As the year 2018 ends and 2019 begins, KYUK's Johanna Eurich took a moment with Sen. Lyman Hoffman to look ahead at the challenges the region will be facing.
Sen. Lyman Hoffman: "It’s always good to be speaking to the people of the Y-K Delta."
Johanna Eurich: "It is before the new year, and the time we focus ahead. What’s up? We’ve got a lot of changes in the political landscape in the last year, and you’re the guy who rides it for us in the Senate."
Hoffman: "Yes, I have been working for the Y-K Delta for many, many years, and it’s been a great privilege to do that."
Eurich: "Before you were in the Senate you were in the House chairing the finance committee, and you’ve been in the Senate doing the same thing for what, a decade?"
Hoffman: "Multiply that times two."
Eurich: "Two decades; 20 years. That is a whole lot of experience in a very crucial committee. Am I getting it wrong, but didn’t our present governor work as a co-chair with you for a while?"
Hoffman: "No, he was on the Senate Finance Committee and I worked with him. You know Gov. Dunleavy lived in rural Alaska in Noorvik and married a Native girl from up there. And he had his inauguration up there, so I am hopeful that rural issues will be received favorably by him."
Eurich: "The issues are going to be tough. There’s already talk of some red ink in the budget."
Hoffman: "Yes, Gov. Dunleavy wants to make sure the dividend is protected, and in order to do that we need to look at streamlining state government."
Eurich: "Well, it’s easy to say streamlining, but what do you think the challenges are going to be. I mean cutting somebody else’s is easy, but not cutting yourself..."
Hoffman: "That is always the case. It’s going to be a very, very challenging year. People say 'cut the budget,' but in reality you need to get 11 votes out of the Senate and 21 out of the House. It’s going to be pretty challenging."
Eurich: "What do you think are the big challenges for this region in the budget?"
Hoffman: "For the whole state and this region it’s going to be the dividend. I'm going down there looking to protect the Permanent Fund Dividend program for many, many years to come, and I think that in order to accomplish that we’re going to have to have a full dividend."
Eurich: "We have a lot of attention on the dividend, but I keep thinking about an old thing that was talked about years ago but still has as big an impact on bills and the way we live, and that’s the power cost equalization."
Hoffman: "Power cost equalization, better known as PCE, is something that has been near and dear to my heart. When I first got elected the fund was not there. We had to appropriate money each year: $30-some million out of the general fund. Since then we’ve been able to put over $1 billion into that fund when I was chairman of the Senate Finance Committee. It generates close to $60 million a year. That is distributed to people in places like my region that has three times the energy costs that Anchorage does. So hopefully we can continue to protect that, and I feel good about it because Gov. Dunleavy had his inauguration in Noorvik and they have similar costs that we have, if not higher."
Eurich: "So you think that’s going to be safe?"
Hoffman: "Well nothing is safe, but I am going to keep my eagle eye on it."
Eurich: "What about education?"
Hoffman: "Well last year when I was co-chairman of the Senate Finance Committee we were able to forward fund education for this next year in 2019, so it’s protected."
Eurich: "What about 2020?"
Hoffman: "Well, 2020 is two years from now and we will cross that bridge when we get to it."
Eurich: "So you don’t think we are going to be able to forward fund any education this year?"
Hoffman: "It’s always open, but I think that since education is funded the attention is going to go to other issues."
Eurich: "And what are those issues going to be besides the Permanent Fund?"
Hoffman: "Crime. That seems to be a big issue in Anchorage, Fairbanks, and other areas; Senate Bill 91. So that’s going to receive a lot of attention. The other third rail that is going to receive a lot of attention is what are we going to do with the gas line. Over the last eight years, we spent over $1 billion in studies and working towards permits. So, we have the Alaska LNG line that I think we need to make sure we get permits for. We’re really close to that, and it’s going to take some $20 million in order to accomplish that."
Eurich: "You’re talking about the gas line from where to where?"
Hoffman: "From North Slope to the west side of the Kenai Peninsula."
Eurich: "I was thinking of another gas line. We talk a lot about Donlin, and there is a gas line talked about in there."
Hoffman: "In talking to the people of Donlin Creek, they plan on building a, possibly a 20 inch line from Beluga Point, which is in the inlet, all the way up to the mine. And I think that’s going to happen regardless of what the state does with its gas line. And their project has to pencil out. If the price of gold is right, if the project goes forward, then the gas line goes forward."
Eurich: "There was some discussion early on about getting the state to pay for that. Do you see that happening?"
Hoffman: "Well, the state hasn’t been asked. I’ve asked, talked to people of Donlin, and they want to see that it’s done on the merits of the project."
Eurich: "Where are we on various social issues? There is a lot of funding that comes from the state for social issues in this region."
Hoffman: "Gov. Dunleavy has hired an OMB director from the lower 48 that has streamlined states like California and others, so it’s going to come into play depending on what she does. I just came from a two-day retreat in Wassilla for all the majority members, and all of them are waiting in anticipation of what will be presented to the legislature. Everyone understands that the budget that was submitted to the legislature was Walker’s budget plus a full dividend. So that is going to change, and they have until the middle of February to come up with amendments to that budget. So we are anticipating that."
Eurich: "Politically, they [Senate Republicans] were forming this coalition originally and somebody said, 'We’re not going to have a Democrats on it.' And I was thinking, 'Oh my God, what’s going to happen with Lyman?' How did you get in?"
Hoffman: "Well, I have a lot of friends in the Republican team and they, I think, realized that I bring a lot to the table. It’s been said that they would rather have me under the tent than outside of the tent. They asked me to come in as just a simple majority member. I said I’m not going to go in as a simple majority member. I have too much expertise. I said my minimum is a seat on finance. So they expanded the finance committee, and I’m a member of the finance team and a member of the majority, and I think that will bode well for the region.
Eurich: "What do you think is the biggest challenge for the region?"
Hoffman: "I think this region as well as the state is what’s going to happen with the dividend, long term. I know, and I feel strongly, that we’re going to have a full dividend. But a full dividend takes close to $1.7 billion to fund. We passed Senate Bill 26 last year, which says we’re going to take 5.25 percent out of the Permanent Fund, which is included in the earnings reserve account, and that totals $2.7 billion. So I think we’re set on the amount that we have. The problem is of the 2.7 billion, 1.7 goes to the Permanent Fund and $1 billion goes to general government. And general government, with that plan, will have a $1.7 billion shortfall. So how do we fill that? I think it’s going to be a combination of using part of the Permanent Fund to fund government and then look at reductions, and I don’t think we’re going to face revenue measures this year. So for the state and for our region, coming up with a happy medium, and I would say that the Permanent Fund has to participate in balancing the state’s budget, and I would say that the dividend amount will not be the $1,000 that many people say it was going to be. I think the figure is between $1,600 and $2,900. Somewhere between those two numbers the legislature and Gov. Dunleavy have to sit down and hammer that out. It’s key to me that the number be as high as possible and we’ll see where we go from there."
Eurich: "Thank you very much Lyman. You have been a real pleasure to talk with."
Hoffman: "Thank you, and happy holidays to everybody in the Delta."