32nd Legislature Outlook

The government’s actions have a major impact on our economy. The decisions on how much to spend, tax, and distribute to the people all ripple through the rest of the system. Now that the election results are in, we can start to speculate on what the legislature will look like during the 2021 session.

Senate Organization

Senate President Cathy Giessel and Rules Chair John Coghill both lost their seats in the August primary. Roger Holland and Robb Myers, who respectively unseated them, went on to win in the General. The other 18 senators will be the same. With two Republicans replacing people from the same party, the make-up of the Senate hasn’t changed.

But, while a GOP majority looks easy to accomplish from the outside, there are challenges with getting the members aligned. The internal strife that caused a lot of heartache during the last legislature still exists. The only difference is that the power dynamics shifted a bit.

During the 31st Legislature, the Republican members were split 6-7 on the issue of the PFD. The six fought for the full statutory amount while the rest pushed for a reduced dividend to limit the need for future taxes or further budget cuts. The latter group called the shots while the former group begrudgingly supported them (but vocally objected on social media).

With Holland and Myers stepping in, the Senate GOP is now 8-5 on the PFD issue. Now the question turns to how von Imhof, Stedman, Stevens, Bishop, and Revak react to the change in power. There are three ways this could go.

Most likely: Republican Senate Majority

The most likely outcome seems to be that the Senate will organize along party lines (perhaps including Hoffman again). This scenario would require compromising on some combination of a reduced PFD, budget cuts, and a change to the POMV draw limit to get everyone on the same team.

The challenge with this organization is that the majority of the members campaigned on full PFDs. Meanwhile, other members are insistent on maintaining the POMV limit. However, it’s impossible to fill the deficit after paying a full PFD without dramatic cuts to the budget, a larger draw on the ERA than current law allows, or some form of taxation. Something has to give. If any of the members draw a firm line in the sand on any of these issues, it will be hard to find common ground.

Less Likely: Bipartisan Coalition

The possibility of those five “establishment” Republicans joining the Democrats is real, but less likely. Doing so would imply focusing on protecting the budget by raising taxes and cutting the PFD to nearly zero (which wouldn’t sit well with most Republican voters). However, the passage of Ranked Choice Voting does give this possibility a little more weight.

Getting to a majority means that at least four of those five Republicans would need to join the seven Democrats. Stevens and Stedman were part of the last bipartisan coalition, so there is a thought that they might do so again. Bishop has tended to be more moderate that the Senators from the Mat-Su Valley, which some suggest might make him defect. If those three joined the Democrats, they would need one more member to have a razor thin majority.

Assuming the pro-PFD Republicans are a united front, that leaves von Imhof or Revak as the most likely candidates. That seems like a stretch to me, but I’ve been surprised before.

Even Less Likely: Pro-PFD Majority

In theory, the eight pro-PFD Republican senators could join with three or more like-minded Democrats (Wielechowski, Kawasaki, Hoffman, and Olson are the strongest PFD supporters). That would rally a bipartisan coalition together under one $3,000 tent.

However, the PFD is about the only thing that these members would have in common. The issue of how to balance the budget after paying it would need to be resolved. And, on that topic, the members are not united. Pro-PFD Republicans tend to push for deep cuts to the budget. Meanwhile, Pro-PFD Democrats support those government programs and want to raise taxes to pay for them. It’s difficult to image a budget that this coalition could pass.

House Organization

There will be 11 new faces in the House next session. Three members from last year didn’t run for re-election (Talerico, Sullivan-Leonard, and Lincoln), one died in office (Knopp), five lost their primary races (Kopp, Johnston, LeDoux, Neuman, and Jackson), and two lost on Election Day (Pruitt and Gillis).

Four of those races were lateral moves — Talerico, Sullivan-Leonard, Neuman, and Jackson were minority members last year that will be replaced by like-minded Republicans.

Another four were registered Republicans that joined the Democratic House Majority last cycle (Knopp, Kopp, Johnston, and LeDoux). They are all being replaced by stronger conservative voices that are far less likely to join the Democrats.

The other three races are party swaps. Lincoln (who didn’t run for reelection) was not affiliated with either party, but joined the Democrats. Josiah Patkotak (nonpartisan) will take over the seat in January. The rumor mill suggests he is likely to join the Republicans, although the PCE issue appears to be a sticking point. Pruitt and Gillis both lost to Democratic challengers in the General Election.

Where things stand

Given the new membership, here’s basically where things stand for organization:

The figure above lists the House members that will be in the 32nd Legislature (which starts January 19th). The names are roughly in order from more liberal on top to more conservative on bottom (the order is completely subjective, but I bet you’ll generally agree).

As you can see, there are 18 Democrats and 18 Republicans that are very likely to stick together. The four in the center could go either way. Stutes, LeBon, and Thompson are all registered Republicans, which would make a majority if they caucus on party lines. But, they all joined the Democrats during the last legislature. It’s still unclear were Josiah Patkotak will land. Regardless, one of those groups of 18 needs to attract at least three more members to form a majority.

Somewhat Likely: A Republican Majority

With the loss of Pruitt and Gillis, forming a Republican majority gets tougher. The best case scenario has all 21 party members plus maybe Patkotak. However, that requires bringing LeBon, Thompson, and Stutes back into the fold. LeBon and Thompson reportedly committed to the party for support during the election. Will shall see. Plus, some members of the party are less forgiving than others. These different personalities would need to play nice to establish a majority.

The problem here is finding someone that can pull the group together. Eight of the 18 Republicans in that right-hand column will be freshmen. Another six of them have been in office for only one election cycle. The most senior person in that group is Cathy Tilton, with six years of experience as a legislator.

With Pruitt out of the picture, all eyes fall to Steve Thompson as the most senior Republican legislator (10 years). Can he (or someone else) bring the party members together to form a fragile 21 or 22 person majority? And can that majority endure the differences of opinion between the people on the top and bottom of that list?

Also Somewhat Likely: Another Democrat Led Coalition

The 18 Democrats don’t have a leadership problem. Many of those members have worked together in the majority during the last four years. Three of the members have been in the legislature for over a decade (Edgmon 14, Tuck 12, Foster 10). This election will push four more across the decade mark (Tarr, Drummond, Josephson, and Kreiss-Thomkins).

Whether you agree with their politics or not, it’s clear that they know how to play the game. When deciding who to put in power, the difference in experience might become an important factor. And, with the new open primary system in place, a more moderate person might not be as afraid of getting punished by the party.

Outlook

There are four possible outcomes of organization (from most to least likely):

Bipartisan House and Republican Senate

In this first case, it’s a repeat of the last four years. And, we would probably see the same outcome. There would be very little change to the budget, a small ad hoc PFD (probably around $500), and we would probably see a sales tax pass to fill the gap. This is the continuation of the path we’ve been on.

Republican House and Senate

With both bodies and the Governor in alignment, it’s likely that significant budget changes would occur. We would probably see a larger PFD (maybe $2,000) and no personal taxes (although we would probably see some other revenue measures). There could possibly be a larger draw on the ERA or other funds to fill the budget gap. This is the path that most economists recommend.

Bipartisan House and Senate

Even a few weeks ago, it would have been hard to imagine this scenario. Now, it’s looking less far-fetched. If this is where things end up, expect a larger budget, a near-zero PFD, and serious conversations about an income tax (which would probably get vetoed). This is the outcome that liberal donors wanted to achieve in the election. It’s arguably the worst outcome for the economy.

Republican House and Bipartisan Senate

This combination would be strange. The bodies would have very different ideas about the budget and compromise would be difficult to find. Revenue measures would also be hard to pass. This scenario would most likely result in a government shutdown (and probably a change in organization to reach a compromise).

Wrap-up

It’s going to take a couple of months before we know how everything shakes out. All we know right now is that things aren’t nearly as cut-and-dry as they appeared they would be. The House is going to have a thin majority that is hard to hold together either way. The Senate has a lot of internal issues to work out. I’d be leery of anyone claiming to know how this will unfold. But, feel free to follow along with me as it does (unless I end up with a conflict that pulls me in a different direction).