Legislature adjourns after energy tax revote

Sean Cockerham | Tribune Media Services
MICHAEL PENN / Juneau Empire via The Associated Press

JUNEAU -- The Legislature adjourned for the year after midnight Sunday night following votes to lower cruise ship taxes, create a scholarship program, expand the size of the Legislature and designate the Alaskan Malamute as the state dog.

Legislators didn't adjourn until 12:37 a.m., going beyond the Sunday midnight deadline imposed by the voter initiative that put a 90-day limit on how long they can be in session. Lawmakers said the 90-day session limit is only in statute and the Constitution still says they can be in session up to 120 days.

The Legislature had appeared headed for a meltdown earlier Sunday night before the House flipped under pressure from senators on a bill to tax natural gas differently than oil. The bill is a big priority for Sitka Sen. Bert Stedman, who argues without it the state could lose billions of dollars if a natural gas pipeline is built to the Lower 48.

The House narrowly voted to defeat the bill, threatening to throw a monkey wrench into the adjournment. Senators were talking about forcing the legislative session to go beyond Sunday night.

After closed-door meetings and hallway talks, the House reversed course. Representatives rescinded their vote, then passed the bill 23 to 17.

The House on Sunday also passed a budget for state construction and maintenance projects that spends more than $3 billion. Representatives added an additional $75 million to it Sunday night for a new statewide crime lab in Anchorage.

"It is a large budget," said Chugiak Republican Rep. Bill Stoltze, who was in charge of putting it together in the House.

But Stoltze said the state had a small capital budget for construction projects last year and there's pent-up need for projects throughout the state.

The House passed the budget on a 30-10 vote. The only votes against it were Democrats. It already passed the Senate and goes to Republican Gov. Sean Parnell, who has called the capital budget a spending spree and is expected to veto projects.

Less controversial among lawmakers was passage of the budget that pays for all state agencies and services, including education and Medicaid. It totals about $8 billion, of which about a quarter is federal money and the rest is state dollars.


The House also voted 27 to 13 on Sunday night to lower the cruise ship passenger tax that Alaska voters approved in 2006. The tax cut now goes to the governor to be signed into law.

The Alaska Cruise Association has reached an agreement with the state attorney general to drop a lawsuit if the tax is lowered. Lawmakers who supported lowering the tax said it clears up the lawsuit and will hopefully convince the industry to bring back more cruise ships to Alaska.

Rep. Stoltze said he's heard from small businesses hurting over a loss of tourism dollars. "Their concern was they want to make sure the cruise ship volume picks up," he said.

Those against the bill said the Legislature shouldn't monkey with a voter initiative. They said there was no guarantee it would lead to cruise ships.

"This bill will cost $22 million a year and for it we have the dubious distinction of having one trade group not sue us. Anybody else can sue on the same issues," said Anchorage Democratic Rep. Mike Doogan.

The Legislature on Sunday also voted to pass a scholarship program, which was a huge priority for Gov. Sean Parnell.

High school students would have to complete a set of required courses, get a good enough score on a standardized exam, and have at least a "C-plus" average to be eligible. Scholarship awards would range from $2,378 a year to $4,755 depending on the grade point average. It would start for high school graduates of the class of 2011.

A task force is to work on how to pay the estimated $20.6 million annual cost of the program. The Senate was to decide whether to approve the bill Sunday night and send it to the governor.

Anchorage Democratic Rep. Les Gara argued it doesn't do enough to help students who can't afford college. He failed in an attempt to add $3 million to the plan for students in financial need.


Another bill approved Sunday would require corporations and unions to report their campaign expenditures, and provide to disclaimers in political ads saying who is behind the commercials. Gara successfully amended the bill to require the top contributors to be read aloud in commercials as well as listed on the screen.

Lawmakers on Sunday also completed approving an amendment to the Alaska Constitution to expand the size of the Legislature. Alaska voters will have the final say on the measure when it appears on the November ballot.

The amendment would add four more representatives and two more senators to the Legislature. The idea is to preserve rural representation in Juneau after all the legislative districts are redrawn following this year's census.

The added seats would likely go to Mat-Su and Anchorage, where the population growth is. But rural lawmakers hope it means they at least won't lose seats and that their legislative districts won't get even geographically bigger than they are now.

Lawmakers passed that measure before the meltdown over the attempt to tax natural gas differently than oil. Oil and gas are combined under the state's current tax system and Sitka Sen. Stedman says that puts Alaska at risk if there's a natural gas pipeline built to the Lower 48.

The state could potentially lose billions if oil prices are high and natural gas prices low, he said.


Stedman said the change is urgent because Alaska's gas tax rates could be locked in for 10 years on May 1 under the Alaska Gasline Inducement Act. Anchorage Republican Rep. Mike Hawker supported the bill, calling it an "insurance policy."

But the Parnell administration and lawmakers who voted against the bill said the change doesn't need to happen now. Many lawmakers said they hadn't had enough time to study the ramifications of the complicated measure and were uncomfortable with the vote. Others said they thought the bill could do real harm and make it less attractive for gas producers to commit to a pipeline, by effectively increasing taxes on them.

"I believe this bill could be the torpedo that sinks our chances of getting a gas pipeline," said Anchorage Democratic Rep. Harry Crawford.

Defeat of the bill in the House set off a flurry of closed door meetings as legislative leaders tried to figure out what to do. Leaders of the House and Senate huddled behind the closed doors of House Speaker Mike Chenault's office during a break in the House floor session at 9 p.m. Chenault didn't look happy walking into the meeting and didn't want to talk about it.

"I don't have time," said the Republican from Nikiski.

After he emerged, the House rescinded its vote to defeat the measure. Reps. John Harris, Bryce Edgmon, Chris Tuck and Max Gruenberg then changed their votes from "no" to "yes" and the measure passed.

"I want to get out of town" Harris said after the vote.

"I just thought more about it," was Gruenberg's explanation.

Edgmon said it was a complicated bill and he'd always gone back and forth on it.

He said other legislators talked to him after his "no" vote and he changed his position. Edgmon said he wasn't promised anything.