The Scoreboard: Halfway through, here's where the big bills stand in the Alaska Legislature

With just over a month left in the legislative session, Alaska lawmakers are inching closer to passing next year's budget, plus an oil tax bill and legislation to restructure the Permanent Fund.

Each of those items moved closer Friday toward votes on the floor of the House and Senate. But one big item remains outstanding: details on the $300 million that the Senate's Republican-led majority aims to cut from the state's $4 billion unrestricted general fund operating budget.

Here's a rundown of Friday's action in the state Legislature, where lawmakers are still trying to come up with a package to reduce the state's deficit of nearly $3 billion that can draw majority support in both the House and Senate.


The House Finance Committee, after three full days vetting amendments, finally advanced the state budget to the floor, where further debate and a final vote are expected next week.

Leaders of the House majority coalition, which is mostly Democrats and a few Republicans and independents, are proposing an income tax and a restructured Permanent Fund to raise new revenue. They've also said they wanted to find areas to cut the budget beyond the 13 percent already shaved from state agencies in the past two years.

But after weeks of work, the finance committee advanced no substantial cuts to those agencies beyond those already proposed by Gov. Bill Walker.


The Senate majority, meanwhile, has promised to find $300 million in cuts, with its president, Fairbanks Republican Pete Kelly, consistently arguing that Alaskans think government is too big.

[Alaska lawmakers are following a budget path that's ended in gridlock before. Will it be different this time?]

The Senate's plans for the state's three largest agency budgets — health, education and the university system — aren't expected until early next week, and Senate leaders have warned that they're likely to propose 5 percent cuts to those departments.

But the Senate's proposed budgets for smaller agencies unveiled Friday and earlier in the week showed something surprising: almost no reductions at all beyond those already proposed by Walker.

The $260 million corrections department budget, which was vetted in a subcommittee chaired by Eagle River Republican Sen. Anna MacKinnon? No cuts.

The $25 million revenue department budget, which was also vetted by one of MacKinnon's subcommittees? No reductions.

Walker's $21 million labor department budget proposal was also left untouched by a subcommittee chaired by Fairbanks Republican Sen. Click Bishop. So was the $15 million budget for the environmental conservation department, which was analyzed by Anchorage Republican Sen. Natasha von Imhof's subcommittee.

The Senate majority leader, Peter Micciche of Soldotna, suggested that there wasn't much room left for cuts during his closing comments at a Friday hearing on the Permanent Fund legislation, even as he said his chamber would keep looking for them.

"You get into a significantly deeper level of cuts and I tell you: You're going to look seniors in the eye that can no longer can count on the basic services. Or 50 kids in a classroom. Or not having someone respond when your family is in a vehicle on the side of the Sterling Highway and the nearest trooper's two hours away," he said. "I mean, these are basic, constitutionally required services as important as the Permanent Fund, and I will fight to protect all of them."

Asked about the subcommittee budget proposals, Bethel Democratic Sen. Lyman Hoffman, the co-chair of the Senate Finance Committee, said his caucus would still find its promised cuts. He added that the subcommittee process would not be the last place that the Senate could propose further reductions.

"The bigger departments — the ones that we're targeting — we're going to get that money. I'm not going to go over my plan but we're pretty close to getting $300 million," Hoffman said.

Kelly, the Senate president who last month said that "most people believe government's too big," didn't respond to a request for comment Friday about his chamber's agency budgets released this week.

Permanent Fund

The Senate Finance Committee, meanwhile, finished its work on Senate Bill 26, the legislation to use some $2 billion in Permanent Fund investment earnings to help close the state's budget deficit.

The bill could hit the Senate floor for a vote next week, as early as Monday.

SB 26 has Walker's name on it. But finance committee leaders this week yanked the text out of Walker's original version of the Permanent Fund legislation and replaced it with verbiage from their own proposal, Senate Bill 70.

[Alaska's political leaders have steered clear of a vote on a Permanent Fund plan. They might get one anyway.]


The two different versions are relatively similar.

Both set the dividend at $1,000 and use roughly the same amount of cash to fill the deficit. Both have a mechanism to use less money from the Permanent Fund when the state's receiving more oil revenue.

But the Senate's proposal adds a spending cap — one that would allow the unrestricted general fund budget to grow above $4.1 billion, roughly its current size, only at the rate of inflation. However, as a state law, not a constitutional limit, the cap could be ignored by the Legislature in its annual budget process.

Five of the committee's seven members endorsed the new bill: Hoffman, MacKinnon, Bishop, von Imhof and Micciche. Donny Olson, a Democrat from the Northwest Alaska village of Golovin, opposed the legislation, as did Wasilla Republican Sen. Mike Dunleavy, who broke with his GOP caucus last year when it approved a different Permanent Fund bill.

The Senate's vote on last year's Permanent Fund legislation was 14-5. Kelly, the Senate president, told reporters at a Friday morning briefing that he thought there would be enough votes to pass the new version.

"No one has come and said, 'By God, I'm not voting for it,'" Kelly said. "I think there's the general support for it."

Oil taxes

House Democrats on Friday unveiled a new version of their proposal to increase oil taxes, House Bill 111, with one provision that would phase out the majority of the cash subsidies given to money-losing companies trying to bring new projects into production.


Those cash tax credits, which have accrued at the rate of hundreds of millions of dollars a year, have become a focal point in the Legislature's debate over oil taxes. Friday's version of HB 111 would replace the cash subsidy program with one in which companies keep their losses on their ledgers until they start owing taxes — as opposed to current law, which allows them to convert the losses into the cash subsidies.

The companies would get to keep 50 percent of losses on their books, with interest for up to seven years, to be deducted from their taxes once they begin producing enough oil to have a tax bill.

The new version of the legislation is expected to move from the House Resources Committee to the finance committee next week.

It makes a few concessions for companies compared to what House Democrats proposed initially, including lower taxes and higher deductions at low oil prices.

But the new bill appeared to generate even less enthusiasm from companies than the original version, which was panned by the industry and Republican lawmakers. Kara Moriarty, the president of the Alaska Oil and Gas Association, said it was ironic that the substitute legislation was introduced the day after a big new discovery was announced by Spanish company Repsol.

"Increasing costs, which the new version of HB 111 clearly does, will not help bring this new discovery, or any project, to production," Moriarty wrote in an email. "In fact, adding costs only hinders future development and production."

Everything else

As of Tuesday — Day 50 of the Legislature's 90-day session — not one bill had passed both the House and Senate and been sent to Walker's desk.

Facing a budget crisis, lawmakers have devoted much of their time to the state's spending plan and deficit-reduction legislation. But the dearth of bills approved by both chambers is actually fairly standard for this point in the first session of a two-year legislative term, according to an analysis by the legislative library.

No bills were passed by the 50th day of the 2015 legislative session, and just one bill had passed by the same point in 2011. The outlier is 2013, when lawmakers passed four bills by the 50th day.

[New bills would create climate change commission, ANWR tours for Congress]

Both the House and Senate are actually far ahead of their bill-passing pace of previous years — though this year's successful measures have not been particularly controversial.


The House had sent 11 bills to the Senate by the 50th day, including one to allow people to post social media "selfies" with their ballots, another to help finance clean energy projects, and another regulating a synthetic opioid.

The Senate had passed five bills, including one authorizing the sale of state royalty oil to Petro Star, another to declare Oct. 25 "African American Soldiers' Contribution to Building the Alaska Highway Day," and a third exempting two new state ferries from the requirement that 1 percent of their costs be spent on art.

Neither chamber had passed more than one bill by the 50th day in 2011, 2013, or 2015.

Nathaniel Herz

Anchorage-based independent journalist Nathaniel Herz has been a reporter in Alaska for nearly a decade, with stints at the Anchorage Daily News and Alaska Public Media. Read his newsletter, Northern Journal, at natherz.substack.com