With the conclusion of Alaska’s legislative session, the senate has finalized an operating budget that will go before Gov. Mike Dunleavy in June. Republican Sen. Bert Stedman of Sitka represents most of Southeast. He co-chairs the Senate Finance Committee, and he was at the helm for this year’s budget-building process.
He spoke to KFSK’s Shelby Herbert about what got left out of the Senate’s lean financial blueprint for this year. He said Alaska burned through its savings over the last few years, but the state is approaching a more stable position.
Bert Stedman: A lot of us, including myself, had no interest in not having a balanced budget at $70 barrel oil, and not overdraw the Permanent Fund. So this is what a balanced budget looks like — it has quite a bit of stuff in it for everybody around the state, as far as infrastructure and expenditures. But there’s obviously not enough money to do everything everybody wants. We’re struggling with some energy issues in Cook Inlet, and we have unprecedented economic downdraft for virtually all fisheries in all areas of the state. So it’s not a perfect world. But when you look at the finances of the state, we’re in pretty good shape right now.
Shelby Herbert: So, just to summarize — you don’t think Alaska is just kicking the can down the road another year?
BS: The economy changes constantly. Kicking the can down the road? I would say that might apply to structuring the dividend, or the permanent fund. But that takes votes. And until such a time [that] there’s enough votes in the legislature to actually tackle economic reality staring them in the face, we’ll continue to kick that can down the road.
SH: Speaking of hard realities, education funding has been a pretty hot potato this session. And as Alaska schools build their budget for next year, programs are getting cut, faculty are getting laid off, and entire schools are consolidating and closing across the state. What do you think can be done at this point to help?
BS: Let’s put in a little bit of context. We’ve had declining enrollment throughout the state, except for Mat-Su. So, you’ve got to take that into consideration. There is definitely a need for a funding increase on the base student allocation. The question becomes: how much. And all districts are different. So, when we look at $680, it’s not a miracle number that fixes all districts. It gets us in the realm of being a reasonable range. I think it’s unlikely the governor is going to veto that number.
My recommendation is that schools settle in around $680 and figure out how you’re going to deal with your budget at that amount. When we look further into the school system, and we look at the salary levels, the salary levels are below the national average — especially when you consider the cost of living in Alaska. And to get us into the range of being competitive when retaining our educators, the salary levels would probably have to move around 20% increase. So, next year, we’re going to have some interesting discussions on the salary levels.
SH: One thing that didn’t make it into the final budget this year was an almost half a million dollar appropriation for free school meals for low income students across the state. You voted against that item. Why?
BS: That item was put in an amendment on the floor to play political games. So what the political game was: [it took] money from corrections — the hoodlums that are locked up in jail — and give it to the kids for free lunch. Sounds pretty good. But at the end of the day, you gotta run the prisons. So, we reversed that issue, and that comes with the territory being chairman of the operating budget.
As a chairman, I make lots of hard decisions. I have to stand up and support the budget, in the end, no matter what’s in it. But that’s the backstory on that one — it’s not that we had any intention of starving or our children, and then not taking care of our prisoners.
SH: This year, you supported funding for carbon capture, as well as a “green bank” for renewable energy projects. What do you think is on the horizon for renewables in Alaska, especially since oil is such an important source of revenue here?
BS: Well, I think renewables — along with this carbon capture, sequestration, and utilization — is a trend that’s going to continue, probably as far as the eye can see. I’d like to see Southeast continually expand their hydro capacity. The less we use the diesel generators, the better for cost and emissions.
We have one atmosphere on the planet, and it’s rather contained. So when we look at whatever impacts we have with human industrialization — or don’t have — is an area for debate. But to control that emissions or reduce them — one way you can do that is you could capture CO2 emissions off power plants and other industrial plants and inject it in the ground, in reservoirs. Then you come in with incentives — in this case, the federal government came in with credits, to push the technology.
We have a depleted gas basin in Cook Inlet, and it’s in a unique position in the Pacific, It’s the largest and one of the oldest ones in the northwest Pacific that can facilitate carbon storage of any meaningful quantity — and vast quantities, we can handle! And a country like Japan doesn’t have the storage capacities. They don’t have any basins like this. So we wanted to set up a regulatory framework so we can have those discussions if it looks [like a good economic possibility] to a country like Japan. Then we can have those discussions — and it won’t be free for them to do it! But it all boils down to — we have to have energy, and we don’t want to pollute the planet where we live.
SH: I just want to latch onto something you said at the very beginning there. It’s clear that you’re interested in reducing emissions and transitioning to renewable energy sources, but do you believe in human-caused climate change?
BS: I’ll let the scientists argue about that, but there is some impact of some magnitude. We can sit around and argue about it and continue to not deal with CO2 emissions, or we can deal with them. We’re probably better off to let the argument continue and deal with them.
SH: On the topic of energy, what’s going on with those energy relief checks that were tacked onto the PFD?
BS: Let’s not talk about it being “tacked on!” It is, kind of… I mean, I guess you could look at it that way. When we look at the earlier question you asked about kicking the can down the road — there are folks that run for public office, and they tell the public that they can have big checks. But they rarely talk about the magnitude of the total dollar amounts. So, a more reasonable and predictable dividend amount would be about 25% of the payout. So this fall’s extra dividend [of $295] is derived off of that.
SH: And is this something you’re confident people will receive going forward?
BS: Jury’s out on that. Apparently, the House liked it [this year.] I put it in last year’s budget, and they didn’t quite know what to do. I hope it sticks around.
SH: Let’s touch on a community-specific issue. Petersburg’s new hospital facility is currently underway. And all the while, our old facility is falling out of code, and is to some degree or another, falling apart. The new hospital facility didn’t make it into the capital project list this session. Is there any hope left that some state funding might come through for the hospital this year?
BS: Capital infrastructure always has my support, but you have to have requests that can financially be delivered. There won’t be any support this year — the budget’s already done. When we take a look at at that particular project — I had a meeting with the hospital administrator and told him it’s not going to happen. And the reason it’s not gonna happen is [because] the dollar amount’s way too big. And when we look at the capital budget for the state, the concentration this year was on education. And next year, the concentration is going to be on energy.
Wrangell needs a fire hall and a police station — a whole building replacement. And they’ve been waiting for several years on that. But I couldn’t even help with that issue this year. So, I don’t know where all these grants for the hospital are going to come from, but it won’t be the state of Alaska.
SH: Well, Senator Stedman, thank you so much for your time. Any final reflections on the legislative session — or what comes next?
BS: The legislative session went really smoothly this year, budget-wise. We had a kind of a mess dealing with legislation, particularly at the end, and I don’t support running over their constitutional deadline, even for one minute. We had a lot of new members a couple of years ago, and they’re starting to learn how the process works. You’re not elected to just squabble in circles and not produce a budget. So, I think we’re moving beyond the squabbling and circles and hope next year’s budget will be as smooth as this year.
