Photo courtesy Peter Micciche.

Micciche ‘optimistic’ lawmakers can steady state’s financial future

Heading into the session, Micciche said his primary focus will be on passing a fiscal plan for the state

When Senate President Peter Micciche, R-Soldotna, lands in Juneau for Alaska’s upcoming legislative session, he’ll be ready to get to work solving Alaska’s financial problems.

He made that clear during an interview with the Clarion on Tuesday, when he sat down to talk about what people should keep their eye on this session and what he wants to see get done.

Micciche said heading into the session, which kicks off Jan. 18, that his primary focus will not be on specific bills, but rather on passing a fiscal plan for the state. At the center of the work is solving the Alaska Permanent Fund dividend question. Micciche has previously stated that he supports Gov. Mike Dunleavy’s 50-50 plan, under which permanent fund earnings would be split between dividend payments and state services.

“Although we’ve made attempts through the years that have improved the outcomes somewhat, we’re somewhat stalled because of the inability to move forward on a fiscal plan,” Micciche said. “So no matter what bills are up, and I’m happy to talk about bills, a fiscal plan is the number one priority with everything else being a distant second.”

Micciche currently has three bills that have already started working their way through the Legislature, including two of his signature pieces of legislation: S.B. 9, which would overhaul with the goal of modernizing the state’s alcohol statutes, and S.B. 29, which would establish a voluntary permit buyback program to help alleviate tensions between eastern Cook Inlet’s commercial set-net fisherman and other fishing groups on the Kenai and Kasilof rivers.

Timing can be everything when it comes to turning bills into laws. This year, Micciche thinks he has a shot.

“If you’re serious about something moving through the system, you typically prefile in the first session of the two-year Legislature,” Micciche said. “Prefiles at this stage of the game that have to move all the way through the process (during) a year we’re going to be focused on a fiscal plan, probably have somewhat less of a chance of getting across the finish line unless they’re halfway there.”

A list of prefiled bills for the upcoming session was released last week and includes legislation from Micciche, Rep. Ron Gillham, R-Kenai, and Rep. Sarah Vance, R-Homer. Gillham prefiled seven bills, including three that address medical liberty relating to COVID-19, one that would exempt seniors from municipal property taxes and another that would require a two-thirds voter approval of those in an affected area prior to a municipality annexing property.

In preparing to craft a fiscal plan for the state, Micciche said he thinks codifying the PFD process will satisfy Alaskans by ensuring that payments are not an afterthought for the Legislature to tackle once the budget process is completed. Beyond satisfying Alaskans, Micciche said getting Alaska’s financial affairs in order will assure industries looking to invest in Alaska that they will not be hit with surprise taxes as a way to boost state revenue.

A fiscal plan isn’t just about solving the PFD issue, though. It also includes limiting spending around inflation and stemming the growth of state government, which will stabilize Alaska, Micciche said.

“(It) will set us on the right path that will get us off of the roller coaster ride and put us into a more controlled and gradual improvement of our economy so that we will be on stable ground for the long term,” he said.

Micciche hopes the Legislature can get to work the first day lawmakers get back to Juneau. Unlike last year, lawmakers will not need to organize themselves first. The process stalled work by about 31 days last year.

In picturing what he wants Alaska to look like five years from now, Micciche said he has a vision of a more successful state that is not bogged down by the annual PFD arguments, that can draw in new industries and that can help people become trained and gainfully employed within the state.

“Alaska has incredible opportunities that are not being realized, because we’ve been unable to settle a fiscal reality that will demonstrate that we’re open for business, and that our next target is not going to be large taxes on new industries that we bring to this state; people need to be secure that we have our fiscal house in order,“ Micciche said.

He said he sees potential in things like the growth of tourism and mining opportunities in places that are not opposed by environmental groups, all while still taking advantage of oil and gas resources that offer domestic security for the state. Economic security, alongside needed improvements to the state’s education system, Micciche said, will help create a state that people want to come back to. That includes his own children, who he hopes would have exciting job prospects when they come back to Alaska after going to college.

“A lot of our best and brightest are not coming home anymore because of the challenges with our economy,” Micciche said. “We’ve been treading water for the last decade and because of that, I think we’ve brought people to office that don’t have that vision of what Alaska can be. We are an infant state, and we do have opportunities that most of the states don’t have. We just need to put our heads together, compromise, work better together, and turn those assets into economic realities.”

A key element of that vision, Micciche said, is improvements to the state’s education system. He’s particularly excited about S.B. 111, also known as “Read by Nine.” Sponsored by the Senate Education Committee, of which Micciche is a member, the bill is the culmination of Alaska borrowing best practices from states like Florida and Mississippi, which have risen in the math and reading ranks through intervention programs, Micciche said.

Educational outcome, however, isn’t necessarily tied to the amount of money a state spends per student, Micciche said. That’s, in part, evidenced by the fact that Alaska is among the top states for per-student spending, yet ranks at or near the bottom for fourth grade reading and math scores. He said S.B. 111 is not a “high dollar bill” but would invest money in some of the programs with proven track records in other states.

Micciche said he hopes to get S.B. 111 out of the Senate early this session and that he thinks improving Alaska’s education system is an area where lawmakers can come to agreement.

The financial debate will come as the Legislature works to pass Alaska’s fiscal year 2023 budget. The $11 billion proposal presented by Dunleavy last month includes roughly $4.6 billion in federal funding, about $4.6 billion in unrestricted general funds, $912 million in designated general funds and $792 million in other state funds.

Micciche said he supports the budget’s bottom line. Something positive about the proposal is that the unrestricted general funds reflect a 2.7% increase, which is within the rate of inflation and indicative of a flat budget. Micciche said he is concerned about federal spending, but would like to use as much of the federal match as possible under the infrastructure bill.

Efforts are ongoing in the Senate, he said, to “undress” the budget by removing temporary federal funds, see what the actual cost of running state government is and identify the gap. A consistent fluctuation, of course, is the price of oil, which Micciche said they try to take into account by working with a spectrum of potential prices. Still, he said Alaska needs to move away from a “boom and bust” model.

“We can’t react to higher spending when oil prices are good only to have to overreact with very difficult decisions when oil prices are not as healthy,” Micciche said. “We have to think about that spectrum over the long term, include the growth of the permanent fund and manage the size and growth of our government accordingly. If we’re able to do that, if the Legislature is and the administration is willing to operate with that level of discipline, Alaska will be fine in the next three to five years.”

When asked whether or not he thinks state lawmakers will be able to craft the financial plan he envisions for the state during the upcoming session, Micciche said he is “eternally optimistic.”

“I’m eternally optimistic that legislators are going to come to work, recognize the imperative nature of passing a fiscal plan this time and that they’re gonna find a way to compromise and come together so that at least everyone leaves equally unhappy, but Alaska’s future is secured because of it,” Micciche said.

Reach reporter Ashlyn O’Hara at ashlyn.ohara@peninsulaclarion.com.

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