Lori Townsend: Long term fiscal solutions for Alaska's budget have been elusive so far.

And after four special sessions last year, political frustration is boiling over.

Unknown: At what point does this Legislature behave like the legislature is supposed to and come up with ideas to solve the plan?

Because right now it appears the only idea is to do nothing and have no result.

Lori Townsend: Will lawmakers find consensus on solutions for a sustainable budget?

We're discussing the upcoming Legislative session right now on Alaska Insight.

State legislators were in session for a record 212 days in 2021, as they wrestled with lingering questions over the Permanent Fund and the state budget.

As lawmakers prepare for this year's session, Alaska Public Media's Adelyn Baxter looks back and reports that despite the lengthy process, lawmakers didn't make much progress last year.

Unknown: In addition to the regular session beginning in January, Gov.Mike Dunleavy -- As you know this is the first day the special session.

- - called lawmakers back to Juneau for an additional four special sessions last year.

They passed a budget during the first special session and then returned for a six-day session to avoid a partial state government shutdown.

In a third special session, they voted to fund $1,100 Permanent Fund dividends.

They were called back a final time last fall to consider a second PFD payment and to consider legislation relating to payment of a dividend that wouldn't try and the PFD in the state constitution.

But nothing happened.

I don't necessarily think we need new revenues.

The lack of progress was frustrating to many Alaskans, including the governor.

At what point does this Legislature behave like the legislature is supposed to come up with ideas to solve the plan, because right now it appears the only idea is to do nothing, and have no result.

For their part, legislators expressed similar frustration with the inaction and the time and expense spent traveling back and forth between their districts and the capital.

It has been a tiring experience.

We're supposed to be a citizen legislature with, you know, essentially 121 days session.

And we've now had four additional months tacked on to that.

With, which has been, yeah, that's been a challenge.

The nonpartisan Legislative Affairs Agency estimated the total cost of the additional time legislators spent in Juneau last year at roughly $1.8 million.

Right now just seems to be a whack-a-mole scenario where somebody comes up with an idea and somebody says it's not going to work, or we need more time or we're tired.

Or we're waiting for spring time or something.

As legislators board planes and ferries back to the Capitol once more.

It's unclear if the gridlock over long term solutions shows any sign of lifting.

With help from KTOO and Alaska Public Media's Andrew Kitchenman.

I'm Adelyn Baxter.

Lori Townsend: Joining me now to discuss the issues in front of lawmakers for next week's session.

Our Senate Majority Leader, Republican Peter Micciche of Soldotna and House Speaker and member of the House bipartisan majority coalition, Republican Louise Stutes of Kodiak.

Welcome both of you.

Unknown: Thank you.

Nice to be here.

Let's start with Oh, thank you.

I happen to be Senate president there, another person is majority leader, but thanks for having us this morning.

Lori Townsend: Thank you for that correction, and my apologies for that, Senator Micciche.

Let's start with the big questions that lawmakers were unable to resolve during the special sessions last year.

The fourth session ended with no action on the governor's requests.

To review lawmakers approved a dividend of $1,114 in the third special session.

In calling the fourth the governor wanted an additional PFD of around $1,200 and he wanted lawmakers to enshrine the PFD in the state constitution.

He also called for lowering the state spending limit.

Representative Stutes, give us your perspective on the governor's requests and why lawmakers didn't ultimately support them.

Representative Stutes?

Unknown: Thank you and thank you for the question.

The Governor was hoping for a 50/50 PFD, which would be 50% of the POMV.

And the problem was he never indicated how that was going to be paid for.

The House Majority has taken the position that we would not be willing to overdraw the POMV, the percent of market value, which is would be about 5% of the earning funds from the Permanent Fund Corporation and the 50/50 PFD would have done exactly that.

So that was a problem that we were facing as the House Majority.

And we felt that we could give a reasonable PFD without overdriving, the POMV and with paying essentially the state's bills.

Lori Townsend: Alright, thank you, Senator Micciche.

Turning to you now, what did you want to see get accomplished in those sessions?

And what do you think it will take to resolve the PFD issue?

Unknown: We had an interesting lead into this show because the fact is the Legislature completed the work that was done by the third special session, by June, that had the same amount of a PFD.

I personally supported a higher PFD.

And I'm willing to work with others to get to that point where we have a fiscal plan moving forward, but there was progress.

Some of the progress was we appointed a speaker and I appointed a Fiscal Plan Working Group that had the people from the different factions working very well together to put some solutions on the table that we began talking about and working through.

As a Legislature once that occurred.

The special sessions were not fruitful.

And I don't believe legislators were ready to move to that next level on executing a fiscal plan.

But I am optimistic that we are ready at this point, I think people have had some extra time to think about, the analogy I use is we had a venn diagram with very few intersections.

And in order for something to pass the Senate and the House, it has to have 11 Senate votes and 21 House votes.

And I believe we need to work together with legislators folks need to show some flexibility.

I think we can deliver a fiscal plan.

But it's going to require that folks take it seriously.

Or kind of the status quo folks come together with more of the populists and decide that we're going to get this done together by compromising and getting a fiscal plan across the finish line this year.

Lori Townsend: Well, we'll talk more about the issues related to compromise as we go forward.

But staying with you, sir, related to the Permanent Fund issue.

I'd like to get your thoughts on the allegations leveled by former permanent fund Corporation director Angela Rodell, that her firing in December was political retribution for quote, "carrying the board's mandate to protect the fund and advocating against any additional draws of the PMOV," the percent of market value spending rule.

Senator Micciche, were you surprised by her force departure and her recent statements?

Unknown: I was surprised by her departure.

I will sort of reserve judgment because we have a legislative budget and audit meeting that will be coming up, we will be meeting with the Permanent Fund board and asking some questions directly about Ms. Rodell's firing.

So I don't want to get put the cart before the horse.

I think we have some things to learn.

There's a chance there was some political influence on a fund that has been designed and through the history of the Permanent Fund has avoided destructive, permanent influence.

Primarily the Permanent Fund has been focused on maximum returns.

That is an asset that belongs to not only current Alaskans, but our kids and grandkids and in perpetuity of this state, so we need to be very careful, but I will reserve judgment on what I believe was the cause of her firing until after the legislative budget and audit meeting.

Lori Townsend: Fair enough.

Thank you.

Rep. Stutes, your thoughts here on Rodell's firing and her allegations that politics played a role?

Unknown: Well, as the Speaker of the House, we were quite surprised to see the dismissal of Ms. Rodell.

She has she has been a friend of the Legislature and she has been a friend of Alaskans in doing her due diligence, as the executive director of the Permanent Fund Corporation.

She had a very successful record.

I believe she was the most successful executive director of the Permanent Fund Corporation during her short tenure.

She managed to put an additional or create an additional $30 billion in the fund.

So it was a grave sadness to myself and to a lot of legislators to see her dismissal.

This should be a non-partisan position.

And I'm hoping that this does not become a political football, or that the Permanent Fund Corporation does not become a political entity.

She, she has always stepped forward and done what she thought was in the best interests of the fund as a whole politics aside, so it was a it was a real surprise.

Lori Townsend: Well, acknowledging, as Senator Micchiche said that there will be a hearing looking into the her allegations, do you think that it's possible that changes may be be may need to be made in the future about how the board is selected?

How people are selected for the Permanent Fund Corporation board?

Unknown: I would say that's a very real possibility under under these circumstances, depending on the outcome, and what other discoveries are made during this LB&A hearing.

Lori Townsend: Sticking with you, Representative Stutes, Governor Dunleavy said in the story we heard at the beginning of the program, that lawmakers are engaged in a game of Whack-a-Mole: "Someone suggests a way forward, someone else should sit down," he said.

"The legislature should look at people who can negotiate solutions."

Who do you think can do that?

Unknown: Well, I think that the that we have the ability, but the problem is we have to put our partisanship aside and work toward the good of Alaska and Alaskans.

We all, I would say all 60 legislators are looking to do the best they can for Alaska, but you can't get anything done if you don't have a compromise, and you don't have the conversation that creates a compromise.

And as is going across the country, and it's visible probably in every state, we have a partisan divide.

And I know that the Senate President and I both are working collectively to try and diminish that divide.

And once we can make headway on that I think that this Legislature is capable of moving our state forward.

Lori Townsend: Do you think the Governor needs to give some things up or change course or work more with lawmakers on that compromise that's needed?

Unknown: Well, this last year, the Governor has been a little more participatory.

And that's been nice.

The first couple years were a couple of tough years.

But I think that any elected official in when they first come into office, you got to get your feet on the ground and figure out which ways up, I think that it's going to take compromise from the House, from the Senate, from all parties, as well as the executive branch.

That's the only way we're going to get anything done.

Even if the Legislature comes together, if the executive branch and the Governor isn't on board, it will have been a futile attempt.

Lori Townsend: Do you support an extra draw from the permanent fund to help close the budget gap for the next couple of years?

Unknown: If we have a solid fiscal plan in place, we would discuss an overdraw of the permanent fund or the POMV, possibly, but until we have a solid fiscal plan in place, I would say it's the position of the House Majority that we do not support an overdraw of that fund.

Because once you do it once, it's easy to continue on.

And we saw that by paying the state's bills with our savings account to the tune of about $14 billion in about seven or eight years that we blew through.

So we would have to know that we had a solid plan in place, I think to even have that discussion.

Lori Townsend: Alright, thank you, Representative Stutes.

Senator Micciche, your thoughts here?

Do you support an extra draw to close the budget gap in the in the next couple of years?

Or what would you need to to support that?

Unknown: So I'd like to rephrase your question because there's not a draw needed at all an extra draw needed at all to close the budget gap.

So it's really related about the settling the permanent fund dividend issue.

We would have a surplus without a PFD.

I don't support that.

I think most legislators wouldn't support that.

But it's satisfying the people of Alaska on an adequate PFD that may require a an overdraw for some time.

And I would certainly like to have a fiscal plan in place and then requires settling the PFD issue to the satisfaction of Alaskans and at least 11, 21 and the Governor for House and Senate votes as well.

It would require re-vamping our spending limit, it would require a way to fill a gap that's created by a larger PFD.

And it sounds it seems, from what I understand from the House, they are willing to support an overdraw, a temporary overdraw or one time and I think the Speaker's right, it's like the first cigarette.

The second one becomes much easier.

And before you know it, it becomes a habit.

But I do believe that we can get there if folks will kind of leave off where they were last year, I think people were really close to a 50/50 plan, whether it's immediate or eventual.

And if there were a plan put together, there'd be very little need for an overdraw because the math gets better with the Permanent Fund.

Over time, once you get to where you can afford a PFD, you'll be able to afford a PFD because of the growth of the fund and the sheer size of our savings.

It's really the next three to five years that are problematic.

And that's where we need to agree on a plan.

I'm more flexible than many, I do believe that we can get to a 50/50.

But I'm more flexible than many.

I would have supported in overdraw last year.

But the majority of our Senate did not seem to be in that position -- very close, very close to a 10 and 10.

It might be at 11 and 9 on supporting an overdraw last year.

Last year is ancient history, we need to start from today, bring people together to where they understand the imperative reality of the need for a fiscal plan going forward and hopefully get folks across the finish line.

Therefore, if there's a one timer that's needed for an overdrive, we can get to support move forward to a much better fiscal future.

Lori Townsend: Senator Micciche, the Governor said his administration provided an opportunity for these issues to be solved.

When we had the Governor on Talk of Alaska during the special sessions he made similar comments.

He doesn't want new taxes, he wants higher dividends.

Does his plan rely too heavily on the hope that oil prices will be higher and a lot more production will come online, especially when as you noted, the investment that is the permanent fund two-thirds of the state budget comes from permanent fund earnings now and and ensuring that that fund is protected into the future is critical?

Unknown: So I guess the way I explain that is I've been in the Legislature since 2013.

We saw these problems coming, which is why I decided to leave the private sector and run for office.

And if it were just up to me and my ideas, we would have solved this problem a very long time ago.

It's those 59 other pesky legislators that get in the way of the perfect solution.

Right?

So the Governor's one person, one administration that has ideas.

How do you get 11 senators and 21 representatives to agree with that plan?

I think that's the key issue here.

So yes, I can drop, I've had an all-in plan that's been on the table for two and a half years.

That's an idea that works.

I think a lot of legislators support it, it may be the direction we go.

The governor has had a plan.

But I have made that mistake in the past assuming that oil prices were going to stay healthy, or they were going to increase and production was going to increase as well and we would be fine.

What we do know is a plan should depend on the callin numbers of the increase in the value of the Permanent Fund and make sure those things dovetail so that we don't have that unexpected drop in the price of oil that takes the whole plan and and shreds it into an ineffective mess.

And that's where the problem lies is how do you convince legislators that the plan you have on the table is going to be responsive to changes in production and oil price?

How are we going to limit our spending in the future?

And how do we set that plan relatively in stone through statute first, and some people support constitutional amendments others don't.

But I think in the long term once we proved that a long term fiscal plan will work will function with that fluctuation in oil prices and production, that perhaps we do lock parts of it into the constitution.

I think with that discussion, and having a president ministration in Juneau through these meetings, or we can all get together and work together collaboratively toward a long term fiscal plan.

I think we can get it across the finish line.

But shooting at each other in the press is not going to do it.

We succeed or fail together.

I never pointed the governor for failures.

I never pointed the house for failures.

I say we succeed or fail together.

That means we need to mean that and not use the press as to whip our opponents into agreeing with U.S. politics do not work that way.

That's either collaborative or it's a total failure.

Lori Townsend: But Senator, this is an election year after for special sessions, do you think progress can be made next week when the regular session starts?

North Pole Republican Representative Mike Prax said it will probably take another election before there's action on a long term budget solution.

What are your thoughts about that?

Do you agree?

Unknown: I'm an optimist.

And as the presiding officer of the Senate, and I'm sitting here on a show with the Speaker of the House, we have to be optimistic about the potential to solve this problem this year.

I think if we don't solve this problem is here voters should look at the inaction of the legislature, whether they're the populist or the kind of stodgy status quo folks and say, hey, the people that are there have been unwilling to come together, who has been willing to act and get this done.

I am not going to accept this election year nonsense.

This should be the year that we perform the best, not the least amount.

And I hope Alaskans weigh in on that in next for the primary and next election if we're unwilling to get it across the finish line.

So I I strongly disagree.

When I hear that excuse being used batter being an election year, it's a year in the legislature, same expenses, same opportunities to succeed and successful long term fiscal plan, or will affect not only Alaska today on a thriving economy that people can count on.

But it will affect the viability of our grand kids and great grandkids, being able to succeed in this state as well.

We are losing our best and brightest because of this seven year struggle on a long term fiscal plan, and it's time to get it across the finish line.

Lori Townsend: Alright, Representative Stutes, Anchorage Democrat Sen. Tom Begich has reintroduced tax bills to generate new revenue such as increased oil taxes.

He said he knows they're not popular, but needed to reach some that but they're needed to reach some kind of compromise.

Do you agree?

Unknown: I, whether I agree or not, we have to take a look at reality here.

And this year, the Legislature has a lot on their plate.

As the Senator has said, we're looking at components of a fiscal plan and putting a fiscal plan in place.

We have a lot of federal dollars coming in, we have a budget to deal with.

And the Governor has made it quite clear that he is not interested in any new taxes at this point in time.

So what you have to ask yourself is do you want to take legislative time working on these things when you know that it's to no avail?

The governor's made it, as I said, pretty clear that he's he's not interested in in new revenue at this point in time.

So I think, really the the issue is we need to focus and place our focus in areas where we know we can make a difference or make some progress.

Lori Townsend: As you both know, every 10 years Alaskans are asked on the general election ballot, shall there be a constitutional convention?

Alaskans have rejected it every decade since 1972 by wide margins.

Citizens can amend theconstitution as Senator Micciche mentioned, that the constitution has been amended and through ballot initiatives, but a constitutional convention means the entire constitution could be discarded and completely rewritten.

Do you support holding a constitutional convention this year?

Representative?

Unknown: I do not.

I think I think that it's opening up Pandora's box.

We have been very successful with our existing constitution.

And when you open up a constitutional convention, and you add all of these different items that want to be added into it, it's a huge endeavor to educate the public on each and every one of those items that they need to vote on.

And I, I don't want to--it's a big job.

Absolutely.

And, and I question is, can we educate the public to know what what that would mean, the end result of these items might be?

Lori Townsend: Absolutely, and I'm sorry to cut you off there.

But I wanted to give Senator Micciche a chance to respond to that question as well.

And we only have about 30 seconds, sir.

Unknown: Sorry.

Yeah, thank you.

Um, I have a similar answer.

I think a constitutional convention is laced with unintended consequences.

But I think the legislature can increase the odds that a constitutional convention does not pass this year by working together on delivering a long term fiscal plan.

I think it's key.

I think if we fumbled around another year without any vision for what this amazing state will look like in the next generation and we're unable to get something across the finish line, the odds will be increased at a constitutional convention passes.

Right.

And I believe that that's problematic.

Okay.

There are many single issue people that believe it's going to be successful for their single issue.

And that's not how a constitutional convention.

We're running out of time, but at this point, I am not a fan of reopening the entire significant potential changes.

Lori Townsend: Thank you both so much.

It's been a rough time for political divisions.

Much like the rest of the nation anxiety over the pandemic and misinformation leading to mistrust of government has divided Alaskans more than at any time in recent memory.

What will it take to get to respectful cooperative debate that can finally bring consensus around solutions for the state's future fiscal stability, there are a lot of differing ideas and agreeing on the best path forward will require compromise, which means no one gets everything they want.

But if the end result is a healthy state economy that provides for the well being of future generations of Alaskans, then some sacrifice on all sides is the right decision.

That's it for this edition of Alaska Insight.

Thanks for joining us this evening.

I'm Lori Townsend.

Good night.