After one hearing and no public testimony, the House Finance Committee has put a high-priority bill that would substantially boost state education funding on the brink of reaching the floor for a final vote. But it’s also facing stiff opposition from minority-caucus Republicans as lawmakers stare down a deficit.
"I can tell you right now, I don't see any way that the Legislature, under our current fiscal regime, has any way to meet these obligations if this bill were to pass," Rep. Will Stapp, R-Fairbanks, said at a House Finance Committee meeting on Thursday. "What type of revenue measures are you going to propose ... or what type of cuts are going to be proposed?"
Stapp's comments came while questioning the sponsor of the House’s top education funding bill, Rep. Rebecca Himschoot, I-Sitka. The bill would boost education spending by more than $325 million next year, with additional increases and inflation adjustments in following years.
Himschoot has said the bill is an attempt to give schools the same purchasing power they had in 2011, making up for years of flat funding and inflation.
Earlier in the week, lawmakers across the building in the Senate Finance Committee heard some grim projections about the state’s finances. Between the current year’s budget and next year’s, legislators are short more than $530 million to maintain essentially the status quo.
Senate leaders say dipping into the state’s main savings account isn’t on the table. Senate Finance Committee co-chair Sen. Lyman Hoffman, D-Bethel, said it would be irresponsible to spend from the Constitutional Budget Reserve to pay for the state's typical operating expenses.
"If we're going to meet our obligations, we need to, I believe, address new revenues," he said.
Major revenue measures, though, have been few and far between. The only bill to get serious consideration so far comes from an unexpected source: A conservative minority-caucus Republican senator.
Wasilla Sen. Robert Yundt filed a bill that would expand the state’s corporate income tax to cover S corporations in the oil and gas sector that take in over $5 million a year. The bill is widely expected to apply to just one taxpayer: Hilcorp. Yundt said it’s all about leveling the playing field — C corporations like ExxonMobil and ConocoPhillips pay state income taxes, but S-corps don’t.
"It's real money. I'm here to count pennies, nickels — right? — dimes, quarters and dollars," Yundt told the Senate Resources Committee on Wednesday. "In an average family of four in Alaska right now, this one loophole is over $700 a year."
For the state, it’d raise $185 million in its first year and $125 million the next.
Members of the largely Democratic bipartisan Senate majority welcomed the proposal — but it’s unclear whether it has support in the House.
That brings us back to Stapp’s question: How are lawmakers going to pay for a boost in school funding?
Education bill sponsor Rebecca Himschoot’s answer was, essentially, that they have no choice. The state Constitution obligates legislators to "establish and maintain a system of public schools."
"At the end of the day, everyone in our state deserves (and) has a right to a high quality education, and we're going to have to figure it out," she said.
That led Stapp, a minority-caucus lawmaker, to do the legislative equivalent of throwing his hands up in frustration.
"I'm interested to hear what the majority's proposals are to be able to fund the bill, but I will absolutely bite," he said. "I know this is a big priority for you guys, so Mr. Co-chair, with the permission of the committee, I'm going to go ahead and see if I can move the bill."
And he did. At its first hearing, the bill passed out of the Finance Committee with no amendments and no opposition. That leaves it in the Rules Committee, tasked with scheduling a final House floor debate and vote.
But when it might come up for a final vote — and in what form — is an open question. Shortly before the bill moved from the Finance Committee, Gov. Mike Dunleavy came out against the proposal.
Dunleavy introduced a competing bill last month that would not raise basic per-student funding, but would boost funding for correspondence students, allow the state school board to directly authorize charter schools, and offer bonuses for teachers. Dunleavy has said repeatedly that any bill boosting basic school funding be tied to reforms that would boost student performance.
Lawmakers and Dunleavy’s staff have been meeting behind closed doors to try and hammer out a compromise, and just as he cast doubt on the future of the standalone bill, he doubled down on his support for the negotiations.
"This fast-track standalone bill does not have my support. The education negotiations between the two bodies and my office do," he said on social media.
Minority-caucus Republicans sought on Friday to bring the standalone bill before the full House but were outvoted along caucus lines. Rep. Andy Josephson, D-Anchorage and co-chair of the Finance Committee, said for now, the majority is holding out hope that lawmakers and the governor can come to an agreement.
"Cynics might say, ‘Yeah, but they won't bear fruit.’ But we're told that they may very well bear fruit," he said. "We want to get, as I noted in Finance Committee, to a win-win with the administration."
But even if a compromise is reached, it’ll still take money to pay for it. And back at the Senate Finance Committee, lawmakers are steeling themselves for some tough choices over the next three months.
“I think we need to add scissors to this tray of equipment on our desks,” Sen. James Kaufman, R-Anchorage, said.
“Red pens, maybe,” Hoffman said.
“Or Zoloft,” Sen. Jesse Kiehl, D-Juneau, said.
