Senate Majority Coalition Website

State Senator District E

 

Senator Cathy Giessel Newsletter

UPDATES



Issues affecting

your family, community and jobs.

 

 

March 30, 2023

 

 

Dear Friends and Neighbors,

 

Day 73 of the 121-day session.

 

Met with YOU!

The last 2 Saturdays I held community meetings in our District.

 

Here's what we talked about:

·     Capital Budget: Is there going to be anything at all this year?: With low oil prices and last year's big PFD, with other spending, we are underwater about $600 Million for this year's budget. So, no, we're not likely to have much of a Capital Budget.

·     Long Trail: overall not appreciated in Oceanview: Helpful to hear, there are other routes through Anchorage that the Trail could take.

·     Carbon Sequestration?: The Governor would like to explore possible revenues from this. It appears that it will take a minimum of 2 years to see it even identified as viable. But the Legislature is likely to give the Governor the go-ahead to explore this.

·     Nuclear Power? Hydro Power? Anything more sustainable?: There is a lot of work being done to explore these alternative energy sources as well as much more.

·     Recruitment & retention of teachers, firefighters, police, snowplow operators: SB 88 has been proposed with exactly this goal. It is a very new Defined Benefit system that actually provides livable retirement pensions and protects the state. Interestingly, many of the people who oppose the Defined Benefit plan (DB) have their own DB retirement from Alaska's previous DB plan! We need to turn around the exodus of an experienced workforce and families from our state, being drawn to WA and OR for better pay and DB retirement.

·     Pensions. How will SB88 cover the unfunded liability?: The past service costs for the previous DB plan will continue to be paid as it has been for the last 17 years.

·     Taxes? Income tax? Statewide sales tax? The House has offered a 2% statewide sales tax, with no exemptions (except for business to business transactions). That means food, healthcare visits and kids' school clothes will all have a 2% sales tax. It is projected to bring in about $740 Million if passed. The Senate is not supportive of this; sales taxes are for cities and municipalities to decide. The Senate is reviewing the corporate income tax for S-Corporations (they don't pay any) and for one of the deductions on oil taxes.

·     How much has the state lost out on by never having a statewide sale tax?: See the question above.

·     Food stamps: what is being done?: We passed money for the Dept. of Health to get staff hired and the computer system in place to get the food stamps out. More money will be needed to reauthorize Alaskans who qualify for Medicaid coverage (about 1/3 of the Alaska population.)

·     Separation of Dept. of Health from Community & Family Services- did it help at all?: Yes, it is helping a lot. Much more focus on the needs of each population.

·     Reduce state expenses?: State budgets have been flat for the last 7 years (all of Gov. Dunleavy years, several of Gov. Walker years.) This year, Gov. Dunleavy is proposing a slightly higher budget.

·     Why is the pipeline half full? How do we fix it?: There are two very large oil discoveries on the North Slope that are under development. This takes years to accomplish and millions/billions of dollars.

·     Geothermal energy: in Southwest near Unalaska projects are being developed.

·     Schools: How do we educate students to become teachers without having to leave the state.

·     Charter schools: Are they taking away from public schools?: See BSA discussion below. Local school boards make these decisions, not the state legislature.

·     North Slope oil money- is it going to other tribal groups?: This question referred to the North Slope revenues that ASRC earns from oil on their land. The Alaska Native Claims Settlement Act provides a section of law that requires each native corporation to share revenues earned with the other corporations.

·     Not many mentions on a full PFD: Lots of discussion about the budget and the PFD. Look at the budget models below and you will see why the Senate has identified that the only sustainable PFD is a 25%/75% which is about $1300 for every man, woman and child.



 

Items in this Newsletter:

 

·     Projected Budget Option Slides

 

·     Permanent Fund Information

 

·     Senate Bill 52 Update

 

·     Senate Committee Meetings

 

·     ACEP Virtual Workshop Series

 

·     Current Topics, Economy, Health Care, Energy

 

·     Alaska History

 

·     Breakdown of Alaska Revenue Sources

 

·     Oil and Permanent Fund Resources

 

 

 

What Will the Dividend Cost?

What Is a Responsible Budget?

 

I've inserted these slides a few times before now, but these updated slides show the drop in oil prices.

 

Graph Below

“Statutory PFD”

Graph on Right

Blue – State tax revenues, mostly oil taxes

Green – funds coming from Permanent Fund

Yellow – funds taken from Savings

Red – no adequate funds to cover without extra from Permanent Fund

Dotted line – budget Without Dividend

Solid line at top – budget With Dividend

 

Graph on Left

Yellow – savings account almost gone by FY 2032

Green – money from Permanent Fund gone by FY 2032

 

Across bottom

POMV Draw rate – should be 5%

PFD/person – amount $3,448 in October 2023 - “statutory PFD” (the 1982 law)

 

Result – by FY25 (next year’s budget) we won’t have enough funds to pay the bills (see red)

               Would overdraw money from POMV 5.83%

 

 

 

 

Next Graph - 50%

50% for PFD

Same explanation for graphs on right and left

 

Graph on Left

Yellow – savings account almost gone by FY 2032

Green – money from Permanent Fund almost gone by FY 2032

 

Across bottom

POMV Draw rate – 5.40% by FY26 (2 years from now)

PFD/person – amount $2,689 in October 2023

 

Result – by FY256 (in 2 years) we won’t have enough funds to pay the bills (see red)

               Would overdraw money from POMV 5.40%

 

 

 

This third (last) graph - 25%

25% for PFD

Same explanation for graphs on right and left

 

Graph on Left

Yellow – savings account Grows!

Green – money from Permanent Fund Grows!

 

Across bottom

POMV Draw rate – always kept at 5%

PFD/person – amount $1,304 in October 2023

 

Result – The budget is sustainable, savings grows, 5% POMV maintained

 

The 25% PFD below is the policy that I support.

 

 

 

Oil Price Affects the Budget

 

We need oil price to average $73.00 per barrel during Fiscal Year 2024 (July 1, 2023 through June 30, 2024) to pay for state services, excluding Permanent Fund money (the Percent of Market Value that comes from the Permanent Fund).

 

For every $1 decrease below $73, the State of Alaska loses about $50 Million in revenue.

 

For every $1 increase above $73, the State of Alaska gains about $65-70 Million in revenue.

 

 

 

Alaska Permanent Fund Corporation

Fund Values as of Feb 28, 2023

 

The low-return environment has decreased investment activity associated with rebalancing and/or realizing investment gains across the portfolio.

Statutory Net Income that flows into the Earnings Reserve Account and is available for legislative appropriation is lower than in recent fiscal years and much lower than the FY23 projection.

 

To read more, go to https://apfc.org/financial-and-performance-reports/

 

 

 

Base Student Allocation

(School Funding, amount of state money for each student)

 

·     The BLUE line is the actual amount since 2011. ($5,930/student in 2022)

·     The BLACK line is what the amount would have been if adjusted for inflation. (should have been $7,222/student in 2022)

·     Bottom Line: Since 2011, BSA has decreased (eaten by inflation)

 

Senate Proposal

FY 24 (Fiscal Year 2024) - increase BSA to $6,960/student

FY 25 - increase BSA to $7,308

Result - catch up State funding of schools to inflation.

 

Alaska Constitution, Article 7, section 1: The legislature shall by general law establish and maintain a system of public schools open to all children of the state and may provide for other public educational institutions. Schools and institutions so established shall be free from sectarian control. No money shall be paid from public funds for the direct benefit of any religious or other private educational institution.

 

 

 

Senate Floor Session

Week of March 23-29, 2023

 

Senate Floor Session Actions

DATE: 03-27-2023

 

HB 79-SUPPLEMENTAL BUDGET TO GET FOOD STAMPS DISTRIBUTED

The bill includes funding, provided by the constitutional budget reserve fund, for the Alaska Department of Health.

Vote: 20-0 in favor.

Agreed to spend from the constitutional reserve fund. Vote: 19-1 to pass.

 

HJR 10-NAT'L PARK SERVICE; HUNTING IN PRESERVES

Resolution disapproves the proposed rule by the National Park Service which would limit non-subsistence hunting and trapping methods already approved by the Alaska Board of Game and urging the National Park Service to withdraw the rule.

Vote: Passed 18-2

 

HJR 4-HONORING THE ALASKA-KOREA RELATIONSHIP

Resolution honors the relationship between the State of Alaska and the Republic of Korea.

Vote: Passed 20-0

 

Senate Committee Meetings

Week of March 23-29, 2023

 

Finance Committee

March 23- Presentation: Willow Project Update by Department of Natural Resources

 

March 24- Presentation: Fiscal Summary Update & Fiscal Scenarios

 

March 27- HB 79 Approp: Supplemental- Invited and Public Testimony

 

March 28- Address Confidentiality Program- Invited and Public Testimony

 

March 29- Consideration of Governor's Appointee: Anita Halterman

 

 

Community & Regional Affairs Committee

March 28- Peer Support Counseling Program- Invited and Public Testimony

 

Education Committee

March 24- Consideration of Governor's Appointees for University of Alaska Board of Regents

 

March 27- Presentation: Alaska Early Environmental Scan

 

March 29- Financial Literacy Course in Schools- Invited Testimony

 

 

Health & Social Services Committee

March 23- Public Schools: Mental Health Education- Invited and Public Testimony

 

March 28- Consideration of Governor's Appointees

 

 

Judiciary Committee

March 24- Presentation: Alaska Victimization Survey

 

March 27- Civil Legal Services Fund- Invited Testimony

 

March 29- Consideration of Governor's Appointees

 

 

Labor & Commerce Committe

March 24- Age for Tobacco/ Nicotine/ E-Cig; Tax E-Cig- Invited and Public Testimony

 

March 27- Physical Therapy Licensure Compact- Public Testimony

 

March 29- Professional Licensing; Temp Permits- Public Testimony

 

 

Resources Committee

March 24- Extend Alaska Minerals Commission- Public Testimony

 

March 27- Address Air Pollution in Fairbanks- Invited and Public Testimony

 

March 29- State Ownership of Submerged Land- Invited Testimony

 

Transportation

March 28- Bills Previously Heard/ Scheduled

 

 

 

 

Current Topics

Legislature passes resolution on defense of Southeast Alaska troll fishery. The Cordova Times

Alaska legislators on Monday passed the Defense of Alaska Fisheries Resolution, urging federal and state officials to continue to defend the state's fisheries, including the Southeast Alaska troll fishery, and to do everything within their power to keep that fishery open.

 

Katmai National Park and Preserve seeks public input on the Brooks River Corridor permit system. Radio Kenai

Katmai National Park and Preserve is seeking public comment on the seasonal Brooks River Corridor permit system, first piloted in 2022. Public comments will be accepted from March 27 through April 28, 2023.

 

February jobs up 2.5% from February 2022. Labor Alaska Press Release

 

Alaska's ferry system expands hiring efforts after identifying problems with recruiting and retention. KRBD

The Alaska Marine Highway System doesn't have enough crew to man all of its ferries this summer. The system needs about 150 more workers- both on water and on land. More than 200 workers have applied for ferry jobs in the last year, but the state has only managed to hire a few.

 

Assembly campaigns align around a single issue: Anchorage voters are tired of drama. ADN

In the lead-up to Anchorage's April 4 election, Assembly candidates across the political spectrum, say voters in their districts are hungry for leaders who will move the city beyond the political toxicity of recent years.

 

Unprecedented closures threaten setnet way of life. Peninsula Clarion

Unprecedented preseason closure of the fishery by the Alaska Department of Fish and Game earlier this month: 11 emergency orders handed down by the department completely closed the east side setnet fishery this season, as well as the Kenai River and Cook Inlet to sport fishing for king salmon.

 

The legacy of Sen. Ted Stevens lives on at UAA. ADN

Catherine Stevens and the Ted Stevens Foundation have gifted the papers of the late U.S. Sen. Ted Stevens to UAA. Our university is very excited to become the new home for this invaluable collection of Alaska history.

 

 

Politics

Alaska House advances budget bill to address food stamps backlog, public defender shortage. ADN

 

Alaska Legislature votes to oppose National Park Service hunting rule that forbids bear baiting. Alaska Beacon

Senate Majority Leader Cathy Giessel, R-Anchorage, spoke in favor of the resolution on the Senate floor, saying the new rule "nullifies Alaska's wildlife management" and is "counter to the Alaska Statehood Act." The National Park Service rule does nothing to ban bear baiting. It does, however, prevent Alaska Natives from hunting on their ancestral lands if they don't also reside on those lands; in other words, if they live and work in Anchorage for example, they can't return to Ahtna Corporation lands to hunt because they are now called "urban hunters" by the NPS.

 

Economy News

Cut to the chase: What's going on with deposit insurance. Axios

Walk into any bank branch in America, and you will likely see a sign that says, in big letters, "FDIC"-- that would be the Federal Deposit Insurance Corporation- and "each depositor insured to at least $250,000."

 

Federal Reserve raises key interest rate by quarter-point despite bank turmoil. ADN

The Federal Reserve extended its year-long fight against high inflation Wednesday by raising its key interest rate by a quarter-point despite concerns that higher borrowing rates could worsen the turmoil that has gripped the banking system.

 

One Big thing: Powell says deposits are "safe". Axios

Depositors should feel secure keeping cash at banks after the government backstopped all deposits- even those exceeding limits on FDIC insurance- at two banks that recently collapsed, Fed chair Jerome Powell said.

 

Ripple effects and Silicon Valley Bank's collapse. Axios

The U.S. banking system appears to be stabilized for now after Silicon Valley Bank's failure, but Wall Street and the Federal Reserve increasingly expect fallout from that collapse to linger as regional and community banks ease up on lending activity.

 

How "too big to fail" became a symbol of safety. Axios

Once upon a time, "too big to fail" was shorthand to villainize big banks- these days, it's a way to say, "your money is safe".

 

Opinion: A solution to Alaska's PFD and budget struggle- less is more. ADN

We've been playing out the "Permanent Fund dividend v. adequate funding" battle for many, many years, and we have seen the consequences.

 

Alaska House Republican introduces 2% sales tax bill as part of fiscal plan. ADN

The conservative Tax Foundation estimated in 2020 that a 2% state sales tax could collect roughly $741 million per year.

 

Alaska banks on solid ground as concerns about banking crisis spread, regulators and execs say. ADN

Alaska's banks are on solid footing and lack the problems that have caused other banks to fail in recent weeks, industry observers say.

 

2023 Spring revenue forecast final press conference. Office of Governor Mike Dunleavy

 

Looming $600M deficit casts shadow over PFD, state budget calculations for legislators. Alaska's News Source

"It appears that we're going to be somewhere between five and six hundred million underwater."

 

Alaska legislators prepare to talk taxes after grim new oil revenue forecast. Alaska Beacon

The Alaska legislature is preparing to examine two new tax proposals after a state revenue forecast showed significant long-term budget deficits even with a sharply reduced Permanent Fund dividend.

 

Healthcare News

Alaska's occupational licensing division staggers under its workload. Alaska Beacon

After waiting six months for a license to operate, and Anchorage psychologist asked Senate Majority Leader Cathy Giessel for help.

 

 

Energy News

ANS off $8.58 for the week as bank runs panic U.S. and E.U. financial markets. Petroleum News

Alaska North Slope crude plunged $3.55 March 15 to close at $71.70, while West Texas Intermediate plummeted $3.72 to close at $67.61 and Brent plummeted $3.76 to close at $73.69.

 

 

Alaska History

·     March 24, 1989: The Exxon Valdez ran aground on Bligh Reef, ultimately spilling 260,000 barrels of North Slope oil.



·     March 27, 1964: A magnitude 9.2 earthquake struck Southern Alaska, the strongest earthquake to ever strike within the U.S.

 

·     March 27: Seward's Day- Under President Lincoln, Secretary of State William Seward signed the purchase of Alaska from Russia in 1867.

 

·     March 27, 1975: The first pipe is laid at Tonsina River, and the construction of TAPS officially begins.

 

·     March 29, 1867: Russian Minister to the U.S. Edouard de Stoeckl appeared at U.S. Secretary of State William H. Seward’s home to inform him that the Czar had wired approval of a treaty for the American purchase of Alaska.

 

·     March 30, 1916: Delegate James Wickersham introduced in Congress the first bill providing for statehood for Alaska.

 

 

Where Does State Money Come From?

 

One Third from the Permanent Fund - money set aside from 1980 to now, by past Alaskans who cared about the future.

 

More than 1/3 from the Federal Government - Alaska still relies heavily on the Feds. We are not paying our own way.

 

Less than 25% of funds are coming from oil resources. Oil price is down. Last year, the Legislature spend a lot of money, believing that the war in Ukraine would keep oil prices high. That turned out to be an incorrect assumption.

 

 

 

Alaska Oil Resource Values

 

ANS crude oil price (3/29/23): $76.15

The current budget requires $89 per barrel to be fully funded.

Price on 9/30/22: $86.91

Price on 6/29/22: $116.84

Price on 3/8/22: $125.44

Price on 12/22/21: $75.55

ANS production (3/29/23): 494,819 bpd

 

Official: Willow oil project holds promise, faces obstacles. AP News

The Willow oil project in Alaska's petroleum-rich North Slope is part of a "new era" of large-scale development in the region, but isn't a sure thing, with litigation and costs among the factors that stand as potential impediments, a state official told lawmakers Thursday.

 

The medium-term future of carbon capture. Axios

IEA also launched a new online database of carbon capture plans and projects worldwide.

 

Alaska's Carbon future: CCUS potential. Petroleum News

Federal legislation has added incentives to entities that are considering facilities for carbon capture, utilization, and storage, or CCUS. Section 45Q of the United States Internal Revenue Code provides a tax credit for CO2 storage.

 

Biden calls approval of Willow oil field, with environmental concession, 'a hell of a trade-off'. ADN

In his first public explanation for his approval of the controversial Willow oil project in Alaska, Democratic President Joe Biden said Friday that he wanted to reject the project but was advised by lawyers that owner ConocoPhillips would likely win in court if he did.

 

Permanent Fund 3/29/2023: $75,553,300,000

Value 9/30/22 : $70,625,300,300

Value 8/31/22 was: $73,670,500,000 

Value 4/30/22 was: $81,387,500,000

 

Principle - $61.7B

$52.1 B savings, royalties, other deposits

$9.6 B unrealized gains

(special transfers from Legislature - $4 B in 2021; $4.943 B in 2020)

 

ERA - $12.6 B (was $16.9B May 2022)

$3.5 B set aside for FY24 POMV

$4.2 B for FY23 Inflation Proofing

$ 2.2 B unrealized gains

$4.0 B uncommitted realized earnings

PFD payout from ERA, 1980-2022: $26.6 B

 

Mineral Prices

Mar. 29, 2023

Gold - $1961.20

Silver - $23.29

 

 

 

 

"To hell with politics!

Let's do what's right for Alaska!"

 

U.S. Senator Ted Stevens

(Senate service 1968-2009)

 

 

Feedback is always welcome.

Have a great week!

 

Cathy 

 

Personal Contact:

907.465.4843

sen.cathy.giessel@akleg.gov

 

My Staff:

·     Chief of Staff: Jane Conway (from Soldotna)

·     Office Manager: Paige Brown (from Girdwood)

·     Resources Committee Staff: Julia O'Connor (from Juneau)

·     Legislation Staff: Ryan Rivers (from Anchorage)

·     UA Intern: Jon Hough (From UAF)

 

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