The state Legislature appears to be moving fast toward closure of its 2018 session

The state Legislature appears to be moving fast toward some kind of closure of its 2018 session and there’s guarded talk that there might be enough agreement on major issues for lawmakers to adjourn on the 90th day, which is next Sunday, April 15.

Upsets could still occur, of course. On Friday the House Finance Committee introduced a new oil tax bill aimed at raising enough revenues back-fill a gap in state finances that will occur even if legislators adopt a plan for a structured draw on Permanent Fund earnings.

That seems increasingly likely after the House agreed to a $1,600 Permanent Fund dividend early last week as a part of the state operating budget passed by the House and the Senate Finance agreed to the dividend amount later in the week.

Agreement on the dividend amount is seen as crucial to securing votes for the structured draw plan from Permanent Fund earnings. If that is agreed, House and Senate leaders could see alignment on the major issue of the 2018 session and after passing a few priority bills call for an adjournment.

The fly in the ointment could the oil tax, which what also caused the extended wrangling and extensions of the 2017 legislative session. The bill introduced by the House Finance Committee, House Bill xxx, was given only the Finance Committee as a referral in the state House, which means the leadership of the body could move the bill quickly if they desired.

Whether the session gets bogged down and extends beyond April 15 may depend on how hard the House leaders want to push the oil tax. The state Senate is strongly opposed to any change in taxes this year, whether an oil tax or tax of any kind so the potential for gridlock is there.

The alternative, absent any source of new revenue, will be to tap reserves that remain in the state Constitutional Budget Reserve, or CBR, to supplement the draw on Permanent Fund earnings. However, the state administration is concerned about depleting the CBR below a certain level because the fund is used to fund month-to-month cash needs for the state, such as for payroll, supplies and services.

The mechanism that is now widely agreed for the structured draw on Fund earnings is a percent-of-market-value plan similar to that used by large endowments, like those at major U.S. universities. A lot of the debate, however, has focused on the percent of the draw from the market value of the Fund.

The Senate has favored a plan for a 5.25 percent draw for three years, which would then be reduced to 5 percent. The House previously favored a lower percentage, of 4.75 percent, to be more conservative.

Also, the calculation is made on an average of the five prior years of market value, which smooths out any bump, down or up, in any one year.

A concern now, however, is that the agreement for a $1,600 dividend, is larger than the approximate $1,200 PFD that would have been paid in the fiscal plans previously discussed, and to pay for that a 5.25 percent POMV draw was stipulated in the budget bill passed by the House.

Some are now calling this an unsustainable rate because may be too high a draw on the Permanent Funds’ earnings reserve, the cash account the withdrawal is actually made from (the principle of the Permanent Fund cannot be spent). If the annual withdrawal from the earnings reserve exceed the income from the Permanent Fund income that replaces it, the reserve will be depleted faster, putting the state and the PFD at risk if there is a big market downturn.

While state finances and the PFD have center stage in Juneau there are a lot of other issues being discussed. One is a bill, House Bill 312, by Rep. Matt Claman, D-Anch., that would provide increased protection for health care workers who are subject to assaults by disorderly patients, typically those under the influence of drugs or alcohol and who are brought to hospital emergency rooms.

Another is Senate Bill 199, sponsored by Sen. Shelly Hughes, R-Mat-Su, which would require more transparency in medical pricing, requiring that health providers post prices for common or popular procedures in public and on a state website. A part of Hughes’ bill provides an incentive for consumers to seek lower cost medical service, with part of the savings passed to the consumer. The bill is now in the Senate Finance Committee.

Rep. Ivy Spohnholz, D-Anch. also has a medical cost transparency bill that requires public posting of prices for common procedures. Her House Bill 123 has passed the House and is now in the Senate Judiciary Committee.

One fast moving bill is a measure that would bring pharmacy benefit managers, or firms that manage pharmacy transactions on behalf of insurance plans, under state regulation. Independent Alaska pharmacies, like those in smaller communities, complain that the pharmacy benefit managers engage in unfair practices including payment for prescription drugs dispensed under health plans at rates lower than what pharmacies paid for them. Unfair and erratic audit procedures by the PBMs are also a sore point with pharmacists.

Most state have brought the PBMs under regulation to moderate these practices but Alaska is one of a handful of that do not. To accomplish this in Alaska Sen. Cathy Giessel, R-Anch., has introduced Senate Bill 38, which is now in the Senate Finance Committee.

In the House, Rep. David Guttenberg, D-Fairbanks, has the same bill under its House designation, House Bill 240. Guttenberg’s bill was reported out of the House Finance Committee on Friday, April 6. It is now in the House Rules Committee awaiting placement on the House calendar for passage in the full House.

Tim Bradner is editor of the Alaska Legislative Digest and the 2018 Atwood Visiting Professor of Journalism at the University of Alaska Anchorage