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Capitol Report May 19, 2022

In a flurry of activity, lawmakers pass the budget and a spate of legislation including a long-term solution for the Higher Education Investment Fund

After a failed budget concurrence vote last weekend, a selection of lawmakers crafted a revised state operating, capital and mental health budget. The revised budget was passed in the final hours of the 121-day legislative session. On the same day, legislators also pushed through several pieces of legislation that are important to the University of Alaska.

Last Saturday, after three days of closed-door budget negotiations, lawmakers in the House narrowly voted against concurring with the Senate’s proposed budget. Instead, they opted to send the budget to a conference committee where three members from each body would take up the differences between the budget passed by the Senate and the one passed by the House back in April. Representing the Senate were finance co-chairs Senator Bert Stedman (R-Sitka) and Senator Click Bishop (R-Fairbanks), as well as Senator Bill Wielechowski (D-Anchorage). The House was represented by finance co-chair Representative Kelly Merrick (R- Eagle River) as well as Representative Dan Ortiz (I-Ketchikan) and Representative Bart LeBon (R-Fairbanks). The conference committee met publicly on Monday and Tuesday, and finalized a consensus  version of the budget Tuesday afternoon. The operating and capital budgets moved from conference committee to the House and Senate for approval before midnight on Wednesday, the constitutionally-mandated last day of session.

The Senate passed the budget 19Y-1N early on Wednesday afternoon while the House deliberated late into the evening before passing the budget 33-7. 

The budget, as passed by the Legislature, had many important  provisions for the University of Alaska system. After eight years of withstanding more than $100 million in cuts, compounded by enrollment challenges and the financial impacts of the COVID pandemic, this year’s UA's operating budget includes a 6.7% base increase over our current operating budget (a total of $291 million base operating budget) plus one-time investments in areas critical to Alaska’s economic recovery. 

The operating budget brings a sense of fiscal stability for the University of Alaska system and includes: 

• $9.9 million for compensation and fixed cost increases (including a 2% salary increase for non-bargaining staff, firefighters, and local 6070) 
• $3.5 million for health program faculty to meet workforce demand
• $2 million for alternative energy
• $1 million for health clinicals
• $1 million for teacher education
• $635,900 for continued Alaska Library Network and Imagination Library support
• $200,000 for Alaska Area Health Education Centers
• $100,000 increase to mental health trust funding 
• $72,300 for technical vocational education program funds (+$881,800  FY22 supplemental)
• And increased authorization to receive federal funding for research

The operating budget also includes one-time funding for research and development critical for Alaska’s economic recovery:

• $10 million for drone programs to secure beyond line of sight and industry development
• $7.8 million for important critical mineral and rare earth research and development
• $5 million for heavy oil recovery research and development
• $250,000 for health program equipment 
• $7 million to support mariculture research, industry support and workforce development

Additionally, the budget contains capital funding for the following:

• $50 million for deferred maintenance
• $20 million for student IT system modernization
• $2.5 million for Alternative Energy Research
• $2 million for fisheries, seafood, and maritime programs
• $500,000 for rare earth elements demonstration facility
• $250,000 for rare earth mineral security
• And increased authorization to receive federal funding for the Seward Sikuliaq facility

The conference committee also added $1.6 million to expand the WWAMI Medical Education Program over two years and $395 million to recapitalize the Higher Education Investment Fund (HEIF) for student scholarships and grants, pending approval of legislation that made the fund unsweepable. (See  below.) With that bill approved, the fund can now be recapitalized.

Bills on the Move

In addition to passing the budget, lawmakers also passed a flurry of bills in the final four days. Among them were several pieces of legislation relevant to the university system. 

, the House Transportation committee bill, initially introduced to protect the Alaska Marine Highway System (AMHS) Fund and Vessel Replacement Fund from being swept into the Constitutional Budget Reserve, was recently amended to also include the Higher Education Investment Fund. Under the bill, all of the funds would be removed from the General Fund and placed under the state treasury where they would be exempt from the sweep. The legislation is timely after the Supreme Court affirmed a Superior Court ruling against the suit brought by four �������ϲʿ���appstudents who legally challenged the administration’s action to sweep the fund into the Constitutional Budget Reserve. By passing HB 322, the Legislature has settled the issue by making the HEIF unsweepable in future years. Protecting HEIF is what’s best for Alaska. Assuring predictable financial support for university students will position the university system to meet Alaska’s future opportunities. The bill passed 25Y-15N in the House and 14Y-4N in the Senate and will now be transmitted to the governor.

 On Tuesday, the Senate passed Representative Bryce Edgmon’s (I-Dillingham) , legislation creating a state office of broadband and a statewide broadband advisory board. Alaska is set to receive billions of dollars in federal funding for broadband improvements as a result of funding contained in the federal Infrastructure Investment and Jobs Act. However, in order to receive the funds, the State of Alaska is required to have an official broadband office. The bill also establishes an advisory board, which includes a member from the University of Alaska who will advise on broadband implementation statewide. The Senate version of the bill was slightly different than the House version, so in a Thursday concurrence vote, the legislation passed the House 34Y-6N. The bill will now be transmitted to the governor.

, sponsored by Representative Bart LeBon, allows the University of Alaska to borrow or refinance at lower interest rates through the Alaska Municipal Bond Bank Authority. The bill passed the Senate 16Y-1N and was concurred upon by the House 37Y-3N.

, a governor’s bill to remove barriers to microreactor development, including requirements for legislative land approval and agency regulations studies, passed both bodies. The bill allows the state to move more quickly on micro nuclear power projects. The Alaska Center for Energy and Power is at the forefront of much of the research and development of these small modular nuclear power plants. The legislation passed the Senate 16Y-2N , and the House 29Y-7N. 

Senator Bill Wielechowski’s (D-Anchorage) , legislation intended to make the spending of state funds more transparent to the public, passed the House unanimously on Tuesday. The bill requires all state agencies and corporations to submit their annual expenses and revenues to the Department of Administration who then publishes the data on a public website, referred to as the “Online Checkbook”. The University of Alaska is included in the bill and will be required to submit annual financial reports. The Senate concurred with the changes made in the House and the bill has been transmitted to the governor.