PETERSBURG — State Senator Bert Stedman predicts the legislature will be in session for a full 120 days with an additional 30 day session if they are to complete their work this session.
“There’s a lot of talk of the 90 day session but the constitution calls for 121 days.
“We’ve only finished in 90 days one time,” Stedman noted.
Stedman was in Petersburg this past weekend to attend the Chamber of Commerce Annual Banquet along with his wife Lureen.
Stedman said there is a “near zero chance of a 90 day session with any quality work being accomplished.”
The Senator said it will take probably a couple more years before the state budget issues are fully resolved.
“We’re not a homogenous group by any means. There will be a multi-year step approach to get out of this budget downturn,” Stedman predicted about his fellow legislators.
Stedman explained that government has to shrink more before an income tax is brought forth. The Rail Belt wants to implement sales taxes while Coastal Alaska is more inclined to have an income tax, because they already have sales taxes in many communities. Implementing a statewide sales tax is a huge concern, “because we would have Amazon.com instead of Main Street.”
Stedman says, “There is no way out of this without help from the Permanent Fund.”
That help has been under debate for the past two weeks.
He noted that the state has $4.2 billion in cash and needs $1.5 to 2 billion to operate. “Those that say stay out of the permanent fund are literally saying let’s shut the state down on July 1, 2019 and that’s unacceptable,” Stedman emphasized.
“Agencies need to come forward with programs they can eliminate. We can’t just reduce everybody’s budget,” he added.
Ferries: While the two new Southeast ferries now under construction in the Ketchikan shipyard are funded with appropriations Stedman put in place while chairing the Finance Committee, the discussion now is over whether the replacement vessel for the Tustemena can be built in the Ketchikan yard.
“I think they can. We’ll build them ourselves. We, the people of Alaska own that shipyard… it’s managed by Vigor,” Stedman stated.
On a positive note, the new federal highway bill contains Capital funds for the Alaska Dept. of Transportation and the Alaska Marine Highway System. A bill signed by the Obama administration will pump close to $3 billion into ADOT for the next five years. Stedman said, “It will be for capital projects not operations. But that frees up cash flow for the AMHS.”
Finance committee meetings last week were appalling Stedman said. State DOT funding was cut by 1/3 and the AMHS budget was cut by 2/3.
“It’s all about the money… we don’t have the political clout to fight the rail belt,” he added.
“My colleagues in the Railbelt want the $80 million in ferry funding for use in road projects in Anchorage and the Mat Su Valley,” according to Stedman.
SE Conference Proposal: Stedman has yet to talk with the S.E. Conference about their proposal to revamp the AMHS operation into a system that is operated like a business with State money.
Management can’t respond to labor and scheduling matters fast enough with continual cuts to the system.
“How are you going to replicate the $80 million subsidy? How do you deal with the labor unions? It’s a virtual partnership and it’s very difficult to de-link the two. You can’t fire all the union employees and go non-union. That’s heresy. It’s more complicated than that. I’m very skeptical of that plan,” Stedman said.
“I’d rather fight the financial battle year by year,” Stedman concluded.
Budget Requests: Folks lobbying for funds in Juneau, were starting to, “get it” for the past couple of years, according to Stedman.
He still wants to see the capital project priority lists from each community. “I want to see the infrastructure needs of the community. It’s a good exercise,” he added.
“Clearly K-12 funding is a constitutional obligation as well as a moral one,” said Stedman.
“We need to educate our kids. We can’t have a group of students with a second rate education. Public Safety, Courts, Prosecutors, Alaska Dept. of Fish and Game all have critical funding needs.
As far as priorities he said even though they provide emergency services for local communities, public radio is way down the list. “The quicker they can be self-sustaining, the better,” Stedman added.
Oil Taxes: “The tax structure for the oil industry will change. It’s unsustainable. We can’t afford the credits and it doesn’t cash flow,” said Stedman.
The Smith Bay project near Prudhoe Bay has been described as the largest oil find in Alaska in over 40 years. Smith Bay developers are talking of a project of up to 300,000 barrels a day in a find located a little west of Prudhoe. “It’s a big deal,” said Stedman.
“It will probably take $6-7 billion to open up. We were paying 75 percent of the development costs. This year it goes to 35% of their costs. We cannot afford to pay 35 percent of 6-7-8 billion dollars with no cash flow coming in, other than to take it out of the permanent fund and that’s absolutely unacceptable. Even the industry realizes we have to change the structure,” said Stedman.
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