Governor's second-year agenda includes state lottery, more land to Alaskans, battle against sex trafficking and major new initiative on children reading

Gov. Mike Dunleavy laid out a second-year agenda Monday night with new initiatives on education, a halt to sex trafficking, a new program to make more state land available to citizens, a state lottery to help fund the budget and renewed efforts to stimulate use of renewable energy.

The governor addressed state legislators in his second State of State address. Overall, his vision was one of economic growth led by the private sector through development of natural resources including minerals and timber. The state’s economy is now improving, he said, and the state’s recession has ended. “We now have the lowest unemployment rate in our history,” the governor said.

Dunleavy touched on accomplishments in his first year including a painful budget downsizing, “that caused discomfort to many Alaskans, I acknowledge.” But while painful, it was necessary to make Alaskans realize the magnitude of the fiscal imbalance. The governor’s goal of achieving a $1.3 billion reduction in spending was only partly met but it succeeded in creating the public awareness of the problem.

In terms of specifics, the governor said Monday night that he would propose a lottery to raise new state revenues. “Forty-five states have lotteries, and it’s past time for Alaska to have one.” On a new public land program, Dunleavy will propose accelerated transfers of land to Alaskans for recreational, commercial sites and agricultural lands, “with no restrictions on reselling,” the lands, he said.

As part of the land program a plan will be developed for Alaskans to obtain certificates to exchange their permanent fund dividend for state land at twice the value of the PFD. “The treasury will get money and Alaskans will get land,” he said.

He promised tough new penalties on sex trafficking. He will also push a strong push behind the new “Alaska Reads Act,” a new bill developed by Sen. Tom Begich, D-Anchorage, with involvement and support from the governor. Its goal is to have Alaska children reading by age four. “We have a moral imperative to provide the best education for children,” and too many students, and schools, are not performing well, Dunleavy said.

One of the main causes of this is high teacher turnover particularly in rural schools. The governor has asked for a report and recommendations to be put together this year by the state education department,

Meanwhile, in other developments in the state capitol, the Legislature is in the second week of its 2020 session with most of the House and Senate committee work focused on reviews of state agencies and programs prior to budget subcommittees sitting down to work on the governor’s proposed Fiscal Year 2021 budget.

Meanwhile, there were some fireworks last Friday when legislators tried to get a three-quarters vote to overturn two of the governor’s vetoes last year. Meeting in a House and Senate joint-session, as they are require to do, lawmakers voted on a measure to restore a $5 million in funding the Legislature added to the Alaska Marine Highway System budget, and also to restore full-funding for reimbursement to communities that issue bonds to construct and improve schools.

The governor had vetoed 50 percent of the municipal debt service assistance payment. While a majority in the House and Senate voted to override the vetoes–37 to 20–the vote fell short of the three-quarter threshold needed to restore the funding. The outcome was expected, and the proponents of the overrides acknowledged it was essentially to put legislators on record for funding of the ferry system and school debt reimbursement.

“Alaskans deserve to know where their elected officials stand,” House Speaker Bryce Edgmon (I-Dillingham) said in a statement after the vote. “Today, we saw clearly that most legislators stand with the Alaska Marine Highway System, and for keeping the financial commitments the state made to local communities,” Edgmon said.

“I want Alaskans to know unequivocally that last year’s budget is not the new normal. The governor’s vision does not support the level of services it takes to build the Alaska our children and elders deserve.”

House Republicans who voted to sustain the governor’s veto had a different view. In his statement, House Minority Leader Rep. Lance Pruitt, Rs-Anchorage, said: “Today’s vote was about nothing more than creating material to use against other members in the next election cycle.The House and Senate leadership knew that they didn’t have the votes to be successful, yet they moved forward anyway, failing to consider the concerns of conservatives who are serious about being guardians of good government and fiscal restraint. That being said, we have several members who have been working closely with the Governor’s office to find solutions to both our immediate and long-term challenges for the Alaska Marine Highway System and school bond debt reimbursement. Voting yes on veto overrides today would have undermined progress made in those negotiations.”

Even in the second session of a two-year Legislature there is period of review before legislators resume work on bills introduced last year, or new bills now being brought into the House and Senate. However, committee work has started in earnest on legislation that would establish the legal framework for cooperation among electric utilities along the “railbelt,” from Interior to Southcentral Alaska.

Special committees on energy in both the House and Senate met this week on House Bill 151 and Senate Bill 123, which deal with “electrical reliability organizations,” of utilities to develop technical criteria for interconnections and power transfers. In the future the organization would be able to do long-range planning that would allow the railbelt power grid to operate more efficiently and to do “power pooling,” a practice that would allow the lowest-cost generation facilities on the grid to be used when there are increases in power demand.

Another bill now active in the House Resources committee is House Bill 27, dealing with regulation of flame-retardant chemicals used with childrens’ furniture and clothing and where there have been health hazards. The House committee started work Monday on a refined version of the bill, which has introduced last year in an original form. Basically, the legislation encourages the use of different chemicals that are less harmful to health.

As is customary, the finance committees in both the House and Senate were briefed on state revenues, oil production trends and state debt capacity, or the ability of the state to issue bonds, for construction as an example. Debt capacity is a measure of the state’s creditworthiness.

On oil, deputy state resources commissioner Sara Longan said the expectation is generally for very gradual decline from the North Slope at about two percent a year, which is an improvement over declines of five percent or more in previous years. Falling production is expected until 2024, when new projects now planned will begin production.

However, Hilcorp Energy has managed to buck the trend with increased production in two medium-sized North Slope fields it operates, Northstar and Milne Point. Milne Point production is up 14 percent this year and Northstar has seen two years of 9 percent growth.

Hilcorp has a reputation for aggressively redeveloping older, mature fields, and it is hoped the company will accomplish similar results in the large Prudhoe Bay field when Hilcorp takes over as operator from BP this year.