January 25, 2013


Legislative Notes for ASHNHA members; compiled from hearings, reports, news accounts and good old fashioned face to face discussion in the Capital City.

Welcome to ASHNHA's 2013 Legislative Notes

ASHNHA is trying a new email format for our Legislative Notes this year. Please remember to click "display all images" for the best viewing. If you would like to print this newsletter you may wish to view it in your browser. If you have any trouble printing or viewing this newsletter please contact or 907-586-1790. Let us know if you would like a pdf version of the newsletter emailed to you for easy printing.

Money is Cheap

Last week the State of Alaska received a jaw dropping and historically low interest rate of 1.42% with the sale of its general obligation bonds for educational facilities. Fitch’s Ratings upgraded Alaska’s General Obligation (GO) Bond rating from AA to AAA in early January right prior to the State’s sale of its GO and taxable bonds. The GO Bonds were also rated AAA by Moody's Investors Service and by Standard & Poor's. In a press release, Revenue Commissioner Bryan Butcher stated, “We are very pleased with the results of this transaction and it bodes well for our future debt issuances. Alaska’s recent upgrade to AAA by Fitch Ratings has made us an elite credit, highly valued by investors.”

Our Savings Accounts are Filling Up

One of the reasons stated by the rating agencies for the State's stellar bond ratings are the large savings accounts held by Alaska.  Commonwealth North presented an annual asset review last week and concluded Alaska has $70 billion in net assets or $96,995 per Alaska resident.  Add to that another $20 billion in liquid assets.  Clearly, no other State is in such a financially advantageous position. Check out the powerpoint at this link.

But We Are in the Financial Dumps

The top fiscal advisor to the Legislature gave presentations this week that threw cold water on large capital budgets of the recent past and any major growth in the operating budget.  David Teal, the top Fiscal Analyst for the Legislature, told the Finance Committees that the days of fiscal surplus are over and now the question is how much to withdraw from savings. That’s a tough equation for Legislators who ran on balanced budgets and at the same time enjoyed using large capital funds to stimulate the economy and meet infrastructure needs.

Right now, Teal told the Finance Committees, they could add basically $263 million to the Governor’s capital budget without dipping into savings.  That would make about a $1.98 billion capital budget versus last year’s nearly $3 billion in total funds.

There is another way to generate money for capital – subtract it from the operating budget.  Governor Parnell delivered a very lean 2014 operating increase of 1% so that would not be an easy job. That compares to 6.5% growth rate of the past several years.  But some legislators are contemplating the tough job of cutting back on operating expenditures.

New Medicaid Expansion Report Released

This week Alaska Native Tribal Health Consortium released a report Fiscal and Economic Impacts of Medicaid Expansion in Alaska: A Preliminary Evaluation.  This independent study by Northern Economics found that expanding Medicaid coverage in Alaska would result in a significant positive impact for the state’s economy, including a $2.33 billion cumulative increase in business sales during the first six years.  Click here for the full study.
The study found that during the first several years:
  • For every dollar in state funding, an additional $15.50 in new federal dollars would be generated.
  • Approximately 4,000 new jobs would be created by 2017, generating $230 million more wages earned annually.  
  • The annual overall economic output for Alaska, based on business sales, would increase by $510 million by 2019, with a cumulative increase between 2014 and 2019 of $2.33 billion.
Alaska would benefit from the Medicaid expansion option on two fronts: it would provide better health care for more Alaskans while also providing substantial economic benefits for our state, as demonstrated by the study.

House and Senate Finance Sub-Committee Ready to Discuss Health & Social Services Budget

Last week the Senate appointed their Finance sub-committee members to begin to evaluate the budget of the Department of Health and Social Services.  The sub-committee members are Sen. Donny Olson (D-Golovin), Sen. Lesil McGuire (R-Anchorage), Senator John Coghill (R-North Pole), and Sen. Berta Gardner (D-Anchorage).

The subcommittee's first meeting is on Tuesday February 7 and continues on Tuesdays and 
Thursdays from 8am-9am. The tentative schedule has Medicaid slated for February 12 and 14.
In an unusual move, the House appointed all 13-members of the Finance Committee as members of the Health and Social Services sub-committee.  The chair of the sub-committee will be Rep. Mark Neuman (R-Big Lake).  Having a sub-committee that large will mean extra work for Commissioner Bill Streur and his staff. 
As you can imagine, Medicaid is of particular interest to the sub-committees and House sub-committee chair Rep. Mark Neuman has indicated that the sub-committee process will continue after their initial deliberations on the Department’s 2014 budget. In fact, Chair Neuman announced the Committee will conduct business year round.

The subcommittee with meet Monday, Wednesday, Friday at 8:30am.

Budget hearings for both Committees will be ongoing over the next several weeks as both Houses prepare their budgets for deliberations with final passage of the budget expected prior to the end of the 2013 Legislative Session on April 14th.

Not Many Healthcare Bills Introduced So Far

Today is the 11th day of the session and only 5 bills have been introduced relating to healthcare.  The topics of these bills relate to naturopathic doctors, pharmacy audits, changing the advance healthcare directives registry, and requiring a consultation for an opiate prescription under certain circumstances. Rest assured more bills will be forthcoming throughout the session but most of the focus with regard to health care is directed at the Department of Health and Social Services budget and whether or not the state will expand Medicaid under the provisions of the Affordable Care Act.

Legislative Hearings January 28th to February 1st

You can watch the Committee meetings live on the internet at Alaska Legislature TV
  • Monday, January 28th  @ 8:30am – House Health & Social Services Finance Subcommittee – Pioneer Homes
  • Wednesday, January 30th  @ 8:30am – House Health & Social Services Finance Subcommittee – Medicaid Overview and Discussion
  • Thursday, January 31st @ 9:00am – Senate Finance Committee discusses Senate Bill 20 - 2014 Mental Health Budget 

Medicaid Projections are Historically Low

One important trend making a lean budget possible is nearly flat growth in the Medicaid program projected for next year. We will report more on this later.  The historically low growth rate prompted numerous interesting exchanges in various committees this week from unbelieving legislators who are used to double digit requests for the program.

Senator Donny Olson, Senate HSS budget chair asked the Governor’s chief budget officer Karen Rehfeld about the projected 1.5% growth rate, “Are we going to see a supplemental?”  Rehfeld replied, “We don’t expect a supplemental to come forward- because the State believes the Medicaid cost containment efforts are working."

Senate Finance Chair Pete Kelly, who has a lot of experience with Medicaid budgets during his previous legislative service ( when I was the Commissioner)  told Rehfeld Medicaid has always expanded far more than what you have anticipated here. “So don’t think it’s that we don’t believe you.  It’s that we will believe it when we see it.”

Same questions in the House.  Representative Lindsay Holmes asked if the appropriation for Medicaid is realistic. “I believe we can operate on this budget” Commissioner  Streur answered.

When  Commissioner Streur was asked if the Medicaid numbers will remain flat in the future, he said, "No, Medicaid and health insurance costs tend to go in four-year cycles of flat, up or down. I think we are in one of the downturns now and we may stay down longer if economy is good and we can find more efficiencies. But overall it will be going up.“

For more details be sure to listen to the House Finance Subcommittee on DHSS on Wednesday Jan 30 at 8:30am.  

Discussion Beginning on Medicaid Expansion

With the release of the ANTHC Medicaid Expansion report—and national press on the expansion, Legislators have a lot of questions. When the expansion came up in the House Finance Committee, Commissioner Streur laid out some of the work he is doing to prepare analysis.

Streur said, “I need to do a deep dive into the Department to identify the population currently covered under grants to see how many would then fall under the 50 percent Medicaid or the 100 percent Medicaid expansion. If the State has $80 million GF in grants and can enroll many of those grant recipients in Medicaid for $36 million it’s a no brainer," added Streur.  He indicated the analysis will take some time, “I want to get it right.” 

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2012 Redistricting Plan Still Not Finalized – New Lines Could Be Drawn For 2014 Election

In May 2012 the Alaska Redistricting Board finalized their election districts for the 2012 Election.  In June 2012, the US Department of Justice approved the plan.  However, there were several court cases challenging the Alaska constitutionality of the plan. The cases were still ongoing even though the Alaska Supreme Court approved an interim redistricting plan for the 2012 election. In a December 28th ruling the Alaska Supreme Court ruled – in a split decision – that the election district lines approved by the Board in 2012 were unconstitutional.  The court maintains that the board should have used a process that gave deference to Alaska’s Constitution first and then addressing the requirements of the federal Voting Rights Act.

In January of this year, the Board asked the Alaska Supreme Court to reconsider their ruling.  The Supreme Court is considering this request.  What is even more interesting is that the Justice who wrote the majority opinion (Walter Carpeneti) is retiring and a new Justice will be named in the near future.  This appointment may impact the ruling and/or the final conclusion of the case. 

ASHNHA Adds To Juneau Legislative Team

This session ASHNHA hired lobbyists Pat Carter and Kent Dawson to help promote ASHNHA’s 2013 priorities to the Legislature, Governor Parnell, and his Administration.  Here is a brief background on Pat and Kent.
Pat (second from left) began his lobbying career in 2001 and brings with him eighteen years of political experience including legislative, lobbying, and government affairs work.  Pat has a good reputation for promoting Alaska’s business environment while developing and maintaining solid working relations with legislators, Governor Parnell and his administration. He also represents the Alaska State Chamber of Commerce.

Kent Dawson (left) is a lifelong Alaskan with an extensive record of accomplishments.  In 1979, following Dawson's service as Chief of Staff to Governor Jay Hammond he began his lobbying business.  Since then Dawson has worked with both State Administrators and Legislators on behalf of resource development, local government, education and tourism.  Kent's ability to interact with all people and his intimate knowledge of state government are paramount to his success.  
Also returning is Geoff Bullock (right) who has more than a decade of service to ASHNHA as the Legislator Coordinator. ASHNHA is pleased to have these lobbyists and professionals,working for us during this session.

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