No one knows what's going to happen

Yes, it's the 130th day of session so far in 2015, and still no one knows what's going to happen. I will explain the situation from the VERY beginning.

There is about a $3 billion revenue shortfall. The legislature needs a three-fourths vote in each body to use money in the constitutional budget reserve to cover the shortfall. They only need a majority vote in each body to use the funding in the permanent fund earnings reserve.

The money in the permanent fund earnings reserve comes from earnings of the permanent fund. The money is used to inflation-proof the permanent fund and to pay dividends. After the fund is inflation-proofed and dividends are paid, the remainder can be spent as the legislature wishes. Right now, the amount available in the earnings reserve, minus inflation-proofing and dividend payouts, is about $6.4 billion.

The House Majority has proposed a plan they think should compel the House Minority to vote to access the CBR: fully fund the statutory BSA and fund state employee bargaining agreements, but deduct an equal amount in an unallocated reduction (approximately $30 million) from the administrative branch. If the minority doesn't vote to access the CBR, then the House Majority won't fully fund the BSA or fund the bargaining agreements, but they will still take a $30 million unallocated reduction from the administrative branch. The House and Senate Majorities will then fund the budget from the CBR with just a majority vote by moving money from the permanent fund earnings reserve to the corpus of the permanent fund.

The CBR usually requires a three-fourths vote to access it. The one exception is if there is less money available for appropriation than the year before. Since the money in the permanent fund earnings reserve is available for appropriation, if the majority deposits that money into the corpus of the permanent fund, then it's not available for appropriation and they can access the CBR with just a majority vote.

That is where we are: the House Majority is now saying that if the House Minority doesn't vote to access the CBR, then they will deposit the money from the permanent fund earnings reserve into the corpus of the permanent fund so that it will only take a majority to access the CBR.

There is only enough funding in the CBR to fund three years of budget shortfall (oil prices are expected to stay low). The available money in the permanent fund earnings reserve would fund two more years of shortfall. The two funds together would give us enough money to fund five years of shortfall, a decent amount of time for Alaska to get its shit together and find some other revenue sources. By depositing the money from the permanent fund earnings reserve into the corpus of the permanent fund, that money would no longer be available for appropriation, leaving us with only enough funding for three years of shortfall.

It is EXTREMELY unlikely that the House Minority will vote to access the CBR to fund the budget. That means the House and Senate Majorities' next option is to deposit the funds in the permanent fund earnings reserve into the corpus of the permanent fund, and then there would only be a majority vote needed to access the CBR.

HOWEVER, six House Majority members have formed what they are calling the Musk Ox Coalition, and have said they will not vote to spend money from the earnings reserve. That is not to say that all of the members of the Musk Ox Colation oppose depositing the money from the earnings reserve into the corpus of the permanent fund, just that I don't know whether they will all vote for that or not. But, Rep. Seaton said in the newsletter he sent out Wednesday that he does not support that option either, as it would mean the money from the earnings reserve would not be available if they need it in the future. If all six members of the Musk Ox Coalition don't vote to move money from the permanent fund earnings reserve to the corpus of the permanent fund, then the House Majority only has 20 votes to move that money. The majority needs 21 votes to do that.

So it is not at all clear whether the House Majority has the 21 votes to even transfer the money from the earnings reserve into the corpus of the permanent fund, thereby allowing the legislature to access the CBR with just a majority vote. So like I said at the beginning, basically no one knows what's going to happen.

My husband spent this week in Anchorage and Seward with the Norwegians (the king was visiting, along with a bunch of other Norwegians, if you haven't heard). They think we are all crazy. They have $900 billion in their permanent fund, and they started their fund later than we started ours. They use the earnings from their permanent fund to fund education. Those earnings fund about 35 percent of their education costs.

So what happened on Thursday? The Senate Finance, Administrative Regulation Review, and House Finance Committee hearings were all cancelled, as was the senate floor session.

The only thing that happened is the house met all day and into the evening on HB 2001, the operating budget. The House Minority offered amendments they've offered in the past: cutting funding for mega-projects; delaying oil tax credits; expanding Medicaid; and funding education (Pre-K, K-12, and university), foster care, the Alaska Marine Highway, senior services, and others. All failed.

LateThursday evening, the house decided to adjourn and continue amendments on Friday. They made it through 12 amendments before doing so. Friday will be the 9th day of the second special session. It will be the 130th day of session so far in 2015 (one regular session plus two special sessions).

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