Oil issues clog Capitol

In your car, oil acts as a lubricant. In the Alaska Legislature, it’s a clotting factor.

With 12 days remaining until the Alaska Legislature’s 121-day constitutional limit, debates over the state’s subsidy of oil and gas drilling are the key item blocking further progress on a fix to Alaska’s $2.7 billion annual deficit.

“That really is the direct problem we’re having with the Senate over this past week,” said Rep. Les Gara, D-Anchorage, on Friday.

On Friday morning, Speaker of the House Bryce Edgmon, D-Dillingham, and House Majority Leader Chris Tuck, D-Anchorage, confirmed that the coalition House Majority remains committed to the idea of putting all four “pillars” of its deficit fix on the negotiating table at the same time.

Not all of those “pillars” are yet ready for negotiations, which is why the Legislature has not yet reached a deal.

The House’s deficit plan includes spending from the Alaska Permanent Fund’s investments, modest cuts to the budget, an income tax, and cuts to the state subsidy of oil and gas drilling.

The Senate has proposed its own deficit-fighting plan. The Senate Majority’s proposal includes spending from the Alaska Permanent Fund’s investments and steeper cuts to the budget.

The Senate plan does not entirely fix the deficit, but that’s a feature, not a bug, Senate leaders say. Having a continued deficit — one small enough to be sustainably covered by the state’s savings accounts — will pressure the Legislature to keep spending low. Meanwhile, oil prices are expected to gradually recover, mending the state’s finances.

As Gov. Bill Walker said in late April, there are two philosophies in the Legislature when it comes to the deficit: “Are we going to fix it, or are we going to try to get through it?” he said.

With the House viewing the deficit as something to fix, and the Senate viewing it as something to survive, this year’s action will be decided at the compromise table.

The House and Senate have each proposed different versions of a Permanent Fund spending plan, and those different versions are ready for negotiation. Likewise, the House and Senate have proposed different amounts of budget cuts, and those are ready for negotiation as well.

The Senate has firmly rejected an income tax, and the Senate Labor and Commerce Committee has canceled all hearings on House Bill 115, the version of the tax passed by the House.

That leaves House Bill 111, which has passed the House and has been revised by the Senate Resources Committee.

Rep. Les Gara, D-Anchorage, called that version “a beautiful deal if you’re an oil company.”

HB 111 will be revised still further in the House Finance Committee, which has scheduled hearings from Tuesday through Saturday.

Sen. Anna MacKinnon, R-Anchorage and co-chairwoman of the Senate Finance Committee, indicated that the committee is open to compromise on the issue.

Asked Friday morning, Gara responded that “their compromise is their position” and not a true compromise.

Wednesday, May 17 is the 121st day of the regular session and the Legislature’s constitutional limit. If lawmakers haven’t finished their work by then (something that appears likely), they can add 10 days of extra time with a two-thirds vote of each house.

If they still haven’t finished, they can call themselves (or have the governor call them) into special session for 30 days.

By that point, time will be running out quickly. If a budget is not approved by July 1, state government will shut down.

Correction: An earlier version of this article incorrectly stated Rep. Les Gara’s district. He represents Anchorage, not Dillingham.


 

• Contact reporter James Brooks at james.k.brooks@juneauempire.com or call 419-7732.

 


 

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