S. Finance is underway. They're taking a look at the revenue forecast with DoR's Chief Economist Dan Stickel. Stedman prefaces by saying investments have surpassed oil, but "that might be switching around."


Watch: w3.akleg.gov/includes/_play…
Docs: akleg.gov/basis/Meeting/…
Stedman says they all need to start settling into a base number for oil price. The state has started to update it more regularly, which Stedman suggests is not particularly helpful because it can make for big swings in the budget outlook.
How's the state's economy doing? "Still a ways to go," Stickel says.
Here's the basics of the state's forecast assumptions with the key being who really knows with this whole pandemic. Most sectors are recovered or close to recovered, Stickel stays, except for tourism. State expects 1.5M visitors in the next year.
Stedman says he wants to get a more realistic oil price projection. He says he's concerned "some in the building" might think that it's more stable and certain than it really is and therefore "want to budget on numerics that may never materialize."
Getting into the inflation talk.

Revenue's banking on 2% annual inflation.

Stickel says there's debate right now whether the 7% inflation seen last year is a trend or transitory.

Stedman says he believes it'll be "substantially" higher.
For the visual folks, here's a handy chart for different revenue sources. Stickel says the state had two windfalls in 2021, "the unusually and exceptionally high return on the Permanent Fund" and federal stimulus packages. Both are one-time impacts.

Petroleum is 5.3% of revenue.
Stedman notes that the Legislature can't actually spend the Permanent Fund's one-year windfall because the payout is based on a 5-year average. Says a look at the undesignated general fund revenue will be more useful.

Stickel agrees.
Alaska hit record revenue in 2021... with the caveat that most of it is in the Alaska Permanent Fund and therefore not available to be spent (under non-binding rules).

Stedman notes legislators shouldn't be "euphoric" about spending that $16B.
Stedman makes the point that just as the market can return +30% in one year, it can also return negative returns. He says the state should brace for potential very low returns and asks that Stickel keep that in mind when talking to other legislators.

Says it can be misleading.
Wielechowski, through some questioning, pokes some holes in this presentation. He notes the forecasted $1.5B in investment revenue would be something like a 1.5-2% return for the Perm. Fund.

Stickel seems to suggest that is filtered through the POMV... yet the boom year isn't.
They touch briefly on the sweep issues the Dunleavy administration approached with a "novel" reinterpretation that's resulted in several legal challenges and sweeping upheavals of the process.

Stedman says they'll need to work to untangle it all: "It's kind of a mess, frankly."
On the corporate income tax issue created by CARES Act allowing companies to carry losses. The state's taxes are automatically linked to the feds, would take a bill to change.

Sen. Wilson asks if the state's working on one.

Stickel punts to deputy commissioner, who has hung up.
Sens. Wielechowski and Stedman both recall that the administration SAID it would be looking at legislation to sever the connection on that point, thereby protecting the state corporate income tax rate.

They'll keep pressure up.
Onto oil price forecasts.

Sen. Stedman asks for a look at the deficit "so we don't get caught in a state of euphoria of high oil prices and put in a fiscal structure in the state that can't be maintained, and we end up blowing a big deficit in our budgets going forward."
Sen. Wielechowski on changes since oil tax changes: "We've got less jobs, less investment, less revenue to the state, a PFD that's a third of what it should be. ... There should be some accountability here. ... We're giving away money and not getting what we were promised."
Sen. von Imhof says that they should keep in mind that oil prices fell, and oil companies had a couple tough years: "There's a lot of factors that affect capital investment decisions and jobs."
There's been a long and mostly technical look at oil tax credits.
Sen. Wielechowski connects credits, PFD: "I want the people of Alaska to understand the connection. We're allowing 1.24B in deductible oil credits, the governor is seeking $199M in refundable tax credits, $785M in net operating losses ... We're giving away money left and right."
Wielechowski says all these concerns about not having enough money for a PFD is a direct result of the "massive corporate welfare" to the oil companies.
Wielechowski notes that the state is running up against the 15-year deadline to complete some oil and gas audits: Are you 100% sure you're going to meet it and not blow the statutory deadline?

Glover of the tax division: 100% sure we'll make it.

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More from @mattbuxton

Jan 21
On the board testimony issues, Judge Matthews: "Both parties make arguments that are well-grounded."
He says Singer already had the chance to file testimony and supplemental affidavits for his witnesses. Singer doesn't get to call additional re-directs (additional questioning) but can file supplemental affidavits for consideration.

Plaintiffs would get opportunity for cross.
Wells apologizes for requiring Bahnke fly into Anchorage, says she will not be calling her for cross examination today
Read 33 tweets
Jan 21
The first day of the trial challenging the Alaska Redistricting Board's work is underway. Today, they'll be kicking it off with the East Anchorage plaintiffs, who are challenging the Senate pairings with the conservative Eagle River.

#akleg #akredistrict

It's going to be an unusual trial because the direct testimony has already been filed. The opening arguments, too. They'll be starting out with cross examination and then direct testimony.
First, they're taking up several objections raised by the Alaska Redistricting Board against lay testimony and expert testimony brought by East Anchorage.

Judge Matthews rejects both motions, adding that he'll take the hearsay testimony as it comes.
Read 87 tweets
Jan 20
The House Finance Committee is underway with an overview hearing on Gov. Dunleavy's budget proposal.


Watch: akleg.gov/includes/_play…
Presentation: akleg.gov/basis/get_docu… Image
Steininger explaining how the state's budget has been reduced by ~5% since Dunleavy took office with most of the cuts coming to the University of Alaska and a few other areas. Notes quite a bit of it, though, has been eaten up by more spending on public safety, corrections. Image
Rep. Foster asks why Steininger chose FY19 as the starting point, asking whether it's intended to make the budget look better.

Steininger says it's to "focus on the achievements of this administration."
Read 36 tweets
Jan 20
Meanwhile, the Superior Court has its final pre-trial briefing. The Alaska Redistricting Board is refusing to make members Borromeo and Bahnke available to testify on Senate pairings.

Singer: "I don't have any obligation" to provide witnesses who didn't support the plan.

Singer, board's counsel, says the depositions are fine.

It sounds like they're going to be putting up Budd Simpson, not Bethany Marcum—the member who came up with the pairings.

Judge Matthews seems to agree with Singer. "What more different information am I likely to get?"
Attorney Holly Wells, the attorney arguing the Senate pairings, says that Singer prevented Borromeo and Bahnke from speaking about executive sessions.

She says they're prejudiced, here.

Judge Matthews seems to suggest there's some merit to that argument.
Read 16 tweets
Jan 19
For the afternoon #akleg, we've got concurrent hearings of the S. Finance Committee on Senate President Micciche's alcohol rewrite bill: w3.akleg.gov/includes/_play…

House Judiciary on a bill dealing with access to MJ conviction records by Rep. Kreiss-Tomkins: w3.akleg.gov/includes/_play…
JKT on his legislation, says it would remove some records of convictions for simple marijuana possession from the public record. You'd have to have been 21+ at the time with no other crimes committed in the act to have your record sealed.

He says it matches the current times. Image
Over in Senate Finance (I'm not sure why I'm doing this to myself), Sen. Micciche says not everyone agrees with everything in his alcohol bill but says it has broad support from the industry associations.

He's been carrying it since 2015. It's been sunk by industry many times.
Read 16 tweets
Jan 19
The Senate Finance Committee is underway. On today's agenda is a look at the state's production forecast (which plays into revenue and therefore the budget).

Watch: ktoo.org/gavel/video/20…
Docs: akleg.gov/basis/Meeting/…

#akleg Image
Sen. Stedman is opening up with an introduction of committee staff as well as legislative aides. When he gets to Sen. Bishop's team, Stedman says: "His duties are whatever his boss assigns him."
Sen. Stedman on the budget process: "We will pull out of the non-reoccurring funds ... and boil it down to the base budget."

"It's very important that we have a base document to go through" instead of the Gov's budget that he claims "is balanced when it's not."
Read 23 tweets

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