The House Finance Committee began voting Tuesday on what House Speaker Bryce Edgmon (D-Dillingham) called an “unusually large stack of amendments” to the operating budget. The day included a filibuster of sorts and a $66 million budget increase.
The House is considering a budget that increases unrestricted general fund (UGF) spending by $121 million (prior to the amendments) due to inflation-proofing the Permanent Fund, something the legislature hasn’t done in two years.
“We are on the small side of budgets,” House Finance Co-chair Paul Seaton (R-Homer) said during a press conference. “We’ve listened to Alaskans, and Alaskans tell us that this is about where they want to see Alaska be. They don’t want to see class sizes of 42. They don’t want to see more Trooper posts closed. They don’t want to see roads waiting two more days before they’re plowed.”
House majority members included a $4.2 billion draw from the Permanent Fund in the budget, thereby closing the budget deficit and reducing the House minority’s influence in negotiations.
Frustrated minority members made good Tuesday on their promise to try to affect the budget through amendments. They offered most of the 330 amendments before the House Finance Committee
“Nobody can remember that many amendments,” Seaton said, though he admitted many of the amendments would have been combined in the past.
“Rep. Seaton’s being really kind,” said Rep. Scott Kawasaki (D-Fairbanks).
Kawasaki said even under a previous system where amendments could be offered across multiple budget allocations, this year’s amendments would total 190.
“There are more amendments sitting here today than I think all ten years past, combined,” House Finance Vice-chair Les Gara (D-Anchorage) said during a hearing Tuesday.
“I’m not going to say that the Republican minority wants to disrupt the process,” Kawasaki said, “but I will say that, you know, in a 90-day session, with 190 amendments that weren’t vetted through the subcommittee, that weren’t discussed at any other point in time, that 190 amendments will cause us problems.”
Seaton originally planned to move the budget from House Finance by Friday.
Given the sheer number of amendments, Seaton said, “The time frame will just have to slip.”
Rep. Wilson Filibusters After Amendments Bundled
House majority members said they would follow due process and publicly address all amendments.
Tuesday, Seaton moved to roll 131 amendments, all sponsored by Representatives Tammie Wilson (R-North Pole) and Cathy Tilton (R-Wasilla), into two large packets of related amendments.
The motions passed along caucus lines, and the minority amendments subsequently failed, but not before Wilson engaged in a pseudo-filibuster.
Wilson read a packet of 93 amendments into the record, despite the fact that the amendments were publicly available prior to the start of the hearing.
The exercise took over an hour. Multiple majority members announced that if Wilson was simply going to read, they were going to leave to conduct other State business.
Wilson pointed out that some of the amendments in the packet cut different amounts from the same allocation, making passage of the packet a logistical difficulty.
“I really thought we were going to have a fair process here,” she said.
Edgmon told reporters there is a bit of irony in the minority introducing so many amendments.
“A lot of those amendments are going to require time and money to be heard because it involves our Legislative Legal drafters to draft the amendments. Certainly, it involves the committee’s time,” he said.
Seaton and Edgmon anticipate working through the weekend, with the possibility of weekend floor sessions to counteract the extra House Finance time.
House Minority Leader Charisse Millett (R-Anchorage) tweeted that the House majority is “circumventing the public process.”
All of Tuesday’s votes were streamed online by the legislature and broadcast live on Gavel Alaska.
Legislative Finance Cautions Premium Pay Cut Not as Intended
Wilson first offered 38 amendments targeting overtime that would have generally reduced premium pay.
In addition to overtime, premium pay includes hazard pay, shift differential pay, and on-call pay.
Minority members called the proposed cuts meticulous and thoughtful. Tilton said that in tough times, “People in the private sector are just happy to be employed and to be able to have money to put food on their table.”
But the Legislative Finance Division issued a memo warning, “Reducing funding for premium pay does not affect the situations in which premium pay is a legal or contractual obligation.”
“Premium is often required by contract or by the Fair Labor Standards Act,” Legislative Finance Director David Teal told House Finance.
Wilson’s amendments included cuts to Alaska State Troopers, Fire & Life Safety, Juvenile Justice, and the Alaska Psychiatric Institute.
“If you cut premium pay, departments wouldn’t necessarily be able to reduce their payments of premium pay because to run a 24-hour institution requires night shifts and so on, all of which are covered by shift differentials, which is premium pay. Troopers are going to work overtime. It’s just the nature of the job,” Teal explained. “You’re not disallowing the payment of premium pay; you’re simply cutting their budget.”
“It’s agency by agency what the consequences would be,” Teal said, but he acknowledged layoffs would be one possible result.
Majority members pointed out the budget already proposes $118 million in cuts to agency operations after the budget has been cut by $3.5 billion since FY 2013.
“It’s not like this is the first time that we have cut the budget,” said Rep. David Guttenberg (D-Fairbanks).
“People are pretending like there haven’t been cuts,” Gara added.
“I get the urge to cut the budget even more… but at some point you just can’t ask for blood from a stone,” he continued.
In every one of these areas, we have inadequate resources. To make them more inadequate so fewer people can get treatment, fewer people can get the help that they need — With the Troopers [amendment], there’s less ability to protect the public. I don’t think you can magically just say, “Hey. We’ve cut your staff. We’ve cut your budget. Now, on top of that, just be more efficient.” I don’t think it works that way. That’s like Magicland. It doesn’t work that way.
Kawasaki highlighted the cuts to Troopers.
“These are people that go in and put their lives on the line for us,” he said in opposition to Wilson’s amendments.
“If these had been brought up in subcommittee, subcommittees could have delved into individual aspects, but here, we do not have the individual agencies. We do not have any other information,” Seaton said after Wilson objected to the amendments being bundled.
“If we group it all together, it’s really an up or down,” Rep. Lance Pruitt (R-Anchorage) complained to Seaton. “I’d like to see us actually be able to cut the budget in certain places, and I think it’s very possible that there might be some members here that could get behind a few of these.”
Earlier in the day, Kawasaki told reporters, “I think we’re at the point where we’ve essentially right-sized government.”
“We don’t want to see the economy stagnating because if it stagnates, then we lose more jobs all across the state and in the private sector,” Seaton added. “That’s not what our coalition wants. Our coalition wants to make sure we have a comprehensive plan that fixes the solution and doesn’t rely on massive budget cuts, which are going to influence the private economy and create further job loss.”
Rep. Pruitt: “I Hope to Goodness the Public is Angry Tonight”
“We’re trying to find reductions so we don’t have to tax Alaskans,” Wilson told House Finance. “We can’t keep spending the way we are.”
With that mindset, Wilson and Tilton offered 93 amendments that would have cut agency spending to actual FY 2016 levels.
Legislative Finance noted that $44 million of the $49 million proposed for cuts are general funds.
“Amendments like those in the packet can have unintended consequences, particularly when the action falls disproportionately on general funds,” a memo reads.
As an example, Teal picked the Wildlife Conservation Special Projects allocation within the Department of Fish & Game.
Wildlife Conservation spent $2.8 million less than budgeted in 2016, but $1.6 million of that was federal receipts. It only spent $7 million less than budgeted in UGF, yet Wilson sought to cut all $705 million UGF from Special Projects.
“You’re doing this at a time when the allocation — as you may know, with Pittman-Robertson funds at high levels — the allocation’s struggling to match available federal receipts,” Teal told Wilson. “My warning, my belief, is that these actions should only be done in close consultation with agency staff, which pretty much means subcommittee review.”
Wilson defended her amendments as thoughtful.
“I could have taken out any amount. I just want to put it out there,” she said. “Any increase over FY ’16, when we’re in the deficit that we’re in right now, is too much.”
No one in committee mentioned that budgeting based on actuals could grow government long-term as agencies spend up to their budgeted amount to avoid future cuts.
Teal did tell House Finance that actuals may not be accurate because agencies can move funding within appropriations, distorting funding levels for allocations like Wildlife Conservation Special Projects.
“I hope to goodness the public is angry tonight when the news reports this because they should be,” Pruitt reacted. “I hope everyone understands this is why people can’t trust government. They can’t trust us. They can’t trust the bureaucrats. They can’t trust government because we’re talking about rounding errors that are more than they make.”
“These are not rounding errors,” Gara responded. “This is damage to human beings if these amendments were passed. We have a heroin epidemic in this state. It is damaging our communities, damaging our families. It’s making our communities more dangerous, and you want to cut grants to treatment for people with a heroin addiction in this amendment?”
Gara highlighted a proposed $2.6 million cut to behavioral health treatment and recovery grants that House Finance boosted last year and another $162,000 cut to residential licensing.
“We want to make sure the places where our seniors live and people with disabilities live are safe,” Gara said. “There is no explanation in this amendment on how you can keep those places safe by not being able to license and investigate the places where our seniors and disabled Alaskans live. That’s not a rounding error.”
Like the premium pay amendments, Seaton bundled the actuals amendments, saying they had the same structural problem of combining fund sources while targeting general funds.
An incredulous Wilson said she was in the Capitol all weekend working on the amendments and could have been contacted.
“Is there a reason why you didn’t think to come back to the makers of the amendments and say, ‘You might have some issues?’” she asked Seaton with no response.
“It’s usurping the rights of the entire citizenship of the state to not understand individually each one of these,” Rep. Steve Thompson (R-Fairbanks) told Seaton following his move.
House Finance Restores Funding for School Construction
Before taking public testimony on the budget, House Finance, at Seaton’s recommendation, cut school bond debt reimbursement by $49 million and rural school construction funding by $17 million. It was an effective 42-percent cut to both.
“We hate passing cuts on to local municipalities, but they also have a mechanism to raise funds and to support their schools,” Seaton told reporters Tuesday.
Seaton said the move was a tradeoff that protected public education formula funding and fully-funds pupil transportation.
“We’re concerned that the Senate is focusing on Base Student Allocation cuts, meaning larger class sizes. That’s all you can do. That’s where all the money goes,” he said.
“The children of this state should not be losing opportunities because the adults in this state can’t get their budget act together,” House Education Chair Harriet Drummond (D-Anchorage) said.
Gesturing to her House majority colleagues, Drummond added, “I think the adults at this table are doing a great job of protecting education and making sure that our children have the opportunities they deserve.”
Seaton acknowledged Tuesday morning that the cut to school bond debt reimbursement might not survive.
Tuesday afternoon, Gara moved to restore all the funds because it hit communities harder than he would like.
“Any time you make cuts, it’s going to be hard,” Wilson responded in opposition.
The bond debt reimbursement amendment passed along caucus lines, as did a restoration of rural school construction funding.
Gara withdrew an amendment to cut an additional $7 million from oil tax credits after Seaton cut $37 million last week.
“The tax credits are a real problem,” Seaton told reporters.
The House majority has a bill that would eliminate cash credits on the North Slope; require credits to be used against future tax liability or sold to other companies; and lower the State’s obligation to cover oil company operating losses.
Seaton said that’s important because the State currently pays 35 percent.
“You can’t get a sustainable, comprehensive fiscal plan going forward if you have somebody else that can sit there with a shovel and dig a hole in your budget. Because at 35 percent of whatever they decide to invest, that comes right out of our budget. That’s unsustainable,” he said.
For companies concerned about being unable to cash their credits with the State, Seaton noted, “They have a way to monetize those on their future production tax. If they never go into production, they’re not going to have any production tax. But these are production tax credits.”
“Our message is that we are committed to a comprehensive fiscal plan and to new revenues, as well as the restructuring of the Permanent Fund, the smart budget cuts that you’re seeing emerging from the House Finance Committee, as well as oil tax credits and the reform needed there,” Edgmon said.
Tuesday afternoon, House Finance rejected two Wilson amendments that would have restored the 2017 Permanent Fund dividend (PFD) and funded the 2018 PFD based on the statutory calculation.
A $63,000 reduction to public broadcasting from Tilton also failed.
“Whether we’re adopting amendments or not, we have to make sure they align with the philosophies and desires of the people of Alaska,” Seaton told reporters.
Tilton’s amendment is part of a packet of 185 budget amendments, many targeting position reductions, on which the committee began voting.
House Finance has already scheduled a Saturday meeting in case it can’t get through the remaining amendments before Friday.
The Legislative Council will meet Wednesday morning to consider a potential cut to legislators’ per diem payments. Seaton withdrew an $860,000 cut to per diem after ruling that it falls under the purview of the Legislative Council.