Committee axes funding for Alaska’s effort to take over a federal wetlands permitting program

The Alaska House Finance Committee voted Monday to remove the state’s planned takeover of a federal wetlands program from its budget proposal and redirect the planned funding to the education program Head Start.

The 6-5 vote came as the committee opened debate on more than 80 amendments to a proposed state budget for the fiscal year that begins June 1. 

Gov. Mike Dunleavy’s administration has proposed taking over the program, which regulates the dredged or fill material that can be discharged into wetlands.

Amendment debates were expected to continue through at least Tuesday, and the full House is expected to vote on the budget proposal after amendments are complete.

Until Monday, the committee’s budget proposal was almost identical — with one major exception — to a $7.1 billion spending plan offered by Gov. Mike Dunleavy earlier this year.

That exception is this year’s Permanent Fund dividend. Members of the committee have proposed a $2,700 dividend, slimmer than Dunleavy’s $3,900 proposal (later reduced to $3,500 because of a drop in formula-driven funding). The reduction was enough to drive the cost of their proposal down to $6.7 billion, according to a Legislative Finance Division analysis dated Friday.

But even with the smaller dividend, the House Finance Committee’s draft budget still runs a deficit, estimated to be $418 million as of Friday. 

On Monday, Rep. Sara Hannan, D-Juneau, proposed erasing that deficit by cutting the dividend further, to about $1,350 per person.

That failed 4-7, with all seven members of the House’s coalition majority opposing it. 

Rep. Mike Cronk, R-Tok and one of the opponents, said rural Alaskans need help amid economic inflation and the collapse of many rural salmon runs.

“We have no fish. We’re spending more money for food. We have the highest fuel costs in the state. The PFD is vital. It’s the most vital chunk of funding the state of Alaska can provide,” he said.

Rep. Bryce Edgmon, I-Dillingham, has previously advocated a smaller dividend as a partial solution to the state’s long-term budget problems and suggested he could support one in the future. 

On Monday, he voted against Hannan’s proposal, saying other action is needed and that a special session on the topic could be warranted.

“I’m not going to support this at this time, but I’m not making any bones about where my position is,” he said.

With the committee standing firm on its dividend position, the wetlands program became the biggest new policy change from the budget proposed by Dunleavy.

In 2014, the Alaska Legislature passed a bill that requires the state to study and eventually take over a federal program that issues permits for construction projects that disturb wetlands.

Department of Environmental Conservation Commissioner Jason Brune and the Dunleavy administration have advocated the takeover, which is known as “404 primacy” after the section of federal law it affects.

Members of the House Finance Committee and the full House voted in favor of the takeover last year, but the Senate opposed the idea and in the final version of the budget, lawmakers funded only a $1 million feasibility study.

That study, sent to the Legislature in January, concluded that “the recommended course of action is for the state of Alaska to assume the 404 program over assumable (waters of the United States).”

The state has argued that permits can be issued much more quickly by the state than the federal government, and without sacrificing environmental protection in the process.

But a significant number of lawmakers have worried about the costs: DEC requested $5 million for the takeover and suggested that it would ask for $4.8 million per year to maintain the program.

That figure doesn’t include the cost of potential litigation. When the state of Florida performed a similar takeover, it was immediately challenged in court and remains entangled in litigation.

“We don’t know what it’s going to cost us in the future,” said Rep. Bryce Edgmon, I-Dillingham and the lawmaker who proposed defunding the effort.

Cronk and Rep. Will Stapp, R-Fairbanks, each voted against Edgmon’s amendment but said they view Head Start as a worthy alternative recipient of the money.

“However this turns out, I’m not going to be disappointed,” Cronk said.