JUNEAU, Alaska (AP) – The Alaska Legislature went into overtime Monday as it continued to wrestle with how to confront an estimated $4 billion state budget deficit.
House Speaker Mike Chenault said legislative leaders planned to keep working past the voter-approved 90-day session limit in the hopes of reaching a compromise on outstanding issues, like oil and gas tax credits, in the next few days. Sunday marked the scheduled end of the 90-day session but the Alaska Constitution allows for regular sessions of up to 121 days, with an option to extend for another 10.
Potentially disruptive renovation work is scheduled to begin on the Capitol on Monday. The construction schedule aims to have the Capitol effectively cleared out by May 2.
Gov. Bill Walker wants lawmakers to approve a fiscal plan to help dig the state out of a multibillion-dollar budget deficit exacerbated by low oil prices. He has said that he considers reduced spending, restructuring of Alaska Permanent Fund earnings and the dividend program and new revenues that include a broad-based tax as key elements to achieving a sustainable budget. He has defined a broad-based tax as an income or sales tax. A sales tax has not been proposed.
A stumbling block for legislators, particularly in the House, has been how far to push changes to the oil and gas tax credit system. While some want broad changes, seeing the system as unsustainable, others worry about the impact big changes or a tax increase will have on an industry also being hit by low prices. Resolution on that issue is seen as key to making further progress on the budget and revenue bills. A budget meeting scheduled for Sunday afternoon was canceled. A notice was posted for a budget meeting Monday.
That’s not to say that getting agreement on other pieces will be easy. Legislators have been divided, too, on taxes and want to be careful in weighing their options for use of permanent fund earnings.
“We want to make sure that we adopt the right plan going forward,’’ said Rep. Cathy Munoz, R-Juneau, and a member of the House Finance Committee. To try to rush such a “monumental decision,’’ in a day or two would be a mistake, she said.
Chenault, R-Nikiski, said Sunday afternoon that depending on the noise level from the Capitol work, hearings could be delayed until later in the day.
Senate President Kevin Meyer, R-Anchorage, said legislative leaders plan to focus their attention during the extended session on credits, tax bills, proposals to allow for structured annual draws from permanent fund earnings and a criminal justice bill.
By Wednesday, he said lawmakers should be able to tell if the work can be completed within a few days or will take a while.
Work continued at the Capitol on Sunday amid the end-of-session ritual of boxing up offices. Both the House and Senate held marathon floor sessions that ended early Monday morning as they tried to clear a flurry of bills. One big one that gained final passage was a measure aimed at curbing and containing costs within the state Medicaid program, which, like tax credits, has become a major budget item.
The House rejected Senate changes to a parental rights and student testing bill that limited who could teach sex education in schools. Meyer said there would be no conference committee to try to hash out the differences, effectively meaning that bill is dead. The same is true for an alcohol-related bill that included provisions sought by marijuana regulators to allow for national criminal history checks for applicants for legal pot businesses. The Senate rejected a House change adding provisions related to the membership of the Board of Barbers and Hairdressers.
The background check provisions are in another bill that is still pending.
House Finance unveiled a draft rewrite of a bill allowing for annual draws from permanent fund earnings of 5.25 percent of the average market value of the fund for the first five of the preceding six fiscal years.
The rewrite calls for a $1,000 dividend each of the next three fiscal years. After that it would be based on a formula that includes a portion of the draw and an amount equal to 20 percent of royalties for the prior year. The rewrite also aims to provide a way to further inflation proof the fund principal and impose a limit on the draw as oil revenue rebounds.
The committee also released a working draft of Walker’s income tax bill with an effective date of Jan. 1, 2019, two years later than Walker initially proposed. Co-chair Rep. Steve Thompson has said he would like to see the bill advanced to the floor for a vote, but he couldn’t say whether it would pass.
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