Session off to a slow, bumpy start in Juneau

Things are in slow motion in Juneau.

Two weeks after the 2019 session began the Legislature is hardly moving. The state House remains in a 20-20 deadlock over organization while the Senate, which is organized, plowed through confirmation hearings on Gov. Mike Dunleavy’s cabinet appointments.

On one side in the House are 16 Democrats, one independent and two dissident Republicans, which totals 19. On the other side are, nominally, 21 Republicans, but Rep. Gary Knopp, R-Kenai, is making it clear that he will not join a Republican majority with only a one-vote margin because that is unstable.

As a result, the Republicans, absent Knopp, have only 20 votes, which isn’t enough to elect a Speaker and get organized.

The House is doing some things, however. With Rep. Richard Foster, D-Nome, acting as a temporary presiding officer, the body is meeting as an informal “committee of the whole” to hear briefings on state revenues and oil and gas production.

One hiccup for Dunleavy in the confirmations came when his choice for Commissioner of Administration, Jonathon Quick, resigned after it was revealed he had embellished his resume and, in testimony to a legislative committee, his professional background.

Quick’s resume had not been properly vetted by Dunleavy’s transition team, which was headed by now-Chief of Staff Tuckerman Babcock, and Quick’s misrepresentation came to light when one of the people he had worked with in Washington state wrote a letter complaining about claims in his presentation to the Legislature.

Dunleavy’s other cabinet picks have had smooth sailing so far although Jason Brune, chosen as Commissioner of Environmental Conservation, brought protests from environmental groups during the confirmation hearing because of Brune’s past work for a mining company.

Many of Dunleavy’s appointed commissioners have strong backgrounds, such as John MacKinnon at the Department of Transportation and Public Facilities, Corri Feige at the Department of Natural Resources and Bruce Tangeman at the; Department of Revenue.

Other commissioner-designees, new to their agencies, are able to retain experienced deputy commissioners and division directors. For example, Brune, at DEC, and Adam Crum, at the Department of Health and Social Services, are backed by strong support staff.

The stalemate in organizing the state House continues, however. For two weeks House members have been unable to negotiate an agreement for a coalition of Republicans and Democrats, an arrangement that usually develops in deadlock situations.

Evenly-matched splits are not unusual in both the House and Senate and the usual outcome is that a group of Democrats will join Republicans to give them the margin of control, or a handful of Republicans will cross over the join Democrats. This happened in the last Legislature when three Republicans signed on with Democrats and two independents to organize a coalition.

It hasn’t happened so far this year, although there is a lot of talk, and back-room negotiation, on a coalition to break the impasse. One new factor is that the all-Republican conservative Mat-Su delegation, which is influential because of its numbers, is showing its strength and appears to be holding firm against any alliance with Democrats.

At least one Republican, however, Rep. Gary Knopp of Kenai, is openly urging a coalition. Knopp argues that any Republican-only Majority will have a razor-thin margin of control and will be unstable, particularly if it includes the Mat-Su’s Rep. David Eastman, of Palmer, who charts his own course and is famously independent.

Among the Democrats there are likely fissures too, although no one is talking. There is a liberal wing among the House Democrats as well as a group of moderates. While House liberals may be open to a coalition, in theory, the breakdown with their moderate colleagues, and potential Republican partners, is likely over specific issues, which are unknown at this point, and who would control key committees.

Although the delay for the House organization is slowing things — bills can’t be assigned to committees yet and hearings held, for example — but the informal arrangements on committees-of-the-whole hearings for all House members for information sessions at least allows newly-elected legislators to begin their important learning process.

The delay in the House is an embarrassment for legislators but the big holdup is really the wait for Gov. Mike Dunleavy’s new budget, which is to be introduced Feb. 13.

“In a way it really doesn’t matter much that the House isn’t organized because we can’t do work on the budget until the governor’s budget is in,” said Rep. Tammie Wilson, R-North Pole, a veteran legislator who would be House Finance cochair if Republicans were to organize the body.

While it’s normal for a new governor coming into office to do a major revamp of the pro-forma budget prepared by the outgoing administration (the Constitution requires a budget to be submitted on Dec. 15, even if it’s the budget done by the outgoing governor) it’s not unusual for a new governor to take time to produce his or her own spending plan.

Thus, introductions of the new governor’s real budget in early February is not unusual. In fact, when he took office in 2014 former Gov. Bill Walker introduced his amended budget after a delay.

What’s unusual about the Dunleavy budget is that it is coming in a little later than is usual – mid-February – but more important is that the new governor is promising a major budget shakeup so that spending matches expected revenues. This implies a budget cut of about $1.6 billion of a state general fund spending that is current about $4.7 billion.

Given the magnitude of that reduction, legislators are holding off any budget discussions until they see what Dunleavy will propose Feb. 13. Donna Arduin, the new director of the Office of Budget and Management, has been very tight-lipped about what is coming.

Lawmakers are puzzled over where, and how, Arduin will propose major cuts. The four major state spending programs are in health and social services, particularly Medicaid; education, mainly the support the state provides to school districts around the state; transportation and highways, and the University of Alaska.

All other state agency budgets are small, in terms of state funds, in comparison to those four agencies.

However, cuts to those four big agencies will have major impacts on the economy. Cuts to health and social services and Medicaid will disrupt medical services, undercutting the only part of Alaska’s economy doing well, in health care employment. Cuts to education funding will push huge costs of supporting local schools down to municipalities and local taxpayers, and could jeopardize the ability of rural schools, where there are no municipalities, to operate at all.

Cuts to transportation would jeopardize hundreds of millions of dollars in federal funding for highway and airport construction and maintenance, and big cuts to the university will further weaken higher education in the state, which has already suffered major reductions in recent years.

While the new state administration, and OMB director Arduin, are keeping plans for next year’s budget, FY 2020, under wraps, an early indication of things to come is in a bill just introduced proposing supplemental appropriations for state agencies for FY 2019, the current year.

Arduin briefed the Senate Finance Committee Jan. 29, on the plan. Supplemental appropriations are routinely done to help agencies deal with unexpected problems. An unusually heavy forest fire season in an example. In the new supplemental budget the administration is proposing to give the Department of Environmental Conservation $9 million to tackle a problem of soil and groundwater contamination around airports where a firefighting foam containing hazardous chemicals was used in firefighting practice.

DEC is now investigating the scope of the problem at airports around the state and it is likely future funding will be needed as the contamination becomes better understood, Arduin told the committee.

A more controversial change made in the bill is a reappropriation back to the general fund of $20 million in state education funds authorized by the Legislature last year. Some members of the finance committee are crying foul on this, since school districts had expected to receive this money and had included the funds in current year budgets. The appropriation is outside the normal K-12 education formula funding for schools, which is not affected, Arduin said.

"It is my contention that school districts and other entities seeking money or expecting money from the state should not be anticipating spending money that has not been allocated to them,” Arduin said.

Legislators on the committee had a different view: "Schools across this state have a desperate need for these resources. These funds were promised through our budgeting process in 2018 and I intend to honor them," said Senator Scott Kawasaki (D-Fairbanks).

"Governor Dunleavy campaigned on being the ‘education governor’ and this is an unacceptable attack on our public education system. He is clearly not fulfilling his campaign promises to Alaskans," Kawasaki said in a statement.

Just because the reappropriations are proposed doesn’t mean the Legislature will pass them. If lawmakers don’t approve them Dunleavy has little recourse, since he cannot go back and veto funds from the current FY 2019 budget.

Other reductions and reappropriations in the bill include $3 million taken from the Village Public Safety Officers; $2 million in school bond debt reimbursement, which helps municipalities pay school construction costs, and $1.2 million in broadband grants to support high-speed internet service to rural schools.

The village safety officer cuts did not go over well with Sen. Donny Olson, D-Golovin, given the serious public safety problems in small rural communities, which are remote.

"VPSOs are the first line of defense for tens of thousands of rural Alaskans. That money was appropriated last year to help recruit and retain highly qualified public safety officials, and I haven't seen anything from this administration that has encouraged that desire," said Olson.

"Pulling the rug out from underneath safe communities in rural Alaska is unacceptable. My constituents depend on these officers. I anticipate this is just the start of the broken promises of the Dunleavy Administration," he said.