In first extra legislative day, Alaska GOP House leaders propose new cut to pay raises for state workers

JUNEAU — The Alaska Legislature made little headway Monday on its deficit reduction plan after missing its Sunday adjournment deadline, while a House Republican leader introduced an entirely new bill to eliminate state workers' annual and biennial pay increases that a Democratic colleague said could actually set negotiations backward.

Anchorage GOP Rep. Craig Johnson, whose House Rules Committee sponsored the last-minute legislation, said House Bill 379 is a "part of the package" needed to close the state's $4 billion budget gap. According to the bill, the increases would be reinstated if the price of oil — revenues from which have traditionally funded the majority of state government — rise to $90 a barrel from their current low of $42.

"There are a lot of people standing in line to raise taxes, tap the Permanent Fund," Johnson said in an interview Monday. "It is unconscionable to be giving raises."

Johnson said he didn't have an estimate for how much money the legislation would save, and he acknowledged it wouldn't be enough to close the state's budget deficit.

The substance and timing of the bill — unveiled on the first extra day after lawmakers missed Sunday's 90-day deadline for adjournment — drew immediate condemnation from labor groups and their Democratic allies in the Legislature.

"I'm trying not to explode," said Vince Beltrami, the president of the Alaska AFL-CIO, the state's largest labor group, after he reviewed the legislation in the Capitol. "I just can't believe on the day after what would be the last day of the session — to go after public employees who have already sacrificed."

Asked why he waited to introduce the legislation until the 91st day, Johnson suggested there could be many more, responding: "Of how many?"


"We've been really busy," added Rep. Charisse Millett, R-Anchorage and the House majority leader. "Let's have everything on the table and everything possible out there."

The bill would apply to legislative employees as well, Millett said.

"When the private sector is doing much more drastic cuts than we're doing and cutting wages much more drastically than the state is — as everybody says, we want everybody to feel the pain," she said. "We're not going to hold our whole family harmless. Everyone's going to help each other."

Johnson's Republican-led majority claims 26 members in the House, but the caucus needs several Democratic votes to be able to withdraw money from the Constitutional Budget Reserve — an $8 billion savings account expected to be necessary to cover next year's deficit.

After House Speaker Mike Chenault, R-Nikiski, referred HB 379 to just one committee — finance — Rep. Chris Tuck, the Democratic minority leader and a union official, asked for the House Labor and Commerce Committee to vet the legislation as well.

Chenault brushed him off by jokingly suggesting he'd refer the bill to the fisheries committee, too.

In an interview afterward, Tuck said the effect of House leadership's decision to introduce the legislation was the same as its decision last week to choose the deeper of two different cuts to the state university system's budget proposed by the House and Senate.

"We're just going in the wrong direction in trying to come up with an agreement, obviously," Tuck said.

The introduction of Johnson's bill was essentially the only significant legislative development Monday, as many lawmakers and staffers focused on packing their offices and loading their cars on a cross-gulf ferry that runs from Juneau to Whittier, an hour's drive from Anchorage.

After the House and Senate adjourned their marathon Sunday sessions at 3 a.m. Monday morning, three hearings were canceled and the finance committees in both chambers were the only two to meet.

Lawmakers conducted no substantive business in their 5 p.m. floor sessions aside from introducing Johnson's bill in the House.

A House Finance Committee hearing on HB 379 set for Monday was canceled, but by the end of the day, a meeting on the legislation was scheduled for Tuesday afternoon.

In the Senate, meanwhile, there's no companion legislation, though finance committee co-chair Pete Kelly, R-Fairbanks, said he's willing to "do something that works" with the state's 24,000 budgeted positions.

"We have looked at the merit system for years, because it seems to be overly generous and overly automatic," he said in an interview Monday.

Under the state's pay structure, most employees receive 3.5 percent annual "merit increases" in their first six years on the job, awarded automatically unless a supervisor moves proactively to deny the pay raise.

More senior employees receive 3.25 percent "pay increment" increases every two years as long as their performance is judged "acceptable or better."

Asked about the potential savings that could be generated by HB 379, the state's administration commissioner, Sheldon Fisher — whose department oversees human resources and union contracts — responded with a prepared statement late Monday.


"We just got a copy of the bill and we will analyze it as quickly as possible," the statement quoted Fischer as saying.

The merit and increment raises for state employees have been a target of both fiscal conservatives in the Legislature, as well as the state's business community, as an alternative, or at least an offset, to increasing taxes and reducing cash subsidies to industry.

Curtis Thayer, the president of the state chamber of commerce and administration commissioner under former GOP Gov. Sean Parnell, testified before the House Finance Committee last week that the raises are estimated to cost the state more than $70 million annually.

Labor officials said state employees have already made sacrifices. Lawmakers currently have before them a three-year contract negotiated by the administration of Gov. Bill Walker with the state's largest public employee union, the 8,800-member Alaska State Employees Association, that includes two days of furloughs and no cost-of-living pay raises — adjustments above the merit and increment raises that are designed to account for inflation.

There's also no increase in the state's contribution to the union's health care plan under the its proposed deal with the Walker administration.

HB 379 "is just going to drive people to another employer that pays," said Jake Metcalfe, the executive director of the Public Safety Employees Association, whose members include state troopers.

Johnson said he wasn't sure if his bill would apply to contracts negotiated by the Walker administration and pending before the Legislature, though he added: "I think it should."

Support for the legislation within his own caucus, however, seems varied, with some members of the House majority's more moderate faction expressing less enthusiasm.


Asked for his opinion on the bill, Rep. Jim Colver, R-Hatcher Pass, responded: "Doesn't seem very popular."

Rep. Louise Stutes, R-Kodiak, said late Monday that she was still familiarizing herself with the bill.

"We're all taking a hit," she said. But, she added: "You've got to compare it to other things and what's already been given up by some of our state employees."

Nathaniel Herz

Anchorage-based independent journalist Nathaniel Herz has been a reporter in Alaska for nearly a decade, with stints at the Anchorage Daily News and Alaska Public Media. Read his newsletter, Northern Journal, at natherz.substack.com