The FY19 state operating budget, House Bill 286, totals $6.27 billion in General Fund (GF) dollars (including Permanent Fund Dividends). This is about $1.87 billion less than FY15, or a 23% reduction. The budget incorporates the rules-based endowment or Percent of Market Value (POMV) approach that the legislature approved earlier this week (SB 26) to use the earnings to protect the dividend in the future and pay for essential public services. The 5.25 percent draw totals $2.7 billion. $1.69 billion will be used to help pay for public services like public education, State Troopers, and road maintenance. $1.02 billion will be used to fund $1,600 PFDs this fall.
Below is a brief summary of the operating budget:
- Public Schools (K-12) – The bulk of education funding—$1.28 billion—is addressed in House Bill 387, which the Governor has signed into law.
- Pre-K – $2 million for Pre-K grants.
- Alaska Performance Scholarships & Alaska Education Grants – $11.75 million.
- $942 million to inflation-proof the value of the $65 billion Alaska Permanent Fund.
- Permanent Fund Dividend – $1.02 billion to pay for $1,600 Permanent Fund Dividends for eligible Alaskans.
- Criminal Division – Five new prosecutors and three new support staff to start reversing the impacts to public safety from earlier budget cuts. Fully funded a second prosecutor that was added in the FY18 budget process.
- Civil Division – One new attorney in the commercial and fair business division in increase collection of funds owed to the state.
- Public Defender Agency – Four new public defenders.
- Office of Public Advocacy – Four new Guardians ad Litem.
- State Troopers – Increased funding by up to $12 million to increase the number of troopers.
Health and Social Services
- Pioneer Homes – Increased funding by $573,000 for the Pioneer Homes, and increased the Pioneer Homes ability to receive Federal Funding by another $550,000.
- Medicaid Services – Reduced funding by approximately $30 million to reflect the savings anticipated from the work of four new positions to increase tribal claiming efforts;
- Alaska Psychiatric Institute – Increased funding by $75,300 to address the critical nursing shortage
University of Alaska
- A $10 million investment in the University of Alaska above the Governor’s original proposal
- Oil and Gas Tax Credits – The legislature passed HB 331, which enables the state to secure bonds that will provide the state with a long-term plan to repay the oil and gas tax credits.
You’ll find the Conference Committee motion sheets with decisions here. The Conference Committee reports are here.
The FY19 operating budget represents a modest increase of $69.5 million GF over the FY18 Management Plan budget.
The House Majority Coalition met after adjournment to take questions from the press.
Click here to watch the Press Availability.
Capital Budget Approved
The capital budget appropriates $148.6 million in Unrestricted General Funds to leverage over $1.1 billion in federal funds for capital improvements. The budget includes:
- University of Alaska – $2 million for deferred maintenance;
- K-12 – An additional $20 million in education funding for FY19 (equivalent to a $78 BSA increase);
- Pre-Kindergarten Grants – $3 million for FY19 and $3 million for FY20;
- AK Travel Industry Association (ATIA) – $3 million;
- Medicaid – $28 million for Medicaid services to cover the shortfall in this year’s budget (this amount, the result of a compromise, is less the $48 million requested by the Governor and supported by the House Majority Coalition to pay current expenses—the Medicaid budget for next year will likely require supplemental appropriations in 2019, but next year’s projected shortfall is less than this year’s shortfall);
- Community Assistance – $4 million;
- Enhanced 9-1-1 Service for Rural Alaska – $3.5 million;
- Substance Use Disorder Treatment – $12 million focused on addressing the opioid epidemic;
- Alaska State Troopers – $2 million for crime prevention and response and equipment;
- Community Watch Program – $75,000;
- Sexual Assault Kits Backlog Analysis and Storage Equipment – $2.75 million to address the state’s backlog of untested rape kits.
Anchorage and District 21 specific items:
- Port of Anchorage – $20 million for reconstruction;
- Pioneer Homes Renovations and Repair – $1 million;
- Hillcrest Subdivision Clean Water Improvement District – $500,000;
- Hillcrest Subdivision Drainage – $250,000;
- Anchorage Police Department – $2 million for crime prevention and response and equipment.
Click here for Legislative Finance Division reports on the final capital budget bill.
Legislature Approves Key Legislation Prior to Adjournment
In addition to approval of the operating and capital budget, the legislature approved other key legislation: (1) early funding of public education, (2) establishing an endowment structure for the Permanent Fund to protect the Dividend and support essential services, (3) authorizing state bonds to pay oil and gas tax credits, and (4) improving public safety for safer neighborhoods and communities for Alaska’s families.
Early Funding Public Education
As we discussed in a previous newsletter, House Bill 287 appropriates $1.3 billion for K-12 education and student transportation in FY19. A provision of the bill funds education in the same amount in FY20 and adds an additional $30 million in one-time grants to school districts. The $30 million increase for FY20 is equivalent to a $117 increase to the Base Student Allocation (BSA).
Endowment Structure for the Permanent Fund to Protecting PFD and Essential Services
Senate Bill 26 implements an endowment structure for the Permanent Fund with a percent of market value approach (POMV) to use earnings from the Alaska Permanent Fund to pay dividends and support essential services. It limits the appropriation from Permanent Fund earnings for essential government services and dividends to 5.25% of the fund's value for the next three years and 5% after the first three years.
Click below to see how SB 26 changes the spending of Alaska Permanent Fund earnings:
State Bonds to Pay Oil and Gas Tax Credits
House Bill 331 allows the Department of Revenue to purchase oil and gas credits at a discounted rate by using funds from the sale of authorized bonds. HB 331 closes out Alaska’s remaining financial obligations from the cashable tax credit program at no additional cost to the state.
Improving Public Safety
As we discussed in my our last newsletter, House Bill 312, sponsored by my office, increases protections for medical providers and addresses the greatest public safety needs in Governor Walker’s Public Safety Action Plan: consideration of out-of-state criminal history, improved pre-trial supervision, and stronger tools for police and prosecutors to fight the sale of illegal drugs.
Passage of HB 312, which passed with near-unanimous support (19-0 in the Senate and 31-1 in the House) reflects the legislature coming together in our commitment to improve public safety and wise use of our public safety funds.
Mark your calendar for these upcoming events:
Airport Communications Plan Public Meeting
Join the Sand Lake Community Council on May 15th for a discussion of the Anchorage Airport Communications Plan. The Airport Communication Plan directs how the airport works with community to notice changes. This event will be a public meeting on the updated communications plan and is focused on communication protocols and expectations between the airport and the community.
When: Tuesday, May 15th from 5:30-8:30 PM
Where: Ted Stevens Airfield Maintenance Facility, 5740 DeHavilland Ave
14th Annual Bike to Work Day
Register by creating an account on LinkAK.org and joining the Bike to Work Day Challenge!
There will be more than 40 snack stations throughout the Municipality of Anchorage, as well as some fix-it stations and other shenanigans provided by our wonderful community partners.
When: Friday, May 18th from 6:00 AM to 9:00 AM & 4:00 PM to 6:00 PM
Where: Check out the map for this year’s stations and don’t miss the bacon station hosted by Bike Anchorage!
Visit the Facebook event page to RSVP and for more information, visit the Municipality’s website.
Alaska Barefoot Mile
Be a part of the solution to end human trafficking in our state and beyond. The Barefoot Mile is a 1-mile barefoot walk where participants stand behind the cause of ending human trafficking. The Barefoot Mile reminds us how effective our community can be when we join for a common goal, which is the safety of innocent individuals. Come for a fun family event to walk bare foot in solidarity with victims of trafficking from Alaska and around the world. Enjoy music, food trucks, and booths while supporting and learning about this crime and how to end it. Bring the whole family. Participation is free, but please register online here.
Barefoot Mile participants, including Mayor Berkowitz, gather at Town Square during the 2017 event.
When: Saturday, May 19th from 1:00-4:00 PM
Where: Anchorage Town Square, 544 W. 5th Ave
As always, please let me know if you have any questions or concerns.
Rep. Matt Claman
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