CLIENT NAME Juneau Report

Key Coalition Legislative Report Week 5 David Parish & Associates, LLC

DHSS budget:

Following SDS and other division presentations to the House Finance DHSS Subcommittee over the last two weeks, a closeout is scheduled for Tuesday of next week. Private indications are that the subcommittee may not propose major changes to the Governor’s budget for DHSS as proposed, and we should know for sure early this coming week.

SB 10 Relating to waivers and foster care for severely disabled individuals:

Sen. Dunleavy’s SB 10 related to transition of severely disabled individuals from foster care to adult foster care homes was quiet again this week while the sponsor took feedback and suggestions on the bill language.

Political Overview:

House and Senate Committees were active this week dealing with a number of bills that appear on track to pass this session, including bills to revise last year’s “crime bill” that many legislators feel went too far in lowering penalties for shoplifting and other property crimes and sex trafficking and legislation to establish a framework for ridesharing companies like Uber and Lyft to operate in Alaska, and bills that aren’t likely to pass including controversial wolf trapping restriction legislation and a bill to require legislative approval of permits for large-scale mines in the Bristol Bay region.. All of this while the House Resources Committee is dedicating lengthy afternoon and evening meetings to HB 111, a Committee bill that would restructure Alaska’s oil and gas investment tax credit system to extract more money out of energy producers and explorers to help cover the state’s budget shortfalls.

On the budget front, subcommittees in the House are closing out their recommended budgets for state agencies by early next week, and the Senate is beginning their subcommittee process. Indications so far are that the House will largely go along with the relatively modest budget reductions proposed by the Governor and the Senate is working to propose much larger cuts in several key areas (healthcare and Medicaid costs, Education funding, and other state pass-through money to local governments). These differing approaches have the House and Senate headed on a path toward a very contentions conference committee process on the budget by April.

The question of how to structure use of earnings from the Permanent Fund and other reserves to cover the multi-billion dollar budget shortfall remains the biggest item on the Legislature’s plate. This week the House Finance Committee dedicated several hours to a proposed bill that would use 4.25 percent of the fund’s value and a state income tax to cover the deficit, while the Senate focused on a 5.25 percent draw on fund earnings combined with a spending limit and more budget cuts to cover the deficit. While the various versions of the Permanent Fund earnings use are forecast to more than adequately cover the deficit for at least 10 years (potentially much, much longer) to the extent that the House ties their support to an income tax that the Senate won’t support and the House ties their support to budget cuts that the House won’t support, an impasse is building which could keep legislators in session past the 90 day deadline on April 16, potentially up to the 121 day Constitutional deadline on May 17, and then possibly into special sessions like we have experienced for the last two years.