Potential Impacts of Shutdown of Alaska's Government
June 09, 2017
This year’s preparations for a government shutdown are different than in 2015, when the legislature had passed a partially funded budget. This year, money has not been appropriated for any government services. As a government shutdown in Alaska is unprecedented, Department of Law is examining what money could be spent to continue vital state services if the legislature has not fulfilled its constitutional obligation to pass a budget. “I remain hopeful that both legislative bodies will come to a compromise in the next nine days of this special session,” Governor Walker. “However, my team and I must be prepared for a worst-case scenario. That is why I have ordered that an incident command structure be set up—much like we implemented to address the opioid crisis.”
Alaska Department of Law: Attorney General Jahna Lindemuth sat down Thursday with legislative leadership in both the Alaska House Majority and Senate Majority to brief them on the executive branch’s preparation for a potential shutdown of state government. If the legislature fails to pass a budget by June 30, 2017, the State will be in uncertain and unprecedented territory. “A shutdown would put the State in a constitutional crisis,” said Attorney General Lindemuth. “Our constitution clearly says the power to determine where and how to spend money lies with the legislature. In the face of the legislature not upholding its constitutional duty, where does that leave state services and programs? That’s the question we are working to answer by evaluating every program or service provided by the State.” Attorney General Lindemuth still believes the legislature can get the job done, but the executive branch also needs to start planning for the possibility that a compromise will not be reached in time. That was the purpose of her meeting today with legislative leadership. The Attorney General outlined the efforts that have been made so far to establish a tiered system to categorize services that can likely continue at some level during any potential shutdown as well as those that would need to be shutdown completely. “Make no mistake - many state services will have to fully shutdown in order for us to remain in compliance with the constitution,” said Attorney General Lindemuth. No matter how long the government is forced to shutdown there will be potential liabilities that accrue. There will be many contracts that are not paid or are otherwise breached, which may result in penalties and interest. There will be statutes that are not being fulfilled that will create additional legal liability. It will require additional efforts by the Department of Law after a shutdown is over to unwind all of legal matters that had to be halted or delayed while a shutdown was occurring. Attorney General Lindemuth also briefed legislators on the incident command structure that Governor Walker is implementing. Alaska Department of Administration (DOA) In response to the lack of a fully funded budget and the resulting threat of a government shutdown, the Alaska Department of Administration (DOA) sent out layoff notifications to all executive branch employees. DOA is obligated by contracts to provide employees with 30 days’ notice of possible layoffs when possible. "This is the second time in three years we have had to send notification letters to employees warning of a potential shutdown. The time and energy spent preparing for this situation every year is a waste of resources,” stated DOA Commissioner Sheldon Fisher. “This uncertainty is bad for state employees and the public who depend on state services. I share Governor Walker’s hope that the Legislature will finish their work so we can continue with ours. " The Alaska Department of Administration has the unique role of providing services to other state agencies and state employees as well as to the public. DOA is working with the Department of Law to analyze the impacts of a shutdown to determine which services we may be allowed to continue without a budget. The following Alaska Department of Administration services are potentially at risk of being shut down, delayed or interrupted if the legislature fails to pass a fully funded budget before July 1:
Alaska Department of Fish and Game The Alaska Department of Fish and Game announced they will be working with the Office of Management and Budget and the Department of Law to analyze the impacts of a potential shutdown of government services. Individual programs are currently being reviewed, including an assessment of the impact of a shutdown on the commercial, subsistence, personal use fisheries, and sport fisheries; as well as hunting seasons. Alaska’s multi-billion dollar salmon industry is primarily based on fisheries that occur between the months of June and September. These fisheries provide the sole means of subsistence and livelihood for many Alaskans. A government shutdown would coincide with the peak of the Bristol Bay sockeye season, which regularly occurs around July 4th. Not only would current season fisheries be potentially impacted, the department’s ability to forecast future escapement goal analyses and data collection could also be significantly compromised. Insufficient sampling could hinder assessment of the state’s performance for Pacific Salmon Treaty obligations, the department’s ability to manage allocations set by the North Pacific Fisheries Management Council, and impact the International Pacific Halibut Commission’s stock assessment program. The issuance of subsistence and drawing permits could be delayed, interrupted or even not issued, creating food insecurity, cultural and economic impacts, as well as loss of hunting opportunities. Additionally, hunts with in-season management, permitting, or reporting could potentially be delayed or cancelled. This includes hunts managed by quota such as Nelchina caribou, most western Alaska moose hunts, and all goat hunts. Hunts for sheep could also potentially close or be delayed due to sealing requirements. Alaska’s two state-owned hatcheries annually produce over 4.5 million salmon, rainbow trout, and Arctic Char. Although the department will take all actions within its authority to avoid adverse consequences for the hatcheries, a shutdown could threaten the 2.5 million fish currently housed at the hatchery, and prevent the collection of Chinook and Coho broodstock. These potential losses could be long-term, surpassing the three to four years required to rebuild the basic broodstock. Additional Fish and Game services potentially at risk of being shut down, delayed or interrupted if a fully funded budget is not passed before July 1 include:
Quoting a Fish & Game news release, the executive-branch still believes that the legislature will pass a budget before July 1, 2017. Therefore, the programs and services at Fish and Game will continue on their normal course through the month of June. Only if a shutdown occurs on July 1 will the Fish & Game department begin to pull their staff back from the field and begin working on any closures that need to occur. Alaska Department of Labor and Workforce Development Layoff notices were mailed last week to all Alaska Department of Labor and Workforce Development employees. Layoffs will occur on July 1, 2017 if the Alaska Legislature causes a shutdown of state government by failing to pass a budget. “Shutting down the department could limit Alaskans’ access to services that help them find good jobs, protect them from unsafe working conditions, and provide them with economic stability when they are unemployed, injured, or disabled,” said Labor Commissioner Heidi Drygas. “The legislature must pass a fully funded budget so we can continue providing these important services Alaskans rely on.” Quoting a news release, the failure to pass a budget would have significant impacts on the Alakska Department of Labor’s ability to perform important responsibilities, including resolution of labor disputes and elections, workers’ compensation adjudications and appeals, and resolution of wage and hour violations. A closure could also result in a lack of employment and training grants and services that help Alaskans get good jobs, and assist disabled Alaskans in securing employment. It could also require closure of the Alaska Vocational Technical Center (AVTEC) – the state’s post-secondary career and technical education school located in Seward. A shutdown could also impact mechanical inspections that protect public safety and worksite inspections that ensure safe working conditions. The Labor Department is encouraging State employees facing layoff to engage in the Unemployment Insurance (UI) process early. State employees may apply for UI at https://my.alaska.gov/. The processing and payment of UI claims may be delayed. Alaska Department of Transportation and Public Facilities: Alaska Department of Transportation and Public Facilities (ADOT&PF) Commissioner Marc Luiken announced Thursday that ADOT&PF is working with the Department of Law (DOL) to analyze the potential effects of a government shutdown. Quoting a news release from ADOT&PF, the following programs and services are potentially at risk of being shut down, delayed or interrupted if the legislature fails to pass a fully funded budget before July 1:
“I am hopeful that the legislature will pass a fully funded budget before July 1 so that ADOT&PF can continue to support safe transportation and provide important services Alaskans rely on,” said Commissioner Luiken. Alaska Department of Public Safety: Commissioner Walt Monegan announced yesterday that the Alaska Department of Public Safety is working with the Alaska Department of Law to analyze the potential effects of a government shutdown on DPS. The Alaska Department of Public Safety has a responsibility to protect the citizens of Alaska and as such, the Alaska State Troopers and Alaska Wildlife Troopers would continue to fully enforce Alaska’s laws and respond to emergency calls. However, it is not fully known how a reduction in support services would affect some services provided by DPS. Below are some of the Alaska Department of Public Safety services "potentially" at risk of being shut down, delayed or interrupted if a budget compromise cannot be reached within the legislature before July 1:
Alaska Department of Health and Social Services In anticipation of a potential Alaska government shutdown, the Alaska Department of Health and Social Services is warning Alaskans of services that might not be available next month. According to the Department of Health & Social Services, because the Legislature has not passed an operating budget for fiscal year 2018, services not directly linked to life, health and safety needs could be delayed, interrupted or shut down beginning July 1, 2017. This includes the issuance of birth and marriage certificates, grant payments to health care providers, and health facility licensing for small businesses. “While I am hopeful that the legislature will pass a fully-funded budget before July 1, we are working closely with Department of Law and the Office of Management and Budget to determine what a government shutdown would look like for our department,” said DHSS Commissioner Valerie Davidson. “Shutting down the government could mean delayed certificates for Alaskans who are getting married this summer. We could also see delayed processing of birth certificates, which is often a minimum requirement for applying for other state and federal services. DHSS touches the lives of so many Alaskans. A shutdown would cause unnecessary burden to individuals and private businesses alike.” Services that could be shut down, delayed or interrupted if the legislature fails to pass a fully funded budget before July 1 include, but are not limited to:
Alaska Department of Education and Early Development (DEED) Education Commissioner Dr. Michael Johnson announced Thursday that the Alaska Department of Education and Early Development (DEED) is also working with the Department of Law to analyze the potential effects of a government shutdown, and is developing a contingency plan for a shutdown of its services if a fully funded state budget is not passed before July 1. “I am hopeful that the legislature will pass a fully funded budget before July 1 so that DEED can continue to provide valuable and important services to support our state’s students and their families,” said Commissioner Johnson. Quoting a news release from the Education Department, Governor Walker is hopeful the legislature will reach a compromise so this shutdown does not occur. But out of an abundance of caution, he wants Alaskans to understand how services provided by DEED would be potentially at risk. The following services are potentially at risk of being shut down, delayed, or interrupted if the legislature fails to pass a fully funded budget before July 1:
According to the Alaska Department of Education, minimal staff would likely continue to work to meet constitutionally and federally mandated requirements, such as payments to formula funding and summer food programs for children, and administrative and fiscal support to ensure essential services of DEED and the State Board of Education continue, such as closing out fiscal year 2017 obligations and state facilities maintenance. The Alaska Commission on Postsecondary Education and the Alaska Student Loan Corporation would also likely maintain minimal staffing to meet federal and bond trust loan requirements. Alaska Department of Revenue: Commissioner Randall Hoffbeck also announced Thursday that the Alaska Department of Revenue (DOR) is working with the Department of Law to analyze the potential impacts of a government shutdown on Department of Revenue services. Quoting a news release, the Alaska Department of Revenue will continue limited functions that ensure the life, health, and safety of Alaskans. These functions include certain services by the Alaska Housing Finance Corporation to oversee public housing units, processing of child support payments to custodial parents, and the work of the Long Term Care Ombudsman’s Office on emergent medical and care issues. Although likely operational, these services could be delayed based on reduced staffing. With reduced staffing, the Alaska Department of Revenue will also continue minimal functions to preserve the state’s financial assets such as those managed by the Alaska Permanent Fund Corporation and the Alaska Retirement Management Board. The State will miss out on investment opportunities and growing these funds if a shutdown occurs. All other services provided by DOR will be reduced or cease entirely pending passage of a budget. The following Alaska Department of Revenue services will likely not be available for the duration of a shutdown:
Alaska Permanent Fund Corporation: Chief Executive Officer Angela Rodell announced Thursday that the Alaska Permanent Fund Corporation (APFC) is taking steps to ensure that the Alaska Permanent Fund and money managed on behalf of the Alaska Mental Health Trust Authority are prudently managed in the event of a government shutdown. The Chief Executive Officer and her staff have been diligently working to ensure that a business continuity plan is in place to protect the assets, should there be a government shutdown. This includes, ensuring that protocols with the Fund’s custodial bank are in place and that the ability to transfer money and make payments under existing agreements are secured. It is important to note that this plan does not provide for the active forward looking investment of the Fund that the Corporation engages in on a day to day basis. Based on the advice received from the Department of Law, it is anticipated that during a shut-down no new investments will be pursued. There can be no assurance that a government shutdown will not have a material impact on the earnings and performance of the Fund for Fiscal Year 2018. The APFC staff manages and invests the assets of the Alaska Permanent Fund and assets on behalf of the Alaska Mental Health Trust Authority; they are among the many state employees who got lay-off notices. Ms. Rodell is hopeful that the legislature will reach an agreement and fully fund a budget prior to July 1, so that the Alaska Permanent Fund Corporation can continue to strive for excellence in the management and investment performance of the Fund. According to a news release from the Alaska Permanent Fund Corporation, the unaudited market value of the Fund is currently $59.8 billion, an all-time high. In the past five years, active management of the Fund’s assets by APFC staff has generated an additional $4.1 billion in value for Alaska’s Future. Alaska Natural Resources Department Alaska Natural Resources Commissioner Andy Mack announced Thursday that the Alaska Department of Natural Resources is working with the Alaska Department of Law to prepare for a potential government shutdown, which would likely require the suspension of all agency functions and services not essential to the life, health and safety of Alaskans according to Commissioner Mack. “I am very hopeful that the Legislature will pass a fully funded budget before July 1 so the Department of Natural Resources can continue to generate revenue for the State of Alaska, support Alaska’s resource-based economy, and facilitate public enjoyment of our state lands,” Commissioner Mack said. Alaska Natural Resources manages the State of Alaska’s land, water and mineral resources. These resources supply most of the revenue for the state's General Fund, endows the Permanent Fund, and supports thousands of private sector jobs. Even a temporary shutdown could disrupt routine activities on state lands and collection of fees and royalties according to the department. Quoting a news release, iIn the event of a government shutdown, Alaska Natural Resources would likely continue wildland firefighting operations and operation of the Alaska Volcano Observatory. Alaska Natural Resources is looking at the possibility that virtually all other DNR programs and activities involving state land, water, forestry, agriculture, geological and natural hazard research, oil and gas leases, pipeline right-of-way oversight, and state parks, could be suspended or experience significant interruptions. The following list describes potential impacts to Alaska Natural Resources’ functions, which could be shut down, delayed or interrupted if a fully funded budget is not passed before July 1:
Alaska Department of Military and Veterans Affairs (DMVA): The Alaska Department of Military and Veterans Affairs (DMVA) has identified the following potential risks to services provided to the public if an Alaska government shutdown occurs.
Alaska Department of Environmental Conservation (DEC) Alaska Department of Environmental Conservation (DEC) is also working with the Alaska Attorney General’s office to identify those services being provided by DEC that may continue even if the legislature does not pass a fully funded budget before July 1, 2017. Based on analyses to date, the Alaska Department of Environmental Conservation anticipates a limited number of services would continue at some level during a shutdown to meet constitutional obligations to protect life, health, and safety. The Division of Spill Prevention and Response would maintain a level of preparedness to respond in the case of an oil or hazardous substance release in Alaska. There are, on average, about 2,000 reported spills each year, and the majority of spills are to land, surface water, and groundwater where the State is the lead responder. Other programs impacting public life, health, and safety that will likely continue at a reduced level are certain air quality advisories, disease prevention duties, and ensuring clean drinking water. The Alaska Department of Environmental Conservation has additionally identified a number of services potentially at risk if there is a government shutdown:
Quoting a news release, the Alaska Department of Environmental Conservation's management remains optimistic the department will have a budget approved by the legislature by July 1, but believes it is prudent to start making contingency plans for a shutdown. Alaska Department of Corrections Corrections Commissioner Dean Williams said yesterday that the Department of Corrections is working with the Department of Law to analyze the potential effects of a government shutdown, which would occur if the legislature fails to pass a budget by July 1. "Any interruption in routine operations of the Department will add risk and uncertainty. While high security functions remain intact, ancillary operations of a correctional system are still important to safety and security," Commissioner Williams said. Although it is uncertain exactly which programs, services, and jobs would be affected during a full government shutdown, Commissioner Williams says any interruption in services could be detrimental to DOC institutions, rehabilitation programs, inmates, staff and communities across the state. Shutting down offender programs or re-entry programs could lead to increased offender recidivism, an issue DOC has been working to combat. Any interruptions, delays or shutdown of inmate programming or community re-entry coalition work could create significant difficulties for re-entrants upon release. Many rely on these services to successfully transition back into Alaska communities. These programs reduce the likelihood of offender’s recidivating (inside and outside the prisons), as treatment in prison enhances success upon release. Below is a list of some programs and services potentially at risk of being shut down, delayed or interrupted if a fully funded budget is not passed before July 1:
Alaska Department of Department of Commerce, Community, and Economic Development Due to the ongoing state budget impasse, Department of Commerce, Community, and Economic Development Commissioner Chris Hladick is also working with the Department of Law to evaluate the potential effects on business and community services during a government shutdown. “While I am hopeful the legislature will reach a compromise, I feel obligated to provide Alaskans with as much advance notice as possible about potential disruptions in services that they rely upon,” said Commissioner Hladick. “We encourage Alaskans, if you depend on one of these services—if your professional license is going to lapse soon, if you are seeking a commercial fishing loan, if you need technical assistance regarding a local boundary issue—consider whether it is something we can help you with before the potential shutdown occurs.” Should a government shutdown occur, Alaskans would likely experience significant disruption in services provided by the Department of Commerce, Community, and Economic Development, which would impact local governments and the private sector. The following services are potentially at risk of being shut down, delayed, or interrupted if the legislature fails to pass a budget before July 1:
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Reporting & Editing by Mary Kauffman, SitNews
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