The operating budget is headed to the House floor after committee members worked late into the night Thursday on amendments.  They adopted cuts to the Alaska Marine Highway System (AMHS) and the University of Alaska, though not as deep as Gov. Mike Dunleavy proposed.

House Finance adopted a new committee substitute for the operating budget Friday, April 5.

That CS incorporates all of the amendments to subcommittee recommendations that members of the full committee made over the previous two days.  Those amendments include $10 million cuts each to AMHS and the University.

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House Finance did not complete the amendment process until 11pm Thursday night, meaning that the Legislative Finance Division and the legal arm of the Legislative Affairs Agency were up all night drafting the new version of the bill.

“I would like to thank them for working all night and all morning,” House Finance Co-chair Neal Foster (D-Nome) said during a brief hearing.

The CS spends $4.256 billion in unrestricted general funds (UGF), a $257 million reduction from FY 2019.

The deepest cuts are to the Department of Health & Social Services (DHSS).  $58 million of the $73 million reduction in DHSS is from projected Medicaid savings.

In total, the committee reduced agency operations by $114 million. 

Statewide items were reduced by $143 million, largely due to a $139 million cut to school bond debt reimbursement and rural school construction.

Rep. Colleen Sullivan-Leonard (R-Wasilla) was the only member to speak for or against adoption of the CS Friday.  She said the reductions were appreciated, but not deep enough.

Dunleavy’s budget contained $661 million more in reductions to agency operations.

The committee adopted the CS along caucus lines.  There was no objection to moving it out of House Finance.

Committee Votes to Cut AMHS By $10 Million

House Finance was in session for 12 hours Thursday, working until 11pm on big ticket items, including AMHS and the University.

The committee passed a five-percent cut statewide for highways, aviation, and facilities, as well as a $10 million cut to AMHS.

House Finance Co-chair Tammie Wilson (R-North Pole) offered the amendments together to demonstrate that the whole state must bear the burden of budget cuts, not just AMHS.

Sullivan-Leonard’s attempt to separate a vote on highways from AMHS failed along caucus lines.

“Part of Alaska, folks, is islands.  We can’t drive everywhere,” Rep. Dan Ortiz (I-Ketchikan) said during Thursday night’s hearing.  “We built those boats before we ever got oil money.  During that time, it was a priority.  I don’t know how it’s any less of a priority now.”

“I just don’t know why these cuts have to happen at all.  I just don’t understand the purpose of the highway or Marine Highway cuts,” Rep. Andy Josephson (D-Anchorage) added.

Ortiz and Josephson were the only committee members to vote against the cuts.

The committee rejected a separate $41 million cut to AMHS offered by Sullivan-Leonard.  She said the cut would have reduced service after September, but the only port that would go without service would be Prince Rupert, British Columbia.

“With great respect, I’ve come to look at you as a friend,” Ortiz told Sullivan-Leonard before exclaiming, “Holy smokes!”

“Prince Rupert is, like, one of the main ports that feeds into Ketchikan.  It’s an opportunity for people to drive across the highways through Canada and catch a six-hour ferry ride to Ketchikan versus a 36-hour ferry ride from Bellingham, Washington,” Ortiz said.  “I appreciate the thought here in terms of attempting to save the State money, but to just go in and say, ‘Okay, no longer service to Prince Rupert,’ as a part of this amendment, I don’t care who you talk to, there’s no way that’s not going to have a negative impact on our economy, on tourism, on all kinds of things.”

Josephson said, “I’m just shocked that the administration is interested in having as part of its legacy the end of something that is iconic for the state of Alaska.  Iconic.”

“No one’s talking about ending it,” Rep. Ben Carpenter (R-Nikiski) countered.  “What the administration is asking, what fiscal responsibility demands of us, is that we find a better way to do those things that we need to do.”

Dunleavy proposed to cut AMHS by $98 million.  That cut would cease operations in October.

Alaska Public Media reported that the M/V Fairweather was quietly removed from service this week and prepped for sale, along with the State’s other fast ferry, M/V Chenega.

Rep. Kelly Merrick (R-Eagle River) amended Sullivan-Leonard’s amendment, reducing the cut by half.  Even so, the additional cut to AMHS failed along caucus lines.

University Also Cut $10 Million, But K-12 Money Spared

In addition to cutting AMHS by $10 million, the House Finance Committee voted late Thursday night to cut the University of Alaska (UA) by $20 million.  The UA subcommittee increased funding by $10 million, making the House Finance move a net reduction of $10 million from FY 2019.

Rep. Gary Knopp (R-Kenai), who offered the cut, said it brings University funding in line with FY 2018 actuals.

Josephson tried to keep flat-funding by amending Knopp’s amendment.

“Education does take money, but it’s an investment that’s well worth it,” Ortiz said in support of Josephson’s effort.

That failed.  Rep. Bart LeBon (R-Fairbanks) joined Josephson and Ortiz in support of flat-funding.

Knopp’s cut then passed 7-2.  Josephson and Ortiz voted no.

Sullivan-Leonard subsequently moved to cut the University by an additional $56 million.

When Wilson clarified that it would be a $76 million cut when coupled with Knopp’s amendment, Sullivan-Leonard simply replied, “Sure.”

“It has to be understood that if this amendment passed, and if the Senate joined in this amendment, and if the bodies concurred… it would certainly be a rational decision for it to shutter and close one of its three main campuses,” Josephson said of the University.  “That’s a game-changer.  That’s a cultural shift for Alaska.”

Merrick joined majority members in voting against Sullivan-Leonard’s cut.

Carpenter also tried to cut the $30 million in one-time FY 2020 public eduction funding that the legislature passed last year in HB 287.  Dunleavy proposed to repeal those funds in his own version of the budget.  

Knopp referred to the committee’s previous action to cut $139 million from reimbursement for school construction and repair.

“Since we have now completely repealed the school bond debt reimbursement, I’m definitely not going to support this,” he said.

“We added this money, and I don’t think that we should change course,” Josephson said.  “The reports from educators are that it’s necessary, and we should stay with it.”

Carpenter’s amendment failed 3-8.  Merrick again joined majority members in opposition.

Wilson said she may vote for the $30 million cut on the House floor.

House Finance Preserves Alaska Grown, Compromises on Recorder’s Offices

Merrick offered amendments Thursday to cut agricultural development programs, including Alaska Grown marketing.  The cuts were part of Dunleavy’s budget.

“A lot of what we’ve been doing here tonight is simply moving the governor’s request of things that budget subcommittees have resoundingly rejected,” complained Knopp.  “In the budget subcommittee process, we probably received no less than 150, maybe 200, letters, emails, and phone calls… in support of this.”

“In a state that’s open for business, I think this is one of the things that’s moving forward,” Knopp said of the agricultural programs.

“This speaks to the need to diversify our economy and reward strong efforts and devoted people,” Josephson agreed.

The cuts to agricultural development and marketing failed, 5-6.  Wilson joined the minority in support.

The committee adopted a compromise on Dunleavy’s plan to consolidate recorder’s offices in Anchorage while closing the offices in Fairbanks, Palmer, Kenai, and Juneau.  The offices are vital to the mining community.

“This department is net positive,” Knopp said in opposition to Dunleavy’s plan. “It pays for itself, and plus, it generates additional revenue.”

Knopp noted that 45 percent of the work of recorder’s offices can’t be done online.

“Everything can be done online, except the plats, and they can be done the old-fashioned way, through the postal service,” countered Merrick, who offered the amendment to close all the offices.

When that failed 5-6, Merrick offered an amendment just closing the Palmer and Juneau recorder’s offices.

“Now this one I can get behind,” said LeBon.

It passed without objection.

Along caucus lines, the committee rescinded its action to require the shellfish-growing industry to pay for its own biotoxin and water testing, maintaining the fund source as the Commercial Vessel Fund.  LeBon and House Finance Vice-chair Jennifer Johnston (R-Anchorage) switched their votes.

Merrick had offered the cut to mariculture.

Funding for VPSOs Preserved, But Additional Prosecutors Cut 

Though crime and public safety have been hot topics in this legislative session, House Finance members offered amendments to cut crime-fighting tools.

Merrick offered two amendments to cut Village Public Safety Officers (VPSOs), saying that 10 of 55 positions were vacant in December.

“I’m inclined to give the program another year to show that it can fill open positions and have the funding available to do so,” LeBon said in opposition.

One of the amendments cut $2.1 million, while the other cut $1.2 million.  Yet both said they were intended to reduce “VPSO program funding to align with vacancy rate.”

“Which one actually aligns with the vacancy rate?” asked Wilson.

Without answering Wilson’s question, Merrick said that the program has lapsed funding the past several years.

“I believe this is a truth in budgeting issue,” she said.

“We have villages out there that don’t have any public safety component, anybody to assure that folks are going to be safe in their villages,” said Foster.  “Last year, we had put in intent language that stated that excess funding would be used for recruitment and retention.  To me, it doesn’t appear that that’s been happening.”

Wilson noted that excess funding was supposed to go to housing.

“I actually took a visit out to Shungnak this past year, and I wasn’t sure how I would like to live in a house that had little to no insulation, and also, if I got a prisoner, I got to stay up all night watching him or her as they were handcuffed to a chair,” Wilson said.

“We don’t treat VPSOs with the stature we should treat them with,” Josephson agreed.  “They get shortchanged a lot.”

Merrick argued that if the VPSO program uses all its funds, it can make a supplemental budget request.

Merrick’s deeper cut failed along caucus lines.  Sullivan-Leonard then joined majority members in voting against the smaller cut.

The committee voted to delete five prosecutors that were added via amendment in the Department of Law subcommittee.

Dunleavy’s HB 49 would also add five prosecutors, noted Wilson, who offered the cuts.

“It has been my commitment… to work with Representative Josephson when we do receive the crime bill, which we will all see on this committee, to look at these positions at that time, because we’ve never put positions in in anticipation of seeing a bill or not seeing a bill,” said Wilson.

Josephson noted the Criminal Division has said crimes are not being prosecuted and plea deals are being bargained because of insufficient staff.

“Even if there were no crime bills… these folks are needed.  The reason they are needed is the caseload is absurdly great,” argued Josephson.

HB 49 is currently in the House Judiciary Committee.

“What really frustrates me is the current political climate indicates that most all of the governor’s requests, whether they be bills or budgets, are being challenged by this majority.  So I have to question whether we’re actually going to see crime bills come forward,” said Carpenter.  “I think the people are speaking that they want us to address crime in a major way, and this is not it.  Just throwing a few bodies at it is not it.”

“Going through the budget process today, it seems that the arts and humanities are so much more important than getting prosecutors,” argued Sullivan-Leonard.  “Are arts more important than prosecutors and fighting crime?  I don’t think so.”

“There is a system problem,” Wilson responded.  “What I’m just asking is let’s try to work on the system, not just one part of it.”

Wilson’s amendments cutting the prosecutors passed 6-5.  Merrick, Sullivan-Leonard, Ortiz, and Foster joined Josephson in opposition.

House Finance lastly voted to cut the legislature’s budget by $2.6 million.

Wilson said the cuts would include the fund that supplied the pizza members ate Thursday night.

“What, no pizza?!” Ortiz joked.

“Well, not as much, Representative Ortiz, as you’ve had,” Wilson replied with a smile.

“I just believe that we should feel some of the pain as everybody else has,” Wilson concluded seriously. 

The cuts to the legislature passed without objection.

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