With just over four weeks to go before adjournment, the Legislature is picking up the pace on bills.
Major legislation being actively worked on include an expansion of early learning and reading instruction in schools as well as a bill that would reestablish certain state powers in the current health crisis after an emergency declaration expired in February.
A number of other bills are moving out of committees, such as one allowing an expansion of industrial hemp farming, a modification of the state’s current “Certificate of Need” (a state license) for expansions of health care facilities, a bill that would allow the Department of Natural Resources to negotiate modifications of net profit share terms in North Slope oil and gas leases (this can now be done only through legislation), a bill requiring that auto dealers carry appropriate levels of insurance, and a bill granting formal state recognition of Alaska Native tribes, which has not been done.
The gorilla in the hallways of the state capitol, however, is the question on how the $2 billion-plus in new federal aid recently authorized for Alaska will be spent, as well as several hundred million expected in a pending federal infrastructure bill.
One billion of Alaska’s $2 billion share of the American Rescue Plan Act, or ARPA, comes directly to the state, while most of the rest will go directly to school districts and municipalities. Of the $1 billion for state government, the Legislature must pass an appropriation bill before these funds can be spent.
With the Legislature’s required May 19 adjournment looming House and Senate leaders are discussing plans for phasing the money over several year to the December 2024 deadline for its use, but it’s likely that a spending bill for half of it, or about $500 million, will emerge in the final two weeks of the session.
Lawmakers can extend the session or call themselves into special session, but both require support from a large majority of legislators, and with a number of Republican lawmakers likely to vote no on those, spending decisions on the $500 million may be left to Gov. Mike Dunleavy through a process known as “RPL”, where the government can make certain spending decisions between legislative sessions.
There may be legal limits to the governor’s ability to do this, however.
But if the money can’t be allocated this year the Legislature can do it next spring, in the 2022 session. However, the Legislature must also approve the state’s receipt of funds for the direct pass-throughs to other entities like school districts and municipalities.
What’s missing from the capitol hallways, so far at least, is talk about a Permanent Fund Dividend, particularly the governor’s plan for a supplemental PFD in late spring and a large one later this year when dividends are usually issued. This is an informal topic of discussion among members of the House and Senate Finance committees, but it will come to the fore in public as final spending decisions are made on the budget for next Fiscal Year, which begins July 1.
Basically, the state budget comes near to balancing with no dividend paid. If a PFD is paid the Legislature and governor will have to find money somewhere, and Dunleavy has proposed increasing the state’s annual draw on Permanent Fund earnings. Critics say overdrawing the Fund’s earnings account, if it were continued, would jeopardize long-term sustainability of the Fund.
Meanwhile, proposals to change dividend calculation method, to enshrine the PFD in the state Constitution by amendment, and to adopt another constitutional amendment establishing a state spending limit, have not advanced far in the Legislature so far.
On other legislation, there are other bills aimed at improving education besides the expansion of early learning. One is a Senate bill to expand high school “middle college” programs with the University of Alaska passed the Senate and is now in the state House. Four school districts now offer middle college for high schoolers, including the Mat-Su school district. Taking college classes in high school helps students get a jump-start on a four-year college degree.
There are business-related bills, including a proposal to conform state banking regulations with those of the federal government. This will allow state-chartered banks, like Northrim Bank, to compete on the same regulatory terms with national banks like Wells Fargo. The Alaska Bankers Association, which includes state as well as nationally chartered banks in Alaska, support the legislation.
Another bill, just introduced by the governor, would expand the role of the Alaska Industrial Development and Export Authority, or AIDEA, the state’s development finance corporation, to help arrange financing for private developers of “green” energy technologies, which includes not only renewable energy like wind and solar projects but also energy conservation, such as in building retrofits.
Conventional financing for these projects is difficult mainly because many commercial bankers are not familiar with renewable energy and building energy conservation and see them as higher risk. AIDEA would partner with conventional financing on these to help remove these barriers.
The program would essentially involve the authority, conventional financial institutions and private investors partnering, much as AIDEA does now with a commercial bank participation program that helps small businesses with needed investments.