Senate Majority Presser, 4/22/26, 12:50pm

I apologize for being a little late today, but glad you are here with us. This is the, of course, the 93rd day of this legislative session. And with me are Senators Giesel, Wilkowski, Steadman, Tobin, and myself. So yesterday the Senate advanced our version of the capital budget, and the co-chair Senator Steadman is with us, and he has made K-12 school maintenance a central priority along with other issues like university and courts. Senator, could you sort of bring us up to date on deferred maintenance and why it's in focus?

Thank you, Mr. President. As the President stated, we concentrated on deferred maintenance of our facilities across the state and heavy concentration on K-12. There's about $401 million on their list. We've put in roughly $53, $54 million on the Senate side. There's obviously— this is only half the capital budget.

The House will do their part. So we went right down the list. We followed the list not only with the K-12, but with the school construction, the judiciary maintenance issue, the university maintenance issue, and had a lot of attention to the deferred maintenance, which frankly has been compounding and stockpiling against the state. And then we had a little— some monies for doing some workforce enhancements dealing with the driving range and pipeline training center, the Keaney Institutional Service Center, and those things. And then we had a couple of buildings at Mt.

Edgecomb High School that need to be substantially addressed, the dining hall. Is one, and then there's some funds in the budget for window replacement. So Mount Edgecomb had a pretty heavy concentration also to try to get that facility in, in a more livable condition for the kids. We want to do everything we can to make sure we get full enrollment again next year at Edgecomb. It's going to take a little time to to deal with some of the buildings, but the furniture and washing machines and things like that are a lot quicker to install.

So it's a reasonable capital budget, but over the last several years it's been awful skinny and we have gotten behind on deferred maintenance. So it's unfortunate that we don't have the financial resources to address a lot of the issues. In the local communities. A lot of times that's referred to as discretionary funds, but these were— this year was a concentration on maintenance. So in a quick caption, that was the capital budget.

Thank you, Senator Stedman. So the Senate Resources Committee started meeting on a daily basis here on a natural gas pipeline, and those meetings will continue for the next week or longer. And yesterday, Senator Giese, you introduced a new version of the Governor's Gas Line Bill. Can you talk to us about that committee substitute, what the key issues are? Sure.

Thank you, Mr. President. The Senate Resources Committee has 3 goals that we're working on here. First of all, to get North Slope gas to Alaska consumers at the lowest possible cost. To protect Alaska consumers from project cost overruns and tax giveaways. And to protect communities from the damaging effects during, during construction, the damaging impacts.

But we're also aware of two constitutional obligations that we have. The first being found in Article 8, to get maximum benefit for Alaska's gas for Alaska's people. And the second constitutional response— responsibility found in Article 9, to never surrender the power of taxation. With those two goals in mind, we took the suggestions the governor gave us in his bill. We adopted many of them.

We altered some. The governor proposed at the full production property tax of about $74 million. That's at full production. The Senate Resources went back and looked at what the most recent project has been— remember, we've had multiple projects proposed— but the most recent one, producer-led, uh, was around $600 million in property tax at full production. And that's where we arrived using the volumetric tax structure that the governor has proposed, which incidentally had also been proposed for that producer, uh, proposed gasoline.

Other features in Senate Bill 280: we disallow any cost overruns for the project to be shifted onto the cost of gas for consumers. We limit the price of gas to the price that the governor is announcing, using in his press conferences. The governor says the cost of gas will be $12 an MCF before export export begins and $5 in MCF after export. So we're quoting that in the bill. Uh, we increase transparency requirements, uh, related to ownership and contracts that are negotiated.

Um, we require maximum use by Glenfarn and contractors of Alaska businesses and Alaska workforce. We put in place impact payments for local communities during construction. Uh, that's $1 million per pipeline mile installed. So that would be, uh, a trench dug, pieces of pipe put into it and welded together. Each mile would have an impact payment requirement of $1 million, uh, per mile that would go into an impact fund that local communities could apply to, to cover the impact costs they're realizing.

We have a corporate income tax placed in the bill. Remember Glenfarn and several of the oil companies being involved are S corporations or LLCs. We inflation-adjust the property tax by CPI. The governor's proposal was inflation adjustment of 1% per year. We are citing CPI, Anchorage CPI.

We required that taxes will be shared after full construction with local governments all over the state. There's a formula in the bill for allowing all over the state communities. We urge the pursuit of a spur line to Fairbanks. We lengthen the time that the legislature would have to determine whether we want to make investments. What's in The proposal now is 6 months.

We would have 6 months to decide if we wanted to put significant investment on the table. We're allowing ourselves 12 months. That means that we would certainly be in session during some of that time period to really have a full discussion of it. And we repeal all of these law changes if the project does not come to fruition. So those are some of the, the main changes, Mr. President.

Thank you, Senator Gissel. And lastly, let's go on to education. And I realize that on Monday the CS, the committee substitute, was introduced in Education Committee, and that really reflects the interest, concerns of the Senate Education— not only Senate Education but also the entire Senate. So can you tell us what those various components are and how is that going to impact children in our schools? Well, thank you, Mr. President.

As President Stevens indicated, the work on this education minibus really started after we heard that there is a deep concern about education reform still being left on the table. And so in those discussions, we focused the new version of House Bill 28 on codifying some of the, the best practices that we know are going to improve education outcomes across the state. The underlying bill itself is a teacher retention and recruitment tool. It focuses on creating a 3-year pilot program for educators to receive loan forgiveness if they are working in much-needed and hard-to-recruit professions: special education, English language learner educators, and those educators working in the STEM professions. We also recognized that there are necessary, needed changes to some of our statutory language around the type of accrediting institutions an educator is able to receive their degree from.

2020, President Biden changed regional accreditation to institutional accreditation, and our statutes are outdated, and so we are updating and cleaning up that language so that we can comply with federal guidelines. We also recognize that there are some education resource centers that want to hire retired educators, but they're worried that they might impact their retirement, and so we authorize the ability for those education resource centers to hire those retired educators, get that experience, but not jeopardize their retirement program. In the House Bill 28, we also repealed law that was established under House Bill 57, which tied reading grants and career and technical education funding to the passage of a highly digitized business tax. That particular policy did not pass the legislature through a veto override, and so we want to decouple those two pieces so we can get those dollars into the classroom and help our educators doing the incredible work they're doing. Of course, actions that happened in February have driven us to have a demand, an immediate response to some of the pressures our education system is facing.

So included in House Bill 28 is authorization for a one-time energy relief payment to schools. We do not want to divert operating costs, dollars that should be in the classroom, to just keeping the lights on and buildings warm. We also have included in House Bill 28 resources for pupil transportation. Again, high gasoline costs are driving dollars out of the classroom and into the fuel tank of our buses. And finally, the, the piece of HB 28 that I am most passionate about is the top priority of the Task Force on Education Funding, and that is an adequacy study.

We know that our foundation formula needs some reform, and it also needs some additional attention on particular components that have changed significantly in the last few years. The pandemic really showcased that when we don't have students in the classroom, there can be significant learning loss, and we are unsure of how to directly get the right resources into our schools to help those students who are continuing to struggle. And so we have asked for an RFP to be put in place that would help us work with school finance reform experts to evaluate our school funding formula, evaluate the inputs that we're putting in so that we can get the outputs that we so desire from our education system. So that is the bill that has been passed out of Senate Education and is awaiting scheduling in Senate Finance. Thank you, Senator Tobin.

So these are the three major issues, among the biggest issues we're dealing with: the capital budget, the gas pipeline matter legislation, and the CS on education. And here we are on the 93rd day. We're all rushing, I know, but I want to make sure you have time to ask us any questions. And please, I ask you to state your name and affiliation, if you will. Mark Sabatini Jr., independent.

Question probably for anybody out there with a big issue package, which is this: the goal is, of course, not just to get stuff across the finish line by— in the next 4 weeks, but also to get the governor to sign off on it. So when it comes to things like the education package, the crime package, the budget, the natural gas pipeline, all of which he's expressed concerns, various concerns about, can you characterize his level of engagement on each of these things? And how, in terms of what it is he says he wants in order to be okay signing off on these things, and what is he asking for? Mark, that's a very good question, and I think we would all have said at various times that we wish the governor was more involved, more in the building, and more here for us to talk to. He does say that he's available, but I think in all three cases, and I'd ask you three of you to speak to that, Has the governor been involved in the capital budget issue, Senator?

Thank you, Mr. President. We did have a meeting with the governor. We talked to him about the capital budget, told him the layout. He seemed very supportive of the direction of dealing with deferred maintenance. And we kind of told him how we're going to structure it using the internal list made by Department of Education, made by the university, made by the courts.

We're going to follow the structure. And he was also very interested in dealing with Mount Edgecomb High School, dealing with that situation. So from the capital budget perspective, I'd say yes, he's been involved and briefed before we put it together in a bill form. We had the structure of what we wanted to do when we sat down with them. Thank you, Senator.

It was a very good meeting, by the way. We'll continue that through all three of those. And Senator Geisel, could you talk about the gas pipeline and the governor's involvement? Certainly. The governor's office did reach out to me to schedule a meeting.

It was rescheduled twice and has never occurred. Moving on to education, Senator Tobin. Thank you. Thank you, Mr. President. In the Senate Education Committee, we've been working with our minority members to create a package that we think will be amenable to many lawmakers here in the building.

As you might anticipate, the governor doesn't take my phone calls. So I have been relying on many of our minority members within the Senate Education Committee to help us in the negotiation process. Thank you, Senator Tobin. Well, there you have it, Mark. Next question.

Mari Konegi with Anchorage Daily News. I have a question for Senator Tobin on the education bill. With moving forward with House Bill 28 and the inclusion of, uh, quite a few one-time funding elements, should we take that to mean that the Senate is opposed to an increase in the BSA this year?

Senator Tobin. Thank you, Mr. President. I think the Senate Education Committee is putting forth a package that we know we can get the number of votes we might need if there is a veto. It is Obviously, the, the hope for all of us that we will continue to increase stable and predictable funding for our schools and ensure that they have the resources they need to be planful and mindful as they go through their budgetary process. However, at the end of the day, our goal is to get dollars into the classroom and to get supports into our schools, and I will work diligently to do that with the number of people that I can guarantee will be there to get that bill across the finish line.

Hi, Corinne Smith, Alaska Beacon. I was hoping you could speak about the omnibus crime bill and the Senate majority's position on that. There has been a lot of controversy around how the bill was put together. At the same time, many bill sponsors are supportive, and they— but what are your thoughts on getting that over the finish line by the end of the session? I would say that the chair of Judiciary Committee has been working hard on that omnibus bill.

And there are issues out there that people like to pull one thing out or another thing. But I think his point right now, and it's been supported by pretty much everyone who has one of those bills, I think there's 10 bills that are all added into one. So I think he's got a lot of support for everyone who introduced those bills to allow it to go forward in the omnibus bill. Senator has said very clearly that he believes that there's a better chance of an omnibus bill passing than getting all of those 10 bills one at a time. Senator Tobin.

Thank you, thank you, Mr. President. And President Stevens and I both serve on the Judiciary Committee and will be hearing that bill today, which I think will give us a great opportunity to understand what is included in it, to hear from the public as public testimony has also been scheduled for today, and of course make any revisions necessary and needed before it moves on to Finance where it will continue to be thoroughly vetted.

Follow up. Yeah. Are there any particular revisions you're interested in or other pieces of crime legislation you'd like to see be a part of that? Personally, no. I think that that's a very comprehensive crime bill.

It has all 10, 10 or 11, 10, 10 bills, I think. Yeah. So it makes sense to maintain that as it is. And you don't want to put anything that's going to take a chance of getting it thrown out because people dislike one piece or the other. I think most folks are going to be satisfied with the consolidated bill.

Eric Stone with Alaska Public Media. I wanted to ask about the pension bill that's pending in the Finance Committee. I wanted to ask Senator Stedman, since you're on the Finance Committee, sort of what the future is for that bill. And I know there's been some controversy in local communities about this increase in the employer contribution from 20— the cap on employer contributions from 22 to 24%. Could you speak a little bit to why that was implemented and also just the way forward on the pension bill?

Do you expect it to pass and enter the governor's session? Thank you. Senator Sandman. Yeah, I think to the end part of the question, I would expect the Finance Committee to conclude their work this week, and I would expect with the enthusiasm of some of my colleagues that that bill will be on the floor next week.

To the point of the 22% cap and the amendment to move it up to 24%, that was because the non-state employers are capped at 22%, and the additional cost of the new pension plan would be borne by the state. So we looked at how to write an amendment to alleviate that and, you know, adjust it annually or semi-annually, whatever. And it was extremely difficult. So the actuary recommended we just do a blended rate at 24, and it should, which is a 2% increase, and it should wash out over a decade. Or, you know, it's going to be a little low sometimes, a little high sometimes.

After the liability is paid off, The current liability is paid down, then there's also an increased cost of the, of the normal cost that would be borne by the employers. So they just need to know the cost factors of it. And it's a very complex bill with a lot of moving parts. Of course, there is concern, as you mentioned, by some of the non-state employers, communities and other entities that are non-communities Some support the bill, support the increased costs. Some don't because they can't afford it or don't want to bear it.

And they'll have that opportunity for the discussion on Friday when we have that at the table. I would expect Friday for the conclusion of work on that bill. And depending on, you know, members of the committee, It should be out of the committee Friday or Monday, and it'll be up to rules chairman on how he wants to schedule next week and so on and so forth. But I would expect, with the enthusiasm to get it on the floor, it'll be on the floor next week. Thank you, Senator Stevens.

Senator Wolkowski. Thank you. There is a lot of interest in our caucus and I think in the building to get that bill scheduled and moved as quickly as possible. So our plan at this point is to have it on the floor no later than next Monday. Great, thanks very much.

Senator Giesel. Thank you, Mr. President. I do want to mention here when we're talking about, you know, cost overruns of this pension, that it begins 100% funded. And in the bill, it requires it stay 90% funded, or all three entities engaged in a defined benefit pension the employer, the employee, and the retirees will all have their contribution adjusted. The actuary has identified that it would take a significant black swan event of 3 years of no returns for this, this particular pension to fall below 90% funded.

Thank you, Mr. President. Senator Heesele, please go ahead. Questions for Senator Giese on the gas line bill. Are you relying on any experts or consultants, or are you kind of shooting from the hip on this bill? And also, I'm wondering if you— I'm sure you saw the president invoke the Defense Production Act.

He didn't mention Alaska, but it talks about LNG. And I'm just wondering, with all these complexities and all of these— the borough mayors and everybody seems to want to get something out of this. Are you concerned that the government might be looking to just take over the project and which case the property tax would be zero.

Senator, you have any response? Well, there were multiple questions there. I'll start with the first one. Of course we have experts. We will be hearing from Gaffney Klein.

We are having them model this right now. We also have heard from Pegasus. They'll be commenting to us on this. And yes, I understand the Defense Production Act Act has been invoked to fast-track natural gas development and LNG infrastructure. You know, we have a president that is unpredictable, and I have no way to foresee what he would do.

Would the federal government take over this project, and what implications would it have for Alaskans? That's the big question. This is Alaska's gas. We rely on our resources for a source of revenue. We have since prior to statehood.

And that's what we're looking at, is how to maintain the most benefit for Alaskans from this. What the federal government does is completely unpredictable. Thank you, Senator Giesel. Thank you, Jeff, for the questions. We'll go online to Becky Borer with AP.

Hi, for Senator Wielekowski, regarding SB 64. You've talked a bit about this being a bipartisan bill and having worked with members of the Republican numbers. Why then do you think that support from minority Republicans was fairly muted on this bill? And have you had any discussions with the governor that would cause you to believe what way he might be leaning on this bill? Thank you, Becky.

Senator Murkowski. Thank you. So just for the public here, you're referring to the elections bill. To take your question in reverse, I know I've not talked to the governor. I don't know, I don't know what his plan is on the bill.

I hope he supports it because a lot of the concepts were ideas that originated from him, and I think they were good ideas. And all I can say is this was a bill that was fashioned with input from Senator Schauer, former Senator Schauer, Representative Vance, and the governor's office himself was very involved in the creation of the bill and actually supported— I was told by them directly that they supported the bill coming out of the Senate, and then they supported the bill in the House that was finally crafted for the House. So I would certainly hope the governor would support the bill because it's based on predominantly his ideas. And we'll see what happens. Thanks, Maggie.

Next up is Ira Samuels with the Anchorage Daily News.

Hi, Ira. Thank you. I have a question about the operating budget. This is probably best for Senator Steadman, but I'm curious if you can give us a preview of what the Senate is planning to introduce in the CS to what the House passed, and especially if you can shed light on the dividend size and what that will be, and also whether the one-time funding for education will remain in its current form as it was adopted in the House. Okay, you're the only co-chair here, so we'll throw that to you, Senator Stedman.

I think it's a great opportunity to just listen in to the upcoming finance meeting right after this. Get a bag of popcorn, it'll be like watching a movie. And you'll have all your questions answered. But I can't, you know, tell you the end of the movie before it starts. Wouldn't be appropriate.

Spoilers. More to come. Last question from Tim Bradner with the Legislative Digest.

Well, hi. Thanks for taking— I'm not sure who best can handle this question. Maybe Senator Murkowski. Lack of information on Glenfarm's cost estimates to the legislature has been a bone of contention. And I've heard Glenfarm say in committee and in other conversations that they're willing to provide the information under confidentiality, perhaps through executive session of LB&A.

And I know that the new Senate bill deals with this, but there must be a legal problem with the inability of LB&A to deal with this, or did legislators go on with confidentiality? And I wonder what that— I've never heard the explanation of it. Maybe a couple of responses to that. Senator Bullockowski. Thank you for the question.

We've had a number of these very complex bills over the years dealing with oil taxes, dealing with gas line, and I've never signed an NDA before. I've never gone into a confidential session before. There's a lot of concerns about doing that. The public expects us to do our work in in public, and we have to be able to explain the decisions that we make to the public, and they have to be brought along with us. And there are many jurisdictions around the world, including in the United States, where they have open book, basically, information, and the producers or developers come out and they provide the information, and then the public is aware, the decision makers are aware, and they make their decisions based on that.

I, I do think we're actually This last week, last couple weeks, we have been provided, I think, with very helpful information by our consultants, by the Department of Revenue, and that's really helping us to figure out what the numbers look like. And I think that provides a greater level of transparency to the public and a greater level— it reduces the concern about that decisions are being made behind closed doors with information that is not available to the public. Thank you, Senator Wilkowski. So there is a difference, I think, between the House's approach and the Senate's. The House seems to be willing to go into a secret session.

I think we are a little more concerned because whoever we send, a small group of people, 3 or 4, cannot tell the rest of us what they've learned. And, um, and they then would be liable for, for violation of laws if they were to tell us. And so I think for transparency's sake, I think it's good that we all hear what's going on in the public hearing. So you know what's going on, Senator Gisel, do you have any further comments on that? I know you've been directly involved in that.

You know, I don't have much to add, Mr. President. I think you pointed out the proposal for the LB&A Committee, Legislative Budget and Audit, is a small committee. I believe there's 14 members, perhaps bicameral, House and Senate members, but it's not everyone. And as Senator Wielechowski pointed out, the public trusts us to conduct our business in public transparently. Thank you, Mr. President.

Thank you all. I think we've done it. Thanks so much. Good to see you. See you next week.

Thanks.