The Sherman family is visiting the capital from Palmer for a few weeks while husband/dad is opening a new LifeMed Alaska location near the Juneau Airport. Seeing constituents ranks as a top highlight of my week! Please be sure to come by and see me if you’re ever in Juneau during session.
Alaskan Friends and Neighbors,
Much has happened since last Monday as we approach the June 30 date by which we must pass an operating budget to avoid a state government shutdown. Allow me to share what happened and then tell you where we are as far as progress.
Just as I thought I had witnessed the full range of what could happen during a legislative session, the House Majority surprised me last Thursday evening. In an unprecedented move without advance warning, they set aside negotiations with the Senate and rolled their entire operating budget (with a few tweaks) into the capital budget, SB23. Many Alaskans watched on television or their devices and were stunned.
The day prior, the House had amended the capital budget to fully fund this year’s permanent fund dividend checks, explaining that because efforts to pass taxes were failing, they didn’t want to balance the budget only on the backs of Alaskans. They then passed the bill.
When the House rescinded their vote on the bill the next night in order to move it back to second reading for the purpose of amendments, it immediately raised red flags. Representative Seaton then introduced an 89-page amendment (the entire operating budget), followed by the Speaker limiting debate to two-minutes much to the Minority’s shock and dismay. The House Majority adopted the amendment, passed the bill and the House adjourned sine die.
For the past thirty days, the Senate had been negotiating in good faith with the House to finalize a budget to which both bodies could agree. On Thursday, even after Rep. Seaton had cancelled several conference committee meetings through the week, negotiations seemed to be going smoothly. Suddenly that came to a halt when the Speaker called the evening floor session on short notice.
Ultimately, the Senate refused to capitulate and gaveled out of the first special session on Friday morning, understanding that shortly thereafter, the governor would call the second special session, with only HB57, the operating budget (as it is currently in Conference Committee), on the call.
So where are we now? Today is day 4 of the second special session. The fact that the operating budget bill is the only item on the agenda is a very good thing. I appreciate the governor taking this wise step to narrow the focus. About ten days prior, I had suggested to Revenue Commissioner Hoffbeck and Office of Management & Budget Director Pitney that limiting the work to the budget itself, with the distractions of all the revenue measures removed – since there was little to no consensus on these items anyway – would help ensure that the budget job got done in time to prevent a shutdown.
Passing an operating budget is our one and only constitutional duty. I believe all 60 legislators want to see services continue uninterrupted and a budget passed to allow that. A shutdown would negatively impact various industries in the private sector including fishing and tourism. The cost impacts would be great for industry as well as for the state. As an example, the state would lose about $3 million per day due to a lack of state employees at the Permanent Fund Corporation actively overseeing investments if a shutdown were to occur.
Before closing, for those of you frustrated and worried, I want to say that I take my share of the blame for the impasse thus far and will continue to work to build consensus however I can.
Be sure to scroll down to hot topics to 1) check on the status of items the governor may add to the call, to 2) see what referendums residents are gearing up to put on the 2018 ballot related to the legislature’s work, and to 3) read the highpoints I’ve gathered and the highpoints I’ve concluded.
Of course, like I hope you do every newsletter, please be sure too to view the photos to learn more about what’s happening – you may even see someone you know and/or learn about a new development on an issue you’re passionate about! Constituent quotes await you as well – always interesting to know what others are saying.
Remember too my Facebook Live tonight at 7:00 p.m. Yes, we are still having it! Your questions will be front and center, so please tune in! (And you can scroll to the bottom to see the last video.)
Working on your behalf,
– A Quote from a Constituent You Don’t Want to Miss –
“The 2017 Dittman poll for the AK Chamber does not support an income tax nor PFD restructuring or theft. The legislature (for the most part) is out of touch with its constituents and has totally ignored that poll. There is, however, a groundswell of support for budget cuts and a spending cap to reign in a state government gone wild. WE WANT LESS GOVERNMENT. The path to less government in Alaska appears to be cutting the purse strings.”
The Alaska Farm Bureau invites you to take on the Alaska Grown $5 a Week Challenge. With the summer farmers markets now in full swing, this is a great time and opportunity for you and your family to make a habit of shopping for fresh produce grown right here in the great land by Alaskan Famers. By spending just $5 per week on Alaska Grown produce, Alaskans can help grow the agricultural industry in our state and help re-enforce Alaska’s food security. I hope to see you at the market!
– A Quote from a Constituent You Don’t Want to Miss –
“So the majority of your constituents oppose an income tax? That is the knee-jerk reaction of the man in the street, who are of course the majority of the voters, but who know nothing about the realities of government or business, (or, of course a high income person who will have to contribute).”
Shelley’s note: I responded to this individual by email stating, “I find the man – and woman – on the street to be much more knowledgeable than you presume.”
– Hot Topic #1 –
– Second Special Session Update –
A quick reminder: unlike during the regular session, only items put on the call by the governor can be addressed during the special session.
Right now, the only item on the governor’s call list for this second special session is the operating budget, HB 57, which is currently in conference committee. However, should a compromise be reached and an operating budget pass quickly, it is possible for the governor to add other items to the call. With that in mind, I will keep you updated on the items below should additional information be available or they are brought forward for discussion for the special session. For now though, the focus is on the operating budget.
1. HB 57 Operating Budget – In Conference Committee
This bill will pick up where it was left during the last special session, in the conference committee. The scheduling and agenda for the conference committee is controlled by the committee co-chair from the House, Representative Paul Seaton. We will be watching this week to see when Representative Seaton schedules conference committees. Some work has been completed on the conference committee already. If you would like to view meetings and discussions that have already occurred in the conference committee, please visit HERE. The bill must pass no later than June 30 to avert a state government shutdown.
2. HB 59 Mental Health Budget – In Conference Committee
The conference committee report found here, which we discussed last week, was introduced and adopted in the House this week. The bill now goes to the governor for his signature and that is now two items that have been resolved during this special session. Members of the committee were Rep. Seaton (Chair – lead), Rep. Foster, Rep. Pruitt, Sen. Hoffman (Chair), Sen. MacKinnon, and Sen. Olson.
3. SB 26 Permanent Fund Restructuring – In Conference Committee
The conference committee for SB26 did not meet during the first special session, so there have been no changes or compromises presented to the bill. I will keep you updated on any additional information that may become available. Members of the conference committee for SB26 are Sen. MacKinnon (Chair – lead), Sen. Egan, Rep. Foster (Chair), Rep. Seaton, and Rep. Thompson.
4. HB 111 Oil Tax Credits – In Conference Committee
The House and Senate versions of the bill both end the use of refundable (cash) credits for oil and gas companies, but the House version includes an increase in the production tax, while the Senate version did not. There are a few other differences, including the interest rate and pertaining to ring-fencing. The committee met briefly for an organizational meeting but did not meet again for the conclusion of the first special session. Members are Rep. Tarr (Chair – lead), Rep. Josephson, and Rep. Talerico, Sen. Giessel, Sen. Stedman, and Sen. Olson.
5. SB 23 Capital Budget – Awaits Senate Concurrence
As discussed at the beginning of this newsletter, on June 15 the capital budget was amended to add the full permanent fund dividend amount. The next day, Thursday, June 16, it was placed back into second reading and the House’s version of an operating budget with tweaks was amended into the capital budget. The amended bill passed the House, but was not brought up for a vote in the Senate. This bill will be brought back up to be dealt with at a later date. It is expected that the Senate will not concur with the House version and the bill will go to conference committee. Because federal match funds pertain to SB23, the bill could pass as late as this fall, prior to the start date of the federal calendar on October 1.
6. HB 60 and SB 25 Motor Fuel Tax – In House and Senate Finance Committees
Both versions are in their respective Finance Committees. There have not been any hearings scheduled during the special session for this bill.
7. HB 159 and SB 79 Opioid Prescriptions – Awaits House Concurrence
HB 159 passed the House three weeks ago and on June 1st it was passed by the Senate. Because the Senate made some changes, the bill requires a concurrence vote from the House. The House has held this bill since June 2nd and has yet to bring it forward for a concurrence vote. It is expected to be added to the Governor’s call after the passage of the budget bill.
8. SB 12 Income Tax – In Senate Labor & Commerce
The Governor had included in the first special session call an act that would create a broad-based tax. In his “compromise plan”, the governor proposed SB 12 be used as the broad-based tax. The monetary impact on working Alaskans is smaller than the earlier income tax bill, HB 115, but the SB 12 tax is still bracketed, based on income. It is possible the governor may add this bill to the call after passage of the budget bill.
PLEASE NOTE: We are still under the “24 Hour Rule” which allows committee meetings to be scheduled just a day in advance. As things progress each week, I will update this list, but to receive the most up-to-date information you can sign up for text alerts (see below) or can click on the links for each bill within this newsletter.
If you want to stay on top of the scheduling, a short text alert can keep you informed. It’s easy to sign up. Text a bill number (ex: SB23) to 559-245-2529 to enroll. You’ll receive an enrollment confirmation and instructions on how to stop receiving the alerts.
Wondering what’s happening with a certain bill? A short text alert can keep you informed. It’s easy to sign up. Text a bill number (ex: SB1) to 559-245-2529 to enroll. You’ll receive an enrollment confirmation and instructions on how to stop receiving the alerts.
On the final day of the first special session, awaiting me on my desk on the Senate floor were two citations for two fine young people I know personally from back home. Angelina is Miss Alaska and David is an outstanding champion athlete. What a privilege to have known these individuals since middle school and watch them work hard and succeed. Congratulations, Angelina Klapperich and David Registe. It’s an honor to recognize you both for your diligence in pursuing your dreams, and for the role models you are to the youth in our community as well as throughout the state.
– Hot Topic #2 –
Will Revenue Measures
Survive the 2018 Ballot?
Alaskan Facebook users don’t have to browse too extensively to see posts and comments about what’s happening in Juneau, nor what residents are planning to do depending on what happens in Juneau. When people’s wallets are at stake, the interest is high.
Discussion on social media as well as in the halls of the Capitol have folks wondering whether two separate referendum efforts being organized to reverse potential action of the legislature would be successful on the 2018 ballot. One is preparing to overturn any income tax bill that passes. The other effort is planning to undo a Permanent Fund restructuring (and PFD reduction) if SB26 were to pass.
Both efforts seem to be gaining traction as Alaskans take notice. It should comes as no surprise considering the 2017 Dittman poll which showed more opposition than support for both measures in 2017 and an increase in opposition against each since 2016.
At the same time opposition to an income tax and PFD reduction is increasing, the support for a spending cap has grown to 66%, likely as a result of Alaskans’ greater awareness of the fiscal challenge and the revenue measures under consideration.
It’s clear that Alaskans want to see less spending and more fiscal constraint. It’s also clear that Alaskans don’t want to cough up part of their income to the state government nor give up part of their PFD.
To review the Alaska Chamber survey in it entirety, click here.
The House amended SB23, the capital budget, on Wednesday to add the remainder of the statutory amount of the permanent fund dividend amount that is not included in the operating budget bill.
The following day, the House Majority then also added an 89-page amendment to SB23: their version of the entire operating budget with various adjustments. Without advance notice to review the lengthy amendment and with debate limited to two-minutes, the House Minority voted against the amendment and then the bill. The bill passed however along caucus lines, at 22 to 18. The Speaker then adjourned the House sine die.
The Senate received SB23 on the following day, the final day of the first special session, but did not take it up. The Senate adjourned sine die, aware that the governor planned to call the legislature immediately back into a second special session with just HB57, the operating budget, on the call.
– Hot Topic #3 –
What I’ve Gathered and
What I’ve Concluded
My two questions since oil prices have dropped is do we need Alaskans to pitch in and if so, when would that be. I’ve been focused on these two points during many committee hearings, listening to hours of testimony from expert economists and tax policy gurus, from my reading and research, and from in-depth study of the numbers.
Here are the high points of what I’ve gathered:
We have more than $16 billion in readily accessible reserves. We’re spending 2.5x more per person than any other state and about 4x more per person than what other rural western states spend for state government. Surveys show that Alaskans want a spending cap – 66% want one. Since oil prices dropped, we’re receiving about $2 billion in oil revenue per year as opposed to the $9-10 billion per year we were collecting when prices were high. We’re officially in a recession. According to the experts, new and increased taxes and PFD reductions will deepen and prolong the recession. They recommend we take 3 years to close the gap for the softest economic landing; closing the gap all at once this year will be more harmful to families, businesses, and the economy overall than closing it in phases.
What other highpoints have I gathered? Compared to an income tax or a PFD reduction, a sales tax results in the least collateral damage to the economy of the three revenue options, takes the least out of Alaskans’ pockets and the most out of non-residents’ pockets (due to 2 million visitors each year and 90,000 non-resident workers), does not trigger outmigration like an income tax, and is not a disincentive to entrepreneurs and small business like an income tax. By taxing both goods and services and excluding groceries and medicine, a sales tax loses regressivity and is considered quite fair.
Here are the high points of what I’ve concluded:
Mathematically, we can’t make up the loss in oil revenue from Alaskans’ pockets via taxes and PFD reductions. We have to tighten the belt and realign the size of the budget to what we can afford. Because we’ve been on the high side of spending per person as a state, we can make this work; we can trim without sacrificing needed services. We have enough in savings that we can bridge the gap without draining the reserves (shortfall this year is about $2.3 billion) while we nudge down the budget over three years to a more appropriate spending level based on our small population, and if resource development revenue hasn’t picked up enough, then implement a sales tax to fill any remaining gap. Turning on a tax spigot without a spending cap does not have public support – so we’d need to put one in place first. We need to be cautious that we trim appropriately – essential services are important to the livelihood of our communities.
– A Quote from a Constituent You Don’t Want to Miss –
“Please show restraint and don’t raise taxes. Hard working Alaskans already bear the brunt of our budget deficit and we can’t take more of the burden.
I understand there isn’t a simple solution to fixing this deficit but please look to fix the government overspending in Juneau as the main fix. According to a recent Dittman poll, implementing a spending cap has bipartisan support; both the majority of Republicans and Democrats support it.
Please keep all Alaskans in mind.”
– A Constituent Quote You Don’t Want to Miss –
“Dear Senator Hughes, As the pressure to reach a budget compromise increases, I simply would like to reiterate my opposition to a taxing the incomes of working Alaskans, no matter what it is called. Whenever funds are removed from one’s paycheck by whomever, it is an income tax.
I continue to believe a sales tax to be more equitable, if a tax is necessary to reach a solution. As a consumer, I can control what I spend. When money is automatically removed from my wages, I relinquish that control. I also fear, once an income tax is reinstated, it would not go away but would only increase as the state budget needed. The sales tax would also tap into one of Alaska’s resources- tourism.
Thank you for your efforts working to resolve a very difficult situation.”
Serving You on Committees
Please note that the only committees on which I serve that are active currently – to deal with key legislation – are 1) Senate Resources (to deal with the oil tax bill), 2) Senate Labor & Commerce (to deal with the income tax bill), and 3) Senate Finance (to deal with two bills just mentioned as their second committee of referral).
- Senate Finance — Member
- Senate Resources — Member
- Senate Education — Member
- Senate Labor and Commerce — Vice-Chair
- Unmanned Aircraft Systems Legislative Task Force — Co-Chair
- Joint Armed Services — Member
Serving You on Finance Subcommittees
The subcommittees have ”closed out” for now and the FY2018 budget is currently awaiting finalization in a joint conference committee. My seat on these subcommittees, however, continues through next year, so if you have ideas for efficiencies, reductions, and improvements in any of these areas, don’t hesitate letting me know.
- Department of Education and Early Development
- Department of Law
- Department of Administration
- Department of Transportation and Public Facilities
For additional information, contact my
Chief of Staff: Buddy.Whitt@akleg.gov
Legislation Update
Bills I’m Sponsoring
Click on bill number for more info. Detailed descriptions are also available in previous editions of newsletters which you can find here.
***Please note that due to the close of the regular legislative session, the earliest any of the following bills (which have not yet passed) will see action will be January 2018 when the legislature reconvenes in regular session.***
• SB6 — “Industrial Hemp Production” — The bill had its second hearing in House Finance two weeks ago but was not moved out of committee nor scheduled for a floor vote prior to the end of the regular session. This means the bill will not be passed in 2017. When the next regular session begins in January 2018, I am hopeful the bill will move to the House floor for a vote.
• SB16— “Digital Assets Act”— Even though my office began work on this bill last August, the House version of the bill leapt ahead and passed. (My office provided the language to Rep. Claman about 3 months ago, so I’m happy with the language in his HB108 obviously!) I carried HB108 on the floor and am proud to say that it passed the Senate unanimously. It awaits the governor’s signature.
• SB32 — “Interchangeable Biological Products” — The House Finance Committee held an initial hearing on the bill. We await scheduling for a second hearing and public testimony. Because the regular session has ended, the earliest this can now occur is January 2018.
• SB96 — “Alaska Education Transformation Act” — Senate Education Committee Bill Relating to Education and School Districts is in the Senate Finance Committee. I am hopeful SB96 will continue to move through the committee process in 2018.
• SCR4 — “Task Force on Unmanned Aircraft Systems” — Passed unanimously both the House and Senate, and awaits the governor’s signature.
• SB111 — “Alaska State Defense Force Powers” — Introduced and assigned to State Affairs and Finance Committees. I am hopeful SB111 will receive hearings in January.
• SB119 — “Alaska Health Care Consumers Right to Shop Act” – Introduced and assigned to Labor and Commerce as well as Finance. I am hopeful SB119 will receive hearings in January.
For information on bills I’m co-sponsoring, click here.
For information on all bills filed by others, click here.
– Let Your Voice Be Heard –
– Participate in Public Testimony –
Public testimony is available for every bill heard in a committee. Follow bills you have interest in on the Alaska State Legislature Page. To testify, go to your local Legislative Information Office (LIO) which you can find here. If you are unable to testify, written testimony can also be submitted by sending an email to the committee.
Public testimony times on bills
that might interest you:
Find it here!
For budget bills, tax bills, and Permanent Fund bills in the Finance Committees, please arrive 15 minutes early for sign-in process, and please arrive 15 minutes prior to the end of the allotted time or testimony may close early. Public testimony may be limited to two minutes per person, so it’s best to prepare concise comments.
Join Shelley to ask questions and give your input on Facebook Live Monday evenings at 7pm at www.facebook.com/AKShelleyHughes.
Watch tonight at 7pm!
TIPS TO STAY IN THE LOOP
More important than ever!
TIP #1: The Alaska State Legislature web site is the place to track bills, locate and contact your legislators (session), and access committee information. Questions? Try the help wizard or call 1-800-478-4648.
TIP #2: SMS Bill Tracking! Once you know what bill(s) you want to monitor, here’s a convenient way to track what’s happening. Text any bill number (ex: SB1) to 559-245-2529 to enroll in text alerts for that particular piece of legislation. You’ll receive an enrollment confirmation as well as instructions on how to unsubscribe.
TIP #3: How to Get in Touch with Shelley! Give our office a call at (907)465-3743 or send an email to Sen.Shelley.Hughes@akleg.gov.
If you are looking to get in contact with a specific legislative aide:
Buddy Whitt – District Director, Legislation
(907)622-8963 – Buddy.Whitt@akleg.gov
Joshua Banks – Research, Legislation
(907)376-3725 – Joshua.Banks@akleg.gov
Best,
Copyright © 2017 Senator Shelley Hughes. All rights reserved.
