House budget subcommittees rejected Gov. Mike Dunleavy’s massive cuts to Medicaid and the University of Alaska (UA), as well as most of the cuts to the Alaska Pioneer Homes.
They also rejected a $154 million increase of designated general funds (DGF). The Office of Management and Budget (OMB) has acknowledged that UA couldn’t possibly raise that much new tuition, meaning the $154 million is simply hollow receipt authority that makes the UA budget appear to not have been cut at all.
A move to split out community campuses as a separate portion of the University budget failed 1-7. UA President Jim Johnsen has testified that the main UA campuses provide administrative functions for community campuses, so separating them would make them less efficient.
Rep. Sarah Vance (R-Homer) was the only subcommittee member to support Dunleavy’s proposals.
The Department of Health & Social Services (DHSS) subcommittee met for four hours Tuesday evening to consider the Dunleavy administration’s efforts to reduce Medicaid spending.
Subcommittee Chair Jennifer Johnston (R-Anchorage) joined House Minority Leader Lance Pruitt (R-Anchorage) and Rep. Cathy Tilton (R-Wasilla) in supporting the cut. Rep. Sharon Jackson (R-Eagle River) was absent.
Elimination of the preventive Adult Dental Medicaid Benefit failed along caucus lines.
The subcommittee did not accept Dunleavy’s $18 million UGF cut to the Alaska Pioneer Homes (APH), with Johnston joining the minority in support.
However, House Health & Social Services Chair Ivy Spohnholz (D-Anchorage) noted that statute allows APH to raise rates at the Pioneer Homes through the regulatory process. APH has proposed to double the rates.
“The rates proposed are inappropriate,” Spohnholz said.
As such, Spohnholz proposed an amendment that would only cut UGF by $8 million, allowing for $25 million in payment assistance to compensate for the increasing rates. That is $10 million more than proposed by Dunleavy.
Rep. Harriet Drummond (D-Anchorage) said she would support the amendment “since we don’t seem to be able to stop the administration from raising rates.”
Pruitt also agreed to support it, though he said he preferred Dunleavy’s cut.
“I do recognize that at times we have to compromise. This is a place that meets in the middle,” Pruitt said of the amendment.
Rep. Matt Claman (D-Anchorage) said the amendment represents a more gradual rate increase that should avoid the “loads and loads of protest” at APH doubling the rates.
Spohnholz’s amendment passed 7-1, with Rep. Geran Tarr (D-Anchorage) the lone opposition.
Rep. Claman: API Privatization “Doesn’t Pass the Test for Good Contracting Out”
The subcommittee also passed intent language from Spohnholz in the wake of the privatization of Alaska Psychiatric Institute (API).
DHSS declared an emergency and turned operation of API over to for-profit Wellpath Recovery Solutions in February. Wellpath is the default management company into the future.
The intent language says DHSS should “abide by all provisions of collective bargaining agreements and adhere to the laws of the State Procurement Code.”
“We want to clarify and further sort of underscore our intent that the department needs to comply with all laws regarding contracting,” explained Spohnholz.
Pruitt said the discussion around API has focused more on the process of privatization, even though patients have been hurt and, in one case, raped.
“It was necessary to take action,” he said. “We’re fighting over everything but the… people that we need to be fighting over, and that’s the people that are actually affected by this. If there is an Oxford definition for ‘at-risk,’ it is the very people that API is servicing.”
“Sometimes, how you do something is just as important as what you do,” responded Tarr.
“The notion that this emergency that calls for some assistance in management then grows to this emergency that justifies a five-year sole-source contract, for me, doesn’t really pass the test of good budgeting. It doesn’t pass the test for good appropriations, and it certainly doesn’t pass the test for good contracting out,” agreed Claman.
Claman said he would like to see bids from three or four contractors, but DHSS has prevented that.
“I have yet to see a compelling argument at all for not having an open bid process,” he concluded.
The intent language passed 5-3, with Johnston joining the minority.
Subcommittees Assert Right of Appropriation
On a 3-5 vote, the DHSS subcommittee declined to consolidate all Medicaid expenses into a single unspecified pot, or appropriation.
Administrative Services Director Sana Efird told subcommittee members it would give DHSS more flexibility in spending, rather than having to make a request to spend between Medicaid items.
Tarr pointed to the prior vote to retain the Adult Dental Medicaid Benefit, which is an optional State service, as an example of her opposition. Despite the legislature voting to retain it, the governor could leave it unfunded as part of a consolidated appropriation.
“If the legislature passes a certain funding amount, the governor can veto that. Once it’s consolidated and there’s just a blanket veto, then you just have one dollar amount you’re working from,” she explained. “I don’t want to have a situation where, because it’s one consolidated appropriation that has been vetoed in a substantial way by the governor, that there can be easy elimination of optional services where the legislature’s not going to have any oversight or participation.”
“We want to make sure that funding goes into priority services,” Tarr concluded.
“The criticism… is that we are, at some level, giving up our power of appropriation. As somebody that believes quite strongly in the separation of powers and the importance of the legislature relative to a [strong] governor by constitutional structure, I’m always reluctant to give away any authority to the extent we have it,” Claman said in opposition.
In that same vein, the DHSS subcommittee unanimously rejected unconstitutional budget language that would allow OMB to move money anywhere within a department after the budget has passed.
Tilton pointed out that a subsequent amendment from Johnston was inconsistent with the subcommittee’s position. The amendment allows DHSS to move up to $30 million anywhere within the department, excluding Medicaid.
Tilton said she was DHSS budget legislative aide in FY 2014 when the move was first used.
“It was not meant to carry on and continue to be something that ended up being a standard procedure,” Tilton said.
Nevertheless, the subcommittee approved the amendment on a caucus line vote.
Before formally closing out the Department of Natural Resources (DNR) subcommittee on Wednesday, March 20, Chair Gary Knopp (R-Kenai) moved an amendment to remove the unconstitutional OMB language.
“By leaving that intent language in there, it allows them to do whatever they want to do with those funds, not what the legislature intended to be done with those funds,” Knopp said.
The amendment passed without objection.
House Minority Whip DeLena Johnson (R-Palmer) and Rep. Josh Revak (R-Anchorage) became the only two members of any subcommittee to support the unconstitutional OMB language.
“It’s an issue of where the appropriation powers lie. It lies with the legislature,” said Ortiz, echoing Knopp.
Legislative Fiscal Analyst Michael Partlow said the executive branch hasn’t had the power OMB proposed since statehood.
“This would be fundamentally changing the role of the executive in the appropriation process,” Partlow said.
“The governor needs a little bit of flexibility on where to move things to,” Johnson told her colleagues in support of the language.
“This governor has more power than almost any other governor in the United States in terms of line-item veto,” Drummond responded, not referring to Dunleavy specifically.
Drummond said leaving the OMB language in the budget would be almost a constitutional change.
“I’m not inclined to give the governor that kind of power, especially considering the lack of skill in the Office of Management and Budget,” she said.
Rep. Ben Carpenter (R-Nikiski) joined majority members in striking the unconstitutional language.
There was a bizarre moment in the hearing when Revak asked whether Partlow, who had his head down, was texting or sleeping.
“What’s he doing?” Revak asked.
Partlow is a non-partisan expert who was available to the committee for questions on amendments and was not involved in subcommittee debate when Revak made his remarks.
Ortiz let the moment pass without comment.
Carpenter and Ortiz Falsely Claim Any Spending Increase Impacts PFD
The DEED subcommittee was one of several that considered member amendments Wednesday.
Carpenter and Revak voted against two Ortiz amendments that reduced DEED travel expenses by $47,000, a compromise after the subcommittee rejected Dunleavy’s 50-percent travel reduction.
Carpenter said that other subcommittees had accepted Dunleavy’s travel reductions.
“In essence, we’re, in bureaucratic terms, pitting one organization against the other,” he said.
Despite Carpenter’s claims, subcommittees have balked at the travel reductions that include federal funds or DGF. Most of those have been split out and rejected. Travel reductions limited to UGF have generally been accepted.
Ortiz’s travel reductions passed 6-2.
In the DEED subcommittee, Drummond proposed an amendment to increase spending from the Higher Education Fund by $400,000 for dyslexia screening and intervention in anticipation of a dyslexia task force report due next week. She noted that dyslexia impacts one in five people.
Carpenter responded that the move cuts the Permanent Fund dividends (PFDs) of five of five Alaskans to help that one in five with dyslexia.
Ortiz later supported the claim, saying that since there are no tax measures being considered, any budget increases will reduce the PFD.
That is false. DGF spending does not necessarily impact the amount of the PFD and does not impact the amount of the deficit.
“This is a bright spot in this process today,” Johnson said of Drummond’s amendment. “I truly believe in what this task force has done.”
It passed 6-2, with Carpenter and Revak opposed.
Carpenter also struggled with fund sources on an amendment from Rep. Grier Hopkins (D-Fairbanks). That amendment increased receipt authority so the Alaska State Council on the Arts could receive a $1.1 million donation from the Margaret Cargill Foundation to expand to Kodiak.
Carpenter, who was the only subcommittee member to vote against the amendment, argued that the Council on the Arts needs to find more non-governmental sources of funding.
The Cargill Foundation is a private organization.
The subcommittee voted along caucus lines to support a $237,000 UGF increase for the Parents as Teachers program, which Rep. Andi Story (D-Juneau) called a “strategic investment.”
Carpenter argued the cost of $2,500-$2,800 per additional family in the program was a redistribution of State money.
“I’m not sure that this is really a fair use of State funds,” he said.
House minority participation was an improvement over Monday, when they staged a walk-out of the DEED subcommittee.
Law Subcommittee Adds Prosecutors
Subcommittee Chair Andy Josephson (D-Anchorage) cited a Criminal Division budget document that shows the division has shrunk from 245 positions to 212 in five years. It reads,
With fewer staff, the Criminal Division must screen case referrals to focus on the most serious crimes (with an emphasis on sexual assault and other violent crimes) and taking [sic] fewer cases to trial. At the same time that the Criminal Division’s budget was being reduced, the Criminal Division saw a dramatic increase in the number of felony prosecutions filed in court. Felony filings have increased by 18% between FY2017 and FY2018. While all types of felonies have increased, the largest increases have been in the more serious types of crime (i.e. felony assaults and robberies). In addition to an increase in the felony workload, the number of misdemeanors being filed has also increased. With such dramatic increases in workload, combined with staffing reductions, the Criminal Division has been forced to resolve cases short of trial and often at a lower level than originally charged. Increases in the number of cases that are resolved pre-trial (through either a plea agreement or a charge-bargain), often frustrates [sic] law enforcement and victims of crime. Further, it has dampened the morale of those in the criminal justice field and caused worry about the effect… unprosecuted crimes will have on communities.
Claman told subcommittee members that the legislature has cut too deep in the Criminal Division.
While Dunleavy has submitted a bill (HB 49) that would add five prosecutors through a fiscal note, Claman said, “This amendment shows that bringing those prosecutors back is a priority and that it is not dependent on any particular legislation passing or not passing.”
“Are there any offsets that we can look to… or is this simply adding to the budget that the governor’s already proposed?” asked Rep. David Eastman (R-Wasilla).
“The one thing I heard loud and clear from the governor was the one place he was going to be more than ready to spend more money was public safety,” Claman replied.
The amendment passed 5-3, with House Rules Chair Chuck Kopp (R-Anchorage) and House Majority Whip Louise Stutes (R-Kodiak) joining Eastman in opposition.
Eastman was the only subcommittee member to vote against intent language encouraging Law to explore staffing a prosecutor in Utqiaġvik. Currently, it is the only superior court not paired with a full-time prosecutor, requiring a prosecutor in Fairbanks to commute.
Alaska Court System Deputy Administrative Director Doug Wooliver said the therapeutic court system is so popular that current staff can’t address the desire from communities to expand it.
Both the Law and Judiciary subcommittees removed the unconstitutional OMB budget language without objection.
Most House subcommittee work has now been completed, with the major exception of the Department of Transportation & Public Facilities (DOT). That subcommittee has yet to consider Dunleavy’s $98 million cut to the Alaska Marine Highway System (AMHS) that would end the ferries on September 30.
The DOT subcommittee is scheduled to meet Thursday at noon.