Legislators go past the 90 day session to bring budget together

Lawmakers blew through their 90 day session end last night and are back at work today, trying to bring a budget together that all sides can agree to. APRN’s Juneau correspondent Andrew Kitchenman joined APRN’s Lori Townsend to talk about about the big stumbling blocks are.

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Rep. Mike Chenault. (Photo by Skip Gray/360 North)
Rep. Mike Chenault. (Photo by Skip Gray/360 North)

TOWNSEND: So, what’s the most contentious issue right now?

The big holdup is the bill that would change taxes and tax credits for the oil and gas industry. The Republican-led House majority caucus has been unable to craft a bill that its members can agree on. And it gets more complicated, because the final budget will likely require the state to draw about one and a half billion dollars from the constitutional budget reserve. That will require three quarters of the House to vote in favor of it, so this gives House Democrats leverage in the outcome of the oil and gas tax credit bill.

–Are you hearing that progress is being made?

Yes. Both House Speaker Mike Chenault and House Minority Leader Chris Tuck say that it’s possible that all of this work could get done this week. And the governor is also optimistic. He says that his administration is playing a technical role in supporting talks among legislators, by providing information on the impact of various proposals that are being discussed privately.

–Any details emerging about what a compromise could look like? Tuck says elements of what the Senate Finance Committee did in scaling back tax credits for Cook Inlet oil producers could be part of a compromise. Governor Walker also likes these provisions. But the industry has used near apocalyptic language in describing these provisions.

In addition, there was some support in the House for scaling back production tax credits on the North Slope – which would go even further than what Walker has proposed, since this would change the key feature of the system put in place by Senate Bill 21 in 2013. It’s not clear whether that is still in the picture, but it’s the one House amendment that would save a large amount of money that received the most votes.

Walker says that if the Legislature doesn’t close the budget gap by making changes like raising the minimum tax paid by oil and gas companies, then it will have to come up with other ways to close the gap.
–Are there other hold ups? No, it’s really the oil and gas tax credit bill that’s at the center of why the legislature is still here. There are differences over some items in the budget – like a 50-million-dollar cut to the University of Alaska – but those could be resolved once the oil and gas tax credit bill is done.

For most Alaskans, the most immediate effect of the remaining bills under discussion is that they would see a 50-percent cut in their Permanent Fund dividends. Legislators know this will be politically unpopular. But it will be easier for them to make a case that residents will have to make sacrifices if industries like oil and gas, mining and fisheries also make sacrifices.

There’s also a mysterious proposal that would affect public employee pay, but no details are available about it yet.

–Are lawmakers figuring on staying in Juneau until they’re done or is a special session being discussed? Legislators would like to be done in Juneau in a week or a little more than a week. If it takes more time that, there could be a special session.

Theoretically, the legislative minorities could try to pass a budget without minority support, by closing the budget gap with money from the Permanent Fund earnings reserve. But this would run the risk that Governor Walker vetoes the oil and gas tax credits for the next year, which would push them off into the future. And it could lead to credit downgrades for the state, since it shows that the state may not be able to sustain its budget. This would make it more expensive for the state to borrow and worsen investors’ confidence in the state.

These are things that legislators want to avoid, as of today.