State budget and ride-sharing

Dear friends and neighbors,

Spring is in the air, and of course there is eternal hope for a timely end to session here in our State Capitol.  We are now down to less than a month to go for us to finish in our statutorily limited 90-day session.  The budget is well on its way, with a big difference in where the House and the Senate would like to end up.  The discussion about whether we provide adequate funding to support state services (House version of the budget) or whether we put undue pressure on state services by cutting education, health care, public safety (Senate version of the budget), will take place in conference committee where the two versions will be reconciled.

Where are we on the state’s budget?

On Friday, the House passed a fully funded operating budget for Fiscal Year 2018 that will ensure that we are able to deliver essential services to Alaskans.  The $5.1 billion General Fund operating budget reduces spending on agency and statewide operations by a net of $82.5 million compared to the 2017 budget, even after Governor Bill Walker’s vetoes.

Cuts this year (in thousands):

Along with my House colleagues, I continue to work towards a balanced fiscal plan that does not overly burden any one sector of our population or economy.  A sustainable and balanced fiscal plan will impact every Alaskan to some degree.  The geographic size of our state and our small population means that Alaskans would carry a very heavy burden for funding our state services through any single broad-based tax.  This is why we need to look at carefully restructuring how we use excess earnings of the Permanent Fund creating a sustainable draw that will allow for payment of a dividend, at the same time allowing us to utilize a steady payment from the Earnings Reserve to support state services.

From my perspective, a sustainable fiscal plan includes continuing to manage our budget so that we are able to provide necessary public services to Alaskans.  In order to pay for that budget, and because oil prices continue to run low, I believe we need a broad-based income tax.  An income tax combined with a sustainable draw from the Earnings Reserve and a temporary cap to the dividend starts to get us closer to sustainability.  The House Finance Committee has introduced House Bill 115 that accomplishes the above stated objective. 

March 28, 2017: Gustavus School contributes pieces to the recent installment of the Art in the Capitol program – thank you, Gustavus!

We also need to look at how our oil and gas tax policy operates under low oil prices, because the policy makers, at the time we moved away from Alaska’s Clear and Equitable Shares (ACES), did not provide adequate consideration to what happens in a low oil price environment.  As a result, we are paying much more in oil and gas tax credits than we could ever expect to see return through production increases.  The House Resources Committee has introduced House Bill 111 to tackle this problem.

There are other things that will need to be done in order to make sure we have a sustainable budget and a way to pay for it, but these are the pieces that need to happen this year to keep us from using up too much of the reserve funding that is currently available in the Earnings Reserve account. Thank you to everyone who has contacted either me, Finance Committee members, or other members of the Legislature regarding our fiscal issue.  Also, I appreciate everyone who took the time to call, email, or speak in person during public testimony.  Public comments are very important as we consider and deliberate on these very difficult issues for our state.

March 19, 2017: A fun week of basketball in Juneau at the Lion’s Club Gold Medal tournament – thanks and congratulations to all the organizers, teams, and fans!

Transportation Network Companies (The Uber bill)

Transportation Network Companies (TNC) like Lyft and Uber utilize mobile apps and websites to connect customers with drivers providing point-to-point transportation using a driver’s non-commercial vehicle. 

Two bills (SB 14 & HB 132) seek to address this issue, and both have had a number of hearings.  These bills will open the door for ride-sharing services to begin operations in Alaska.  The issue is starting to make the news, and you can find articles here, here, and here.  We have heard from many Alaskans with a desire to see TNC operations come to our state, and we are committed to making sure this platform is available and works for Alaskans.

Personal Legislation update

In addition to everything else that is going on this session, I have a number of personal bills.  You can see a full list of legislation I’m sponsoring here.  Below I highlight a few of those bills.

•         HB90 changes statute to spread the total cost of investigation charges for professional licenses to all licensed/registered professionals.  Currently, each profession is responsible for the cost of investigations for their license, but for some of the boards with smaller numbers of licensees, investigation costs have put a financial burden on the licensees that is in danger of becoming a barrier to practice for those professions.  HB90 is in House Finance and awaiting a second hearing.

•         HB91 increases the fee for legislative lobbyists who register with the Alaska Public Offices Commission (APOC).  The revenue generated by this fee will help APOC administer Alaska’s disclosure statutes and publish financial information regarding the activities of election campaigns, public officials, lobbyists, and lobbyist employers.  HB91 is awaiting its first hearing in House Finance.

•         HB124 modifies Alaska’s corporation statutes to allow for the establishment of an entity called a “benefit corporation”.  A benefit corporation is a for-profit corporation that is allowed to incorporate public benefits and community improvements into its by-laws and hence business practices.  HB 124 will be heard next in House Labor & Commerce.

March 21, 2017: It was great to welcome the 2017 Spring Alaska Association of Student Government to the Capitol!

Heads up

•         Permanent Fund Dividend application: The deadline to apply is March 31. You can apply online, or call the Juneau Permanent Fund Dividend office at 465-2326 to get more information on how to receive a paper application.

•         Thanks to the organizers of the 2017 Alaska Association of Student Government (AASG) spring meeting for their hard work in putting on this year’s meeting, which included a student tour of capitol. I enjoyed meeting with the students during their visit.

Best wishes,

Sam Kito III