Too Many Places to Be

I'm in the House Finance meeting on the fifth floor where John Katz, director of state and federal relations and general counsel to the governor, is calling in from DC.  Former senators Stevens and Murkowski and former governor and current railroad head Bill Sheffield are in a resource meeting on the 2nd floor.  And another meeting they are discussing an issue of more immediate interest, I'm sure, to many Alaskans, on the repeal of daylight savings time.

But I'm here to hear John Katz, an Alaska legend.  I'll blog as I go, so excuse the many typos. 

Hard to predict, but
1.  Attempts to shift costs to states
2.  Amount of money coming to Alaska will shrink in real terms, especially considering inflation
3.  Federal receipts compared to state money will decrease


This comes from need for the federal government to reduce debt.

Congressional earmarks.  Even though percent is quite low, averaging between 1 and 2% or 16 billion out of 1.2 trillion, they get a lot of attention.  They're a metaphor.  Easier to talk about earmarks than entitlements.

State has seen earmarks as a way to address fed funding sources that don't figure in Alaska's unique circumstances.  Even before the lst election we were seeing signals that Congress was going to tighten hold on earmarks.  Focus on transparency, sponsors and benefactors of earmarks.
Rules more stringent in House.  Republicans have declared moritorium though Young resists.  Democrats moratorium on earmarks to private companies.

Senate side different.  Congress' duty through control of federal purse, up to Congress to shape federal budget which may include earmarks.  In Alaksa context, lst year about 700 earmark requests from Alaskans.  This year about 500 = @$3billion.  this year reduced in numbers and size.  Few over $1million.  Those reduced by quarter to half.
Alaska's response:
1.  Jawbone more with bureuacrats

3.  Federal grants



Last year STate requested 8 and the same this year for about $23 million and they all have strong federal nexus, strong public support, and we can show some other source of money.  We see literally dozens of Alaskan mumicipalities and non-profits.  They're chaning too.  Fewer earmarks, and only one source of funding for a project.

Number of earmarks will reduce over time, but won't go away altogether.  Denali Commission.  Budget at times has exceeded $100 million at times.  Obama admin says it's compatible with their rural policy, but they don't like it being funded by earmarks.  Obama reduced it to about $16 million and earmarks are in jeopardy.  Suffering from other problems:
1.  needs to be reauthorized, not yet
2.  unlike Appalachian group, only represents one state
3.  others are jealous

State is starting to match some of the expenditures.
Transportation, two sources:
1.  AIT funds in FAA.  House has acted on that legislation as we speak,  Don't expect any big changes for Alaska which comes on formula, though national press has focused on some rural airports
2.  Surface transportation leg.
a.  earmarks - these unique, draw directly on highway trust fund, advantages to states.  In past, earmarks additive to forumula funds, but last time, some earmarks deducted from formula funds.  We had trouble with that and we think deductive earmarks detract from p
This law is up to be extended.  $20 billion of which AK might get $150 million.  Some Congress members want to reauthorize comprehensive legislation.  This could be difficult because fund dependent on gas taxes which went down as people drive less.  Conflict between donor and donee states.  Ak poster child we get $5 for every $ we contribute.

Obama wants to allocate more funds on competitive basis.  Disadvantage for less populous states.  Rank pedestrian and bike travel with motorized uses.

Military.  Everyone knows the strategic import of our bases.  Supportive community.  Principle disadvantage is high cost of business in Alaska and of fuel and energy.  Up til now, military has been immune from budget cuts.  This could end after election.  Another round of base reallingment and closures coming up.  Governor has formed committee for this.  When AF didn't place F35 fighter in Alaska in first round, that was a signal to all of us and our concerns about Eilson.  We need to be

Medicaid.  First or second largest expenditure of most states.
1.  FMAP formula - state and fed outlay formula
2.  Benefits a state provides and whether feds require enefits to be provided.  This is in state of flux.  Initial attempt to shift costs to states.  Now 50/50.  Was 70% fed 30 State.  Mitigated for the short term by extra match in stimulus package and likely to be extended to end of calendar year.  Also language in health care billl for newly eligible which would be much higher match.  States concerned how long that would last.  State will continue to lobby for higher rates because state health care so much higher.  Tribal health - hard to get handle $200-400 million.  So far in tact.  But domestic discretionary funds.  Have to keep careful eye on them.  Fed funds tend to be focused on tribes in Indian country, since Venetie decision, there's little Indian Country in Alaska.

Education.  Bulk comes from states and localities. but fed formulas in k-12 are important source of funding.  Obama put out 47 page outline of changes he would like to see.  Broad spectrum of issues.  Formulas:
1.  more competition
2.  premisted on core academic standards, bench marks, reading, math, etc.
Alaska hasn't yet become invovled in setting national standards.  Also concerned about standards that don't relect Alaska's unique circumstances.

Misc. category.  Obama's proposed budget.  A number of items of significance for AK
1.  All subsidies for oil and gas repealed - deliterious for AK
2.  Funding for conveyance of land for state of Alaska.  Obama recommending 1/3 cut for surveys at BLM.  Necessary for land selections.  Can retard development.

In conclusion we can do several things:
1.  Jawbone with Federal agencies to include funds for Alaska programs in their budget.  Getting more adept in competing with agencies.  Scrutinizing fed formulas when they come along.  Population doesn't help us.
2.  Conception of Alaska Statehood Act.  In 1959, many Congress were afraid Alaksa would become ward of US.  Gave Alaska land with expectation they would become self sufficient.  But didn't foresee EPA etc.
3.  Federal domain, 60% of land mass of Alaska continues to be owned by feds.  We've supported OCS exploration and get OCS revenue sharing.

Conclusion
Can expect significant federal funds, but not as in the past. 

I'll post now, and then add as this continues.

4pm:
Wilson:  What taxes on oil being repealed?
Katz:  8 in total.  I don't know the full spectrum.  In total they would wipe out subsidies and incentives the oil industry receives.  President's response:  These subsidies gerrymander the  the energy field by pushing industry in certain areas.
Wilson:  We're currently doing in the resources just that - cutting some taxes and adding incentives.  Because that has dropped dramatically in last three years.
Katz:  You're considering the exact opposite of the Obama administration.  Hoping Congress won't support President on this.  There'd be a disproportionate effect on Alaska.

Joule:  Denali Commission.   Didn't quite understand the question.
Katz:  Concern for some in congress.  Not sure if real concern or rationalization

End of Katz portion.

John Boucher, senior economist with OMB.  I've got a printout of his powerpoint, so I'll go check in the other rooms.  4:07pm

[Photo:  John Boucher testifying with Reps. Peggy Wilson and Doogan in background.]










4:40pm  I checked in on the resources committee meeting.  It was crowded.

And then I went off to see what was happening in the Community and Regional Affairs committee to hear the HB 19 bill to end daylight savings time.  I'll cover that in the next post.