Welcome to my last Peggy’s Corner for the 2014 session. We have worked diligently in both houses of the Legislature on many pieces of legislation that will affect our state for many years. Throughout the process this year we have been trying to keep our eye to Alaska’s future.
State employees will be happy to learn that the legislature put in place a long term plan to pay down the unfunded liability in the PERS/TRS retirement systems. $2 billion will be moved from our constitutional budget reserve to the TRS trust fund and $1 billion to the PERS trust fund. It will also change the approach to future funding to a more fixed contribution instead of the more volatile contribution rates that we have seen in the past decade. The amortization terms will be re-evaluated each year by their actuarial firm. This bill received unanimous support from the Senate and House as the cost of doing nothing was simply too great.
We all knew going into this session that education was going to be a key part of this years’ process. Both sides of the legislature worked extensively on the governor’s omnibus education bill. This bill touches all levels of our state education system whether it is a second grader in a traditional school, a student in a technical/vocational education program or one in a charter school. I believe the work done this session has given many legislators a better understanding of the complexity of our education funding package. We all realize the need to transform our educational system to the 21st century and this bill is a start. As my newsletter goes out to you this week, we are still working on the education issues.
The LNG gas pipeline bill that was passed by both the Senate and the House has had a tremendous amount of collaborative work put into it. Both houses worked diligently in various committees our entire session. I have confidence that this is a great start and look forward to the continued evolution of this project. This bill provides a roadmap for developing Alaska’s vast North Slope gas resources. From my perspective, the important components in this bill are having a competitive tax rate, providing affordable energy to Alaskans and having the ability to own a part of our own pipeline. I am also pleased that an Affordable Energy fund is a final component of this bill and that I was able to double the original proposed allocation. This fund would be created specifically for energy infrastructure projects, in areas that are not expected to receive direct benefit from the proposed gas line. This of course would include SE Alaska. This fund has the potential to be a catalyst for new economic growth and jobs far into the future.
This is not a hands-off bill. We are not passing it and then going on our merry way. This will be the biggest pipeline
project in the world if it happens and we will be watching very carefully every step of the way. This whole process will take several years from start to finish – probably 8-10 years—and we actually don’t know if we can work it out to be economical. The Departments of Natural Resources and Revenue will be back before us many times in the next couple years prior to the legislature making a final determination to go forward with the pipeline and related facilities.
This brings me to the budgets for this year. Last year we slowed the growth of government in the operating budget and this year we continued that work by reversing growth. Our guiding principles of fiscal responsibility include living within our means, saving for future needs and identifying core government functions were adhered to with this budget. We were able to reduce the 2015 Operating Budget by $51.4 million. This reduction allows us to add funding for the education system for the next three fiscal years.
We came into this session with a $2 billion revenue shortfall and the forecast for next year is an additional $1 billion shortfall. The budget we just passed is based on the price of oil averaging at least $105.00 per barrel all year long. This budget shaves state government by 2.2%. We will continue trying to budget responsively and live within our means in order to minimize our deficit spending and the draw on our savings.
These same principles were followed in the passage of the capital budget. I am very pleased to have kept intact what we had submitted in the budget on the Senate side. The House added 42 million dollars to the Senate
version of the Capital budget. This included the 10 million dollars for the governor’s Susitna Watana Hydroelectric Project. I was able to channel an additional $1.6 million to District 33.
Thank you to everyone in House District 33 for your numerous emails, letters, and visits throughout the session. I feel blessed to have met so many of you these past two years. This is the end of the weekly “Peggy’s Corner” until next year.
During the interim, please contact either my Wrangell or Ketchikan office if you have questions, need assistance this summer or have an idea for a bill or needed statute change. Blessings to you all!
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