Good times back in the district. After connecting with folks in Palmer at the Friday Fling (and yes, a tasty bite from an outdoor vendor!), I enjoyed visiting with friends at the Palmer Senior Center. This week, before heading to Juneau, I hope to make it to the Chugiak Senior Center for more good times!
Alaskan Friends and Neighbors,
Yes, I’ve been home in the district this week but no, the special session is not over. The reason? Negotiations on HB111, the oil tax credit bill, have been at a snail’s pace. I’ll talk about why and what to expect, and then I’ll touch on why you shouldn’t be misled by a claim that there’s been a $1.9 billion state spending reduction to the operating budget. Don’t miss my significant budget comments. Alaskans need to know what’s going on so they can decide if they like the direction we’re headed.
HB111 is an important piece of legislation that I hope passes sooner rather than later. We can no longer afford the cashable tax credit program; passing the bill with an effective date of July 1st could save nearly $200 million this year, and $300+ million annually in out-years. This is a necessary step in the work to shrink the fiscal gap, reduce cash outflow, and reduce future liabilities.
The House Majority has been insisting that tax increases be paired with the elimination of the cashable credit program, but with consensus only on the latter, at both the urging of the Governor and the Senate, and by their own recognition, the House understands the hundreds of millions to be saved immediately by moving forward to eliminate the cashables.
Members in both the House and Senate are preparing to return to Juneau this week in expectation that the Conference Committee will reach a compromise. The special session is limited to 30-days, so with Saturday the last day, time is of essence to pass the bill! For further discussion of HB111, see Hot Topics #1 and #2.
Now for a little budget discussion…. I want to point out that the governor’s recent claim that “total state spending on the operating budget has been cut $1.9 billion since fiscal year 2015—a 27 percent decrease in three years” is misleading to say the least.
What makes up that $1.9 billion in cuts? Operational dollars to programs and to the departments? Hardly.
According to Legislative Finance, $508.6 million is primarily due to the reduction of what we’re paying to small companies for oil tax credits owed to them by the state.
$582 million out of the $1.9 billion is due to the reduction to Alaskans’ PFD checks last year.
Those two items total about $1.1 billion of what you thought were hardcore reductions to programs and departments.
So what makes up the difference between the $1.1 and the $1.9 billion? On the surface, it sounds like a solid $790.6 million decrease in spending for agency operations. The catch is, that this $790.6 million less in unrestricted general fund spending to agency operations is accompanied by (and offset by) an increase of $450.6 million in spending on agency operations from other fund categories (federal, designated, and other).
So the real decrease in agency operation spending over those 3 years? $340 million. And here you thought the operating budget for programs and departments was reduced by $1.9 billion. Not even close.
We need honesty and transparency – not spin – when we talk about the budget.
Here’s some straight talk – my forthright assessment: leaders who lead the public to think programs and departments have been cut by $1.9 billion are simply trying to convince you that we can’t cut anymore and that it’s time to tax you; it’s time to take half your PFD this year – and a greater share of your PFD in the future – plus it’s time for a substantial broad-based tax.
This brings me back to why I was a no vote on the budget. The track we’re on, based on the budget bill that was passed a few weeks ago, will require half your PFD this year – and a greater share of your dividend in future years – PLUS a substantial broad-based tax (such as an income tax or sales tax). If Alaskans are fine with this track, that’s how the legislature will proceed. If Alaskans aren’t okay with that, they will need to speak up decisively, loudly, and insistently.
One more budget tidbit shocker: the Legislative Finance Director expects the unrestricted general fund (UGF) spend for agency operations to be greater in FY17 than it was in FY18 once the $57 million increase in statewide items, the $64 million increase in dividends, and the supplemental appropriations (unknown amount at this time) are added in. Keep in mind that the UGF is where the fiscal shortfall resides. It is the funding category filled – now partially filled – by oil revenue. If we’re spending more UGF in FY18 than we spent in FY17, we’re going in the wrong direction….. Again, if Alaskans are okay with that track, that’s how the legislature will proceed. If Alaskans aren’t okay with that, they will need to speak up decisively, loudly, and insistently.
Of course, like I hope you do every newsletter, please be sure too to scroll down 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. Don’t miss the bear update – or as some who’ve weighed in would say, the “poor bear” update.
Stay tuned for my next Facebook Live. If I’m at a place where I can broadcast this evening at 7pm, I’ll look forward to your input and questions.
Working on your behalf,
Constituent Quotes
“Thanks Shelley for standing strong. I believe you made the right move by voting against the budget. I believe the Governor’s compromise was really just another concession to not get into my pocket as deep.”
“As an Alaskan resident, I’m writing to urge you to oppose the attempts to raise the gas tax. A gas tax increase won’t just make commuting and travel more expensive, it will raise the price of just about everything. Your job as a legislator is to put your constituents first. A gas tax increase doesn’t do that. Please oppose the gas tax hike.”
“Admiration for making the tough and difficult stand!”
“What about a SEASONAL tax so tourists can contribute? That is a HUGELY untapped resource. Kicking the normal Alaskan in the teeth, while we are ALREADY struggling, by cutting the dividend again this year is not the answer!”
“Shelley, unfortunately you are forced to be on the front lines of this mayhem. Truly a warrior for the people. I thank you for your diligence!”
“I’m disgusted that the legislature chose to cut the pfd. I’m glad to say that both my Senator Shelley Hughes and my Representative DeLena Johnson did not support this. I plan to join the movement to make it uncomfortable for those that did support it, be they Republican or Democrat.”
“Thank you Shelley Hughes for being true and for representing the people even when it goes against the caucus. You have my utmost respect.”
“I followed the budget discussions and didn’t really like any of the proposals put out there. We need less government which will result in more freedoms in our everyday lives and less taxation required. Thank you for voting against the budget.”
“Thanks for standing by your convictions and the people!”
“I do not favor the House coalition’s approach to a budget.”
“Just a note to say thank you for your no vote on the budget and your stated views on the caucus rule. I think you have represented the views of Districts 11 & 12 very well. [C]ontinue to stand strong. I know the decision to “buck” the caucus was a tough decision, but I believe it was the right decision – thank you for putting your constituents ahead of politics.”
“Thanks for not widening home plate.”
Providing the full spectrum:
“Having read your newsletter I see have to give you specific feedback on your budget vote. I see your protest vote as principled, but useless, dangerous and short sighted. Count that as 4 people objecting to your budget vote.”
“…I disagree with your assessment of what the people of your district want….We rise and we fall together as one people, and when times are tough we all have a role to play in keeping the ship of state afloat and performing the tasks we have asked of it and have come to expect….A reasonable income tax helps to accomplish stability and citizen buy-in….We don’t want to see senior services defunded. We don’t want to see larger class sizes and less qualified teachers….We want fewer subsidies to the largest corporations on earth (subsidies that don’t appear to be getting us what we were promised)….”
I had the pleasure of meeting with Craig and Holly Saunders this past week at our Mat-Su office. They wanted to be sure I was aware of the lack of treatment options for teenagers with substance abuse problems, and also of the good work that MyHouse is doing with homeless teens to help them develop job skills, find work, and get housing. Those that have substance abuse problems though, need treatment first. Craig and Holly want to see community-based, grassroots efforts to meet the treatment needs so these young people can also get their lives on track.
– National & International Interest –
in My Bear Story Post
Sparks Debate with Animal Rights Activists
Last week I shared a photo of the young son of family friends who at age 11 shot a grizzly charging him here in Alaska a couple weeks ago. The story ended well, with the bear dropping about 3 feet from the four who were walking on a trail near a favorite fishing hole. National and international news agencies picked up the story. When some animal rights activists started “poor bear” Facebook posts under my photos, accusing the boy of “murder” and Americans of reckless use of guns, the comment section got a little feisty this past week.
You might enjoy glancing through the posts – quite the eye-opener. You may even want to chime in. Click here for the Facebook post. You may need to use the translation option after some of the comments if you’re not brushed up on your German!
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BTW, be sure too to continue to practice bear safety this summer!
Here are helpful sites with tips:
http://www.adfg.alaska.gov/?adfg=livingwithbears.bearcountry
http://dnr.alaska.gov/parks/safety/bears.htm
http://www.alaska.org/advice/alaska-bear-safety
Thanks to the runners, cyclists, walkers, and stroller-riders who supported the work of the Heartreach Center this past weekend to help babies, moms, and dads throughout the year. Before the runners took off on their course, I got to cheer them on following Miss Alaska’s (Angelina Klapperich’s) words to the crowd.
– 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.
The second special session is due to conclude July 15. The operating budget, HB 57, and the opioid bill, HB 159, passed on Thursday, June 22. On Friday, June 23, Gov. Walker added HB 111 to the call. The governor can add other items to the special session call, including bills he’d removed earlier to narrow the focus on the budget. I’ve included those bills and their status in the update below.
1. HB 57 Operating Budget – In Conference Committee
NO LONGER ON CALL – ITEM COMPLETED
2. HB 111 Oil Tax Credits – In Conference Committee
CURRENTLY ON CALL
The HB111 Conference Committee has met once, on June 9. It’s unclear whether negotiations will be successful at the date of this writing and whether a compromise is on the horizon, but there does seem to be some movement in that direction. The Senate plans to return to Juneau this final week of the special session to complete the task of ending the cashable credits, but can only do so if the House agrees to do the same. The House had stated previously that if they cannot increase the production taxes on oil producers, they will not agree to end cashable credits. 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 effective tax rate increase of between 200% to 300% in the $50 to $90 barrel per oil range, while the Senate version does not. There are a few other differences, including the interest rate for overdue taxes and ring-fencing. See Hot Topic #2 for more discussion on the items in the bill under debate, Members are Rep. Tarr (Chair – lead), Rep. Josephson, and Rep. Talerico, Sen. Giessel, Sen. Stedman, and Sen. Olson.
3. SB 26 Permanent Fund Restructuring – In Conference Committee
NOT ON CALL BUT COULD BE ADDED BACK
The conference committee for SB26 did not meet during the first or second special session, so there have been no changes or compromises presented. SB26 restructures the Permanent Fund, changing the calculation of the PFD to a percent of mark value (POMV) model. The bill also caps the dividend amount to Alaskans and allots a portion of the POMV annual draw from the earnings reserve for funding state services. Members of the conference committee for SB26 are Sen. MacKinnon (Chair – lead), Sen. Egan, Rep. Foster (Chair), Rep. Seaton, and Rep. Thompson.
4. SB 23 Capital Budget – Awaits Senate Concurrence
NOT ON CALL BUT COULD BE ADDED BACK
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 (it currently contains the House version of the operating budget). Once a conference committee is assigned to SB23, their first action would be to remove the operating budget from the bill, and then proceed to work out a compromise of the actual capital projects. 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.
5. HB 60 and SB 25 Motor Fuel Tax – In House and Senate Finance Committees
NOT ON CALL BUT COULD BE ADDED BACK
Both versions are in their respective Finance Committees. The governor may add this bill back to the call for consideration now that the operating budget bill has passed, since the governor still appears to want additional revenue measures as soon as possible.
6. SB 12 Income Tax – In Senate Labor & Commerce
NOT ON CALL BUT COULD BE ADDED BACK
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 now that the budget bill has passed.
7. HB 159 and SB 79 Opioid Prescriptions – Passed Legislature
NO LONGER ON CALL – ITEM COMPLETED
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.
Celebrating our nation’s 241st birthday last week with local friends and neighbors: Veterans, Miss Alaska, and Boy Scouts.
Alaska Department of Transportation
Summer Road Work Information
For overview of planned projects throughout the Central Region:
Central Region Road Construction 2017.
For more detailed information on specific projects:
Central Region Projects.
– Hot Topic #2 –
Differences Between House and Senate Versions of HB111
& Why Ending Cashable Oil Tax Credits Is Paramount
(Some info below is repeated from last newsletter in case you missed it)
Read the Case for Ending Credits Now
Walker Administration White Paper
Click here to read a good summary of the differences in the highpoints of the House version of HB111 and the Senate version, as well as a discussion of the importance of ending the cashable credit system sooner rather than later.
Read How Current Tax Structure Has Impacted Production
“75 Million Reasons” Alaska Journal of Commerce Article
A discussion on the impact of the current tax rate on production can be found in this article in the Alaskan Journal of Commerce by Andrew Jensen.
Hughes Views on the Topic
My thoughts on this topic? Because the more production, the more revenue (tax and royalties) for the state, and because for the first time since 1987-88 (as Mr. Jensen pointed out), we’ve seen two years of production growth, tinkering with tax rates could backfire and reduce production and revenue.
Legislative Budget and Audit is hiring oil tax consultants to analyze and model the impact of proposals in the coming year. Hastily passing a tax increase this summer could slow and stifle production growth – or even reverse it and put us back in decline mode – and both of these scenarios would have a negative impact on the amount of incoming state revenue. It could also result in further job loss in an industry that’s already laid off thousands of workers.
When we’re in a recession and facing a fiscal shortfall, these are serious considerations.
Note: In case you’re wondering what the other sticking points are between the House and Senate versions of HB111, here’s a quick overview. Although there is general agreement the cashable tax credit program should end, the House Majority is questioning the Senate Majority’s moving up the effective date from January 1, 2018 to July 1, 2017 (retroactive). The House’s version includes ringfencing, disallowing losses incurred from a non-producing field to be applied to reduce taxes on a producing field; the Senate version did not include this provision. The House wants a 7% interest rate applied to overdue taxes; the Senate had set that rate at 3%. And of course, the most controversial difference between the House and Senate version, as we’ve already discussed, is that the House version effectively raises taxes by 200% in the $50-$70 per barrel range and by 300% above $70 per barrel. The Senate’s version does not raise taxes.
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.
A break from the capital and fresh air clears the head in preparation for work on the oil tax credit bill and any other item the governor may put on the special session call.
Serving You on Committees
Please note that my following committee assignments will be changing due to my exit from caucus at an upcoming Committee on Committees meeting (date to be announced).
- 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
My seats on these subcommittees are also subject to change.
- 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
907-622-8963 (Eagle River office)
907-376-3725 (Mat-Su office)
For information on bills I’m co-sponsoring, click here.
For information on all bills filed by others, click here.
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 those only wanting legislative news, please skip! For those wanting this week’s glimpse into the life of a legislator, here you go!
Just got back photos this weekend from my sister’s wedding. I coordinated the event for the lovely bride and groom, and was the matron of honor. The bridesmaid on the right works for Legislative Finance and the one on the left is a former legislative aide. The junior bridesmaid is my niece’s daughter and the little flower girl is my granddaughter.
– 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.
(Please note that schedule is subject to change. Look for updates on our Senator Shelley Hughes Facebook page for latest information.)
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.
