Legislators wrapped up their fourth special session called for the year last week, passing a crime reform bill but failing to take up any new revenue measures.
Passing both chambers, Senate Bill 54 revises the criminal justice reform package passed under SB 91 in 2016. The latest bill is based on recommendations by the Alaska Criminal Justice Commission, including tightening up penalties for Class C felonies and repeat thefts, violations of release and sex trafficking offenses.
“There was definitely a need to work the Senate Bill 91, which I didn’t support,” commented Sen. Bert Stedman (R-Sitka). “So we tightened that up a bit. There still needs to be work going forward on that. Because frankly, in my opinion, we’ve put in a system that allows the low-level criminals to be out on the street. And we don’t have the ability in rural Alaska – or anywhere in Alaska right now – to really deal with the treatment of these individuals.”
“Definitely some changes needed to be made to SB 91,” agreed Rep. Dan Ortiz (U-District 36), who likewise had not voted for last year’s bill. “In that sense I think it was a positive piece of legislation, so I feel good about that. However, there is that one outstanding issue about the constitutionality of a particular portion of that bill. If there’s not a workaround arrived at by the administration and their legal team we’re going to have to address that issue, probably first thing.”
The Senate had previously passed SB 54 back in April, but it had not been taken up by the House by the end of the regular session. Governor Bill Walker had placed it on the agenda for the fourth of subsequent special sessions held so far this year, along with a proposal to implement a statewide income tax. Passing both chambers before the special session’s end, Walker signed SB 54 into law on Monday.
Absent from his desk was his tax bill, which was not taken up for consideration by the Senate. House Bill 4001 and SB 4001 were both versions of Walker’s proposed tax on payrolls and self-employment earnings, at a flat 1.5-percent for both resident and non-resident workers. The tax would be capped either at $2,200 or at twice the previous year’s permanent fund dividend amount, whichever is higher. The governor’s proposal was projected to generate between $300 million and $325 million each year.
The latest estimates of Alaska’s deficit for FY18 is at $2.7 billion, worse than expected when the budget was adopted in June. State savings meanwhile have been drawn from to make up for its multiyear, multibillion-dollar deficits, with an estimated $14 billion having been drawn upon over the past six years. Standing now at $2.1 billion, the Constitutional Budget Reserve will at this rate be depleted before the start of the new fiscal year next July.
Measures to address the state’s red ink during this year’s regular session included several similar proposals that would have restructured the state’s Permanent Fund, from whose earnings residents receive their annual dividends. The bill which received the most traction had been SB 26, which proposed a 5.25-percent annual draw toward the fund’s earnings reserve. This reserve would then be split between a dividend and operational spending.
Making available around $2 billion for the state’s coffers each year, of the different new revenue sources proposed SB 26 would have been the best option to close up the annual deficit. The item passed the House but not the Senate during the regular session, and after an appearance on the agenda of the first special session held afterward was no longer put forward.
Speaking before the special session, Stedman was of the opinion that taking up the more modest payroll tax before addressing the Permanent Fund would have been out of step. “To deal with a deficit of this magnitude it is going to need the help of the Permanent Fund. That’s the biggest piece of the solution that needs to be implemented, and in my opinion that should come first,” he commented after the session ended last week.
“It’s frustrating that we didn’t see any movement on that particular issue,” said Ortiz. “It kind of got taken over by the crime bill.”
Looking ahead to the next regular session, which begins in late January, Ortiz and Stedman both considered the Permanent Fund restructure to be the largest issue facing the Legislature. Though he was not quite ready to discuss the details, Stedman said his office was working on a filing dealing with just that.
“It’s not going to be anything earth-shattering, but we need to deal with this fiscal issue,” he said of it. “We’ve dilly-daddled and burned through our cash, and the chickens have home to roost. So the Permanent Fund is going to be front and center.”
“There’s not going to be any choice. It’s not like we can do what we have been doing up to this point, which is to balance the budget with funds coming out of the Constitutional Budget Reserve,” said Ortiz. Exhausting the CBR and potentially defaulting on the state’s debts seemed to him to preclude further inaction on the part of legislators.
“That’s not in anybody’s best interest. Anybody,” he reiterated. “Even though there’s been a deadlock on this issue, between the House and the Senate and the governor up to now, our solution to that deadlock is no longer there. It’s not even an option. I’m quite confident something will be done.”
As far as filings for the next session go, Ortiz said he was still intent on seeing through a pair of bills which would support the development of mariculture in Southeast. Ahead of the session’s start, he plans to visit constituents in Wrangell for feedback on the upcoming agenda, likely in early January.
Reader Comments(0)