Sen. Cathy Giessel

The state budget and public safety will be the state Senate’s top priorities when the Legislature convenes Jan. 15, incoming Senate President Cathy Giessel said last Thursday in an address to an Anchorage business group.

New estimates of a big state budget deficit, now estimated at $1.6 billion, have reappeared with the recent drop in crude oil prices, Giessel said at a Resource Development Council breakfast meeting.

“We now face a ‘reality’ oil price $60 to $65 per barrel,” for Fiscal Year 2020, the budget year that will begin July 1. Previously, the state revenue department had estimated FY 2020 price average of $75 per barrel but a $10-per-barrel drop in prices in the last few weeks caused the department to readjust its estimate downward.

That would result is less revenue, adding to the deficit. New Gov. Mike Dunleavy’s commitment to a larger Permanent Fund dividend will also increase the deficit by taking money that could have been used to support the state budget.

Public safety spending, aimed at slowing the rising crime rate, and the amount of the Permanent Fund Dividend, or PFD, are also at the top of the Senate’s agenda, Giessel told the RDC.

The comment on the PFD indicated that while many legislators may agree with Dunleavy about funding the PFD according to a formula now in state law, not all do, and that the matter will be a major topic of discussion.

The PFD formula, which essentially reserves half of the Fund’s annual income to the dividend, is essentially a guideline for determining the amount of the dividend if funds are available and if legislators approve the appropriation. It is not a legal requirement.

Last year lawmakers approved the first-ever use of Permanent Fund earnings to support the budget, which when combined with normal state income, mostly from oil, reduced multi-billion-dollar state deficits that had existed since 2015, when oil prices dropped sharply.

Giessel is meanwhile upbeat about the Senate, citing long years of experience among the leaders chosen this year for the body. “All five of the Senate’s leaders are lifelong Alaskans,” most with a number of years of legislative experience. Giessel herself was born and raised in Fairbanks.

Also, an unusual move this year to expand the Senate Finance Committee from seven to nine senators means that almost half of the 20-member Senate will sit on the committee that will write the state budget.

That guarantees an unusual amount of focus on the budget, she said, but it also means the committee will have members from all regions of the state, from Southeast to Northwest Alaska and the Arctic.

There will be disagreements at times, Giessel said. “You’ll see us disagree on many topics, because that’s part of the process. But on the core issues like fighting crime and protecting the Permanent Fund we’ll be together. You’ll also see us being supportive of business development, not harassing businesses, and protecting, not ignoring, families,” she said.

Giessel also said Alaska is fortunate to have a federal administration in sync with state leaders on important natural resource issues and that having Alaskan Joe Balash as Assistant Secretary of the Interior is critical in keeping key initiatives, like opening the Arctic National Wildlife Refuge coastal plain, on track.

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