Legislature adjourns; special session up next

Oil taxes, in-state gas line, human-trafficking measure on agenda.

Anchorage Daily NewsApril 15, 2012 

JUNEAU -- After working overtime into early Monday to complete their work, legislators were told by Gov. Sean Parnell that they in fact were not done. He proclaimed a special session starting Wednesday at 1 p.m.

Parnell issued his order at 12:53 a.m. Monday, 14 minutes after the Senate adjourned and 44 minutes after the House. He told lawmakers they would have three unfinished issues on their agenda: oil taxes, the in-state gas line bill and a human-trafficking measure.

Sen. Hollis French said the human-trafficking bill would probably pass quickly, but the other two issues could bedevil a special session like it did the regular session. Had the governor just called the Legislature back to debate the gas line, French said, it would have been the briefest of sessions, with the Senate unlikely to give much more than it had already -- a bill that allows the state to continue work on a line and keep confidential records of business secrets it learns. The House sought a much more comprehensive measure that would allow construction of a line to proceed without any additional legislation action.

Oil taxes will probably complicate the special session, French said.

The Senate, after working for two years, came up with a bill that was criticized as inadequate by Parnell because it didn't cut taxes enough, but which couldn't get through the Senate anyway.

Before they adjourned, the House and Senate passed the operating and capital budgets, film tax credits and a law that requires private insurance companies to provide coverage for minors with autism.

New-field oil tax credits died, as did the House's in-state gas line bill. Both had been priorities of the House and the governor. What the governor or the House could do to change the Senate's mind on those issues wasn't obvious.

Throughout the day, as the two Houses went in and out of session with the last minute business of the Legislature, the zipping sound of packaging tape dispensers echoed around the Capitol amid giant bales of bubble wrap.

The tone for the Legislature's last day was set shortly after 9 a.m., when the House teased the Senate with a suggestion it would pass the Senate's oil tax bill, the one granting tax incentives to new North Slope oil fields.

It happened at a rare meeting of the House Rules Committee, which normally just processes bills headed to the floor.

The Senate had grafted the new-field tax incentives to a House bill, 276, that originally gave tax breaks for drilling in Interior Alaska. That's important in a region of the state where home-heating energy prices are exorbitant but where natural gas might be lying undiscovered.

Needless to say, 276 was a popular bill in the House, where it originated with a Fairbanks Republican, Steve Thompson. The Senate hoped the popularity would bleed over to its oil tax measure and lead the House to pass the bill without delay.

The House Rules Committee was holding one of the Senate's most popular bills, a film tax credit measure. It was named Senate Bill 23. The Rules committee slit it open and inserted the Interior drilling incentives, the North Slope new-field tax cuts of the Senate, and another item sought by Interior communities: support for natural gas storage facilities.

A Republican House aide spoke in favor of the whole package, including the Senate's new-field credits. Then Tom Wright, an aide in the House majority office, whispered something to House Speaker Mike Chenault, a member of the Rules Committee. Rules Chairman Craig Johnson, R-Anchorage, called a recess. The Republicans huddled.

When Johnson hammered the committee back into session, Chenault moved to kill the Senate's oil-tax reform. In a few minutes, it was gone from Senate Bill 23.

The movie tax credit was probably the perfect venue for the morning's dramatic short subject.

After the Rules committee broke up, Chenault met with reporters in the hallway and said it was never his intent to put the Senate's tax measure in the film bill in the first place. He said it was accidentally swept into the bill with the other tax credits.

Not everyone believed that story. But in any event, with Sunday being the last day of the session, the new-field oil-tax credit appeared dead.

"We haven't had a chance to study them," Chenault said, explaining why he stripped the tax relief from the bill -- even though the House had long sought oil tax relief for the North Slope. Its proposed relief was on a much grander scale.

Chenault was also unhappy with how the Senate packaged the tax bill when it sent it across the hall.

"What justification did they have to put that into a bill of ours?" he grumbled. "I won't allow them to hold us hostage."

So Chenault dumped House Bill 276.

"I walked in and killed my bill," he said. "I'm not a guy that gets held hostage too often."

But while Chenault killed one of his bills to avoid it being held by the Senate, the Senate had another House bill it was holding, one that had far more value than 276. It was House Bill 9, which would authorize construction of a small-diameter gas line from the North Slope to Southcentral Alaska.

The Senate said it was happy to keep alive the idea of a line by spending money to develop plans over the next year. But it stripped House Bill 9 of the authorization it gave a state agency to construct the line without getting new permission from the Legislature.

House Bill 9 was Chenault's own bill. He invested considerable personal authority into it and now it was in deep trouble in "the other body."

"They've effectively killed the only in-state gas pipeline that's moving forward," Chenault said.

What would he do about it?

"I'm not a horse trader," he said. "Trust me, I'm not a horse trader."

Only a minute later, he sounded more conciliatory.

"This is the political system that we live in and you're always open to negotiations," he said.

That was a preview of the day to come. At times it seemed the Senate and House were lobbing mortars across the green line that separated their chambers.

Then they'd talk about compromise.

Aside from the gas line, oil taxes remained a focus, as it had entire session.

Chenault said he was "not necessarily opposed" to the Senate's new-field tax incentives. "They might be the right thing to do, but we have to look at the overall tax structure that the state of Alaska uses and just not incrementally pass something that is the only thing we can pass. It's needs to be an overall fix for all the tax structure."

A few minutes later, Sen. Lesil McGuire, an Anchorage Republican and a strong supporter of the new-field credit, said might still be alive.

"You never know," she said, as he rushed to the 10:15 a.m. Senate floor session. "It's still early, believe it or not. I know that sounds crazy to the public, but there's still many hours left. So I hope they consider that doing something good for new development is the right thing to do."

On the fifth floor, where Sen. Bert Stedman had just wrapped up a meeting of the Senate Finance Committee -- the origin of the new-field tax-credit bill -- word had just arrived of the House Rules actions.

Like McGuire, Stedman said he wasn't willing to call it quits.

"So they don't support a tax break for new oil? That's not good," Stedman said.

For most of the day, the idea of a trade of oil taxes for gas line was the most lively topic for the kibitzers on the benches in the hallways or, if they didn't want to be overheard, by the courthouse across the street from the Capitol. Some had real information, others just speculation. But as the day wore on and the Senate and House took turns going into session to pass the less notable bills, a grand trade seemed to recede in likelihood.

For one, many Senators had decided they could live with no tax reform. One, Sen. Lyman Hoffman, the Democratic co-chair with Stedman of the Senate Finance Committee, said he was still fine with ACES, the current tax structure. If the new-field incentives died in the House, so be it, he said.

Sen. Hollis French, the influential Democrat from Anchorage, said the Senate might be willing to give back some additional provisions of Chenault's gas line bill, it wasn't ready to cede authority for deciding on its construction to a state agency.

In others, he was also happy with House Bill 9 the way it was.

While the House had possession of the capital spending bill, it seemed an odd measure to use for leverage, since it was so loaded with projects it goodies for everyone.

Throughout the day, the governor's office was oddly quiet. Gov. Sean Parnell has leverage too -- he can call a special session and decide the agenda. He can also veto items.

Parnell might have been talking to House and Senate leaders, but he wasn't using his bully pulpit -- or even making public suggestions that could apply pressure or steer the debate. His press spokeswoman, Sharon Leighow, wasn't responding to media requests Sunday. Even on Saturday, she had only issued terse comments reiterating previous positions.

Late afternoon, there were more tricks with bills. Senate Bill 23, the film tax credit now laden with Interior drilling credits and natural-gas storage-tank incentives from the House, popped up in the Senate Rules Committee. So did House Bill 252, a popular measure there that exempted some small businesses from corporate income tax.

The committee sliced open 252 and inserted parts of Senate Bill 23: the film tax credit and interior drilling. Stedman, the Finance co-chair, left out the storage tanks, a measure he thought was inappropriate.

The Senate quickly passed House Bill 252 and sent it back to the House. That gave the House some leverage, because the Senate wants film tax credits. The bill was sponsored by Sen. Johnny Ellis, D-Anchorage and Rules Committee chair. But if the House threatened film tax, it would also threaten Interior drilling.

Sen. Joe Thomas, D-Fairbanks, said on the floor he wished he could reinsert the Senate's new-field oil-tax credits into the bill too, but realized that was a hopeless cause. "I thought at least we should've made some attempt to push things forward," he said in an interview during a recess. "That might've led to more discussion -- it might have led to a special session as well, but it would continue the conversation."

That didn't happen. That's the way the last day of session works.

Anchorage Daily News is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere in the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.

Commenting FAQs | Terms of Service