State legislators are back in Juneau and diving into some of the state’s most pressing and contentious issues: how to fund education, set the permanent fund dividend amount, and balance the state budget.
Sen. Lyman Hoffman (D-Bethel) represents Senate District S – the Yukon-Kuskokwim Delta, Alaska Peninsula, and the Aleutian Islands. He's the longest-serving member of the Alaska Legislature, and sits as co-chair of the Senate Finance Committee, where he’s in charge of the state’s operating budget.
Hoffman spoke from his Juneau office with KYUK’s Sage Smiley on Jan. 29 about what’s on his mind as the legislative session gets underway.
Read a transcript of the conversation below. It's been lightly edited for clarity and flow, and may contain transcription errors.
KYUK (Sage Smiley): Thank you for taking the time to speak with me today, Sen. Hoffman.
Sen. Lyman Hoffman: Yes, my pleasure.
KYUK: So my first question is just: it's the beginning of the legislative session. What's been [occupying] most of your time so far?
Hoffman: We've been meeting, we met with joint leadership in the House and the Senate, and we've been meeting with Senate members in our caucus, and the dialog has been [looking at] what the governor is proposing on his budget, but reducing his dividend down to a 75 / 25 – just about $1,400 for the dividend, and what number to use for the [Base Student Allocation]. And looking at $680 [Base Student Allocation], which would increase the amount for education funding by $175 million. But by doing those, and keeping everything, and looking at $70 a barrel for oil, we would be about $250 million in the red. So that's the discussion, you know, what can we afford on those two issues, the [Base Student Allocation] and the dividend.
KYUK: So after many years of having been the only Democrat in the majority coalition, that's changed. Does that change how those discussions go at all?
Hoffman: I don't think so. I think, you know, those are – the dividend and education funding are sort of universal in the legislature. You know, you're either on one or the other. And it's probably the most difficult year that I've seen in 20 years to try to balance this dividend. No one wants to spend any of the constitutional budget reserve account, which stands at about $2.8 billion right now. But even if we wanted to do that, it's really difficult because it requires a three-quarter vote.
KYUK: So yeah, tell me a little bit more about that. What makes it the most difficult year in your more than 20 years of legislative experience?
Hoffman: Well, I think the appetites are up there for education, the governor is going to come up with another bill – he said he's going to have a $200 million budget increase over current year, and there's a lot of support for retaining the level of funding for the dividend. I think it was $1,600 last year, and the price of oil is going down, and that creates a big gap in how to balance the budget.
KYUK: As the Senate Finance co-chair of the operating budget, what's your priority in thinking about budgeting?
Hoffman: Well, the party is working with the members of our caucus and finding out what they support. Because in the end, we have to get 11 votes in the Senate, and then after that we have to work with [the Alaska State House]. I just spent half an hour with the Speaker of the House, Bryce Edgmon, trying to figure out what we can agree upon. And it's a little early, but times goes by pretty quickly once things start happening.
KYUK: So how does the way you're thinking about the budget compared – you mentioned Gov Dunleavy's budget. It's a $15.7 billion proposed budget, including a $3,982 [Permanent Fund Dividend]. Do you think the Senate's proposed budget will be anywhere near that?
Hoffman: No, the dividend amount, there's some discussion to fund the dividend and or the Base Student Allocation for education early. That dialog has taken place several times in the past, but has never come about itself and [has been] decided near the end of the session.
KYUK: Speaking of education, the legislature has struggled to come up with a solution that's permanent for education funding. The Base Student Allocation has been on the table and been kind of at the forefront the past few years, but one time education funding has even been a really embattled thing. How are you thinking about looking at education funding this year?
Hoffman: Well, I'm telling people that we fought over it last year, and we came one vote with resolving that issue on an override, I would say that we need to do the same thing this year. I think in talking with members of the other body, in particular, they are less inclined to support the governor on an override. We need to give some increased stabilization for the school districts and I think the number that we're starting out with in the Senate is $680. Whether or not that is the number that we end up with remains to be seen, but at least getting that on the book so that school districts can plan their budgets when they do that in March.
KYUK: So the other side of this, obviously, is the revenue, the money that the state has to spend in the first place. How are you thinking about shoring that up? It's a discussion in the legislature every year whether that would be an income tax or a sales tax or some other way of increasing the state's revenues.
Hoffman: There's little interest in the other body to address revenues this next year, they have a slim margin, and it only takes one member of that group to say no, and they've made that quite clear that they're not going to be dealing with revenues this year.
KYUK: In light of the federal funding freeze on many programs, is that changing the discussion in the Senate or in the legislature more broadly here in Alaska?
Hoffman: Well, I think it will. I think it's going to put additional pressure upon the budget, but I think that all has to sink in in the state.
KYUK: So we used to hear a lot about the power cost equalization program, but less so since it moved to management under the Permanent Fund [corporation]. Do you think that that's been an effective move?
Hoffman: I believe it has been an effective move. There was discussion about spending those dollars, the administration tried to liquidate that account and the lawsuit came about. But that did not answer the question whether or not those dollars could be spent, they can be spent, and that is why I proposed to change its administration from the [Alaska] Department of Revenue to the Permanent Fund Corporation. Once it's in the Permanent Fund Corporation machine, it gets spread up into several different components, and it's very difficult to pull them apart and spend those dollars individually. So I think it was a good move. I think it accomplished what it was intended to do.
KYUK: Earlier, you mentioned that in looking at the budget initially, obviously things will shift throughout the legislative session that you're discussing a [Permanent Fund Dividend] that may be about half of the governor's proposal. Could you speak a little bit more to that and how you're thinking about pulling from the permanent fund versus keeping that a sustainable fund?
Hoffman: Well, the governor has been consistent in putting forward the statute amount, which is $2,800. But everyone in this building realizes that is untenable, and we in the Senate have proposed fixing that through legislation, but the other body has not agreed to that, so we've been piecemealing it every year and it becomes a big budget hot potato, so to speak. So again, it's going to be an issue that is out there, and I think this year it's competing with the [Base Student Allocation].
KYUK: How is this legislature different than the last one, in your opinion?
Hoffman: Well, I think the Senate – there's a big gap, I think, between the Senate and the House. They have 13 new, 14 new members. They had 17 or so last year. So they are quite inexperienced in the process. And it's a big learning curve for them. But in the Senate, we've had members that I worked with, Sen. Stedman, Sen. Olson, Sen. Stevens, I've worked with them for over 20 years, so we have developed a really good working relationshi, and understanding each other's needs are.
KYUK: Speaking of new members, the Lower Kuskokwim has a new representative, Rep. Nellie Jimmie, and there are other counterparts of yours in the Yukon-Kuskokwim Delta. How are you talking to them or working with them here at the start of the legislature to prioritize the issues of the Yukon-Kuskokwim Delta?
Hoffman: Well, I met with her, and I introduced her to Bryce Edgmon, who's the Speaker of the House, and I think she's coming along quite well. I've asked Rep. Edgmon about that, and he's doing what he can to help her along, and I think she's doing a tremendous job so far in participating. It was good to see that she got onto the House Finance Committee.
KYUK: Rep. Jimmie ran on a platform of really prioritizing rural issues, especially infrastructure issues. And within the last year, many [Yukon-Kuskokwim] Delta communities have seen issues with power, with water, with sewer infrastructure. How are you thinking about both working with all the legislators of the state to come up with statewide solutions, but also specifically prioritizing issues within this region?
Hoffman: Well, the way I look at selling things is to try to broaden it out. And let's take energy. That is a major issue in Anchorage and the rail belt, because they have a limited amount of natural gas. So working with them and telling them that we understand their situation, but we in rural Alaska have higher prices, you know, in many cases, twice as much in expenditures for our energy. So while we're looking at solutions, and we haven't come up with one yet for the for for the rail belt, they need to keep in mind that any solution that they may have, we need to look at how we can reduce energy costs for rural Alaska.
KYUK: Do you have any specific ideas on how we can reduce energy costs for rural Alaska right now?
Hoffman: I do, but I'm negotiating those, and I'd rather not divulge those positions this time.
KYUK: That's fair. Well, is there anything else you'd want to add about what you're thinking about or what you're prioritizing here at the beginning of the legislative session?
Hoffman: Again, it's all about the budget, working with the members of the Senate Finance Committee, working with our leadership team, and addressing the budget crisis that I believe that we're in.
KYUK: Well. Thank you very much for your time and your thoughts today. Sen. Hoffman.
Hoffman: Thank you Sage, have a great day, and everybody keep healthy and warm out there in the Yukon-Kuskokwim Delta.
