session to debate and tweak language in a constitutional amendment and stlll have it appear on the ballot.

In discussions, Dunleavy appears to be open to a statutory test-drive first, legislative leaders have said.

There is a particular sensitivity on the spending cap proposed in one Senate bill because there must be built-in flexibility to deal with unexpected events like the earthquake that hit Southcentral Alaska last Nov. 30.

The PFD formula change being proposed in the other Senate bill would split 50-50 the money drawn foe the budget under the 5.25 percent-of-market-value, or POMV, annual draw from Permanent Fund earnings between the state budget and the PFD.

Under the current formula, which is also in statute, the PFD is to receive 50 percent of realized, or cash, earnings of the Fund. Both provisions, 50-50 from the annual POMV draw or 50-50 of realized earnings, are based on a rolling average of past-year income.

Sen. Bert Stedman, R-Sitka, the other cochair of the Senate Finance Committee, is leading the work on the revised PFD formula. The current formula faces problems because it is based on cash earnings in a year that can be bumped up by a sale of a large asset, such as real estate, or depressed by a decision by the Fund’s trustees to hold onto assets.

The POMV 50 percent share, on the other hand, is based on the market value of the overall Fund rather than on cash earnings. Market value changes are more gradual when calculated over an average of several years. That makes the PFD amount more predictable, Stedman said.