Capital budget compromise unlikely to restore PFDs, address oil and gas tax credits

Alaskans wait in line to file their Permanent Fund dividend applications in downtown Anchorage in March 2016. (Photo: Rachel Waldholz, APRN)

The Legislature will return to Juneau on Thursday to vote on a capital budget that senators and House members have agreed to.

Soldotna Republican Sen. Peter Micciche said the bill is unlikely to address the most contentious issues: Permanent Fund dividends and oil and gas tax credits.

“Clearly those are going to be the most difficult issues that have to be solved going forward,” Micciche said. “I don’t think they’re going to happen in this bill.”

The Legislature will meet at 11 a.m. in the Capitol. The leaders of each chamber polled members, and more than two-thirds supported calling the Legislature into session to consider Senate Bill 23, the capital budget.

Micciche, who’s a leader in the Senate, said some capital projects were already delayed due to delay in the capital budget.

“This budget will focus on the federal match, and the primary capital budget line items where both bodies have essentially agreed,” Micciche said. “I don’t think you’re going to see the more contentious issues being solved.”

Lawmakers haven’t provided details about what will be in the compromise agreement they announced last week.

The biggest disagreements in the capital budget were over how much to pay out in Permanent Fund dividends, and how much to set aside for oil and gas tax credits.

The House voted to fund PFDs to the full amount set by state law. That’s roughly $700 million more in fund earnings than the operating budget the Legislature passed in June.

Some House members said in June that PFDs shouldn’t be cut without requiring oil and gas companies to pay more in taxes. The Legislature has since passed a bill that does require these companies to pay more.

The Senate capital budget didn’t include additional money for dividends.

But the Senate capital budget did include $288 million more for oil and gas tax credits. The House didn’t include any.

Senators have noted that the state owes companies more than $1 billion in credits that they must receive.

The Senate transferred money away from the natural gas pipeline project. It shifted $25 million from the pipeline to a fund for public schools and $10 million from the pipeline to road maintenance and plowing.

The House shifted money toward replacing the school in Kivalina. Lawmakers have differed over funding for the Northwest Arctic Borough school.

Senators have maintained that $43.2 million the Legislature appropriated for the project two years ago satisfied the state’s obligation for the school.

The House capital budget would spend up to another $7.2 million, which Gov. Bill Walker’s administration says is needed for the school.

The House capital budget also included another $8 million in payments to assist municipal governments.

Lawmakers say they’ll release details by Thursday.

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Andrew Kitchenman is the state government and politics reporter for Alaska Public Media and KTOO in Juneau. Reach him at

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