Alaska lawmakers advance bills to borrow cash for oil companies, restrict Medicaid coverage

JUNEAU — The Alaska Senate passed a bill Thursday to require able-bodied recipients of Medicaid, the state-federal health care program, to work in order to keep their benefits.

Senate Bill 193, sponsored by Senate President Pete Kelly, R-Fairbanks, passed 14-3, with support from Kelly's mostly-Republican majority caucus; members cited the Medicaid program's growth and cost as a reason to support it.

If it passes the Legislature and is signed by Gov. Bill Walker, Walker's administration predicts that the bill would affect about 25,000 recipients — about 10 percent of total Medicaid enrollment, with most people exempted from the new requirements due to disability, pregnancy, age or other factors. Affected recipients would have to work, go to school, volunteer or engage in "subsistence activities" for at least 20 hours a week.

But SB 193 appears unlikely to advance in the state House, which is controlled by a largely-Democratic majority. Anchorage Democratic Rep. Ivy Spohnholz, who chairs the House health committee where SB 193 will likely be sent, cited figures from Gov. Bill Walker's administration that said the legislation will cost the state more than $10 million a year to implement.

"It's government expansion in search of a problem," Spohnholz said.

Kelly's proposal came after President Donald Trump's administration in January said it would allow states to require Medicaid recipients to work.

There are 200,000 Alaskans covered by Medicaid, or slightly more than one-fourth of the state's population, with Walker's administration predicting 240,000 to be enrolled next year. Republican lawmakers, particularly in the Senate, say they're alarmed by a recent increase in demand for the program, which has come amid Alaska's recession.


[Related: Alaskans turn to government for food and health care amid recession, prompting worry about cost]

"We have an unsustainable system in need of reform," Eagle River Republican Sen. Anna MacKinnon said during debate on SB 193. "The bill in front of us is asking people to participate and help themselves."

Walker's administration predicts the bill would cost $80 million in state money to implement over six years, though it would spent $175 million less in federal cash. The Senate passed the legislation saying that costs beyond the first year would be "indeterminate."

The legislation faced staunch opposition from Senate Democratic minority members. Anchorage Democratic Sen. Bill Wielechowski called it a "bureaucratic nightmare" for Alaskans on Medicaid.

House passes bill to borrow money for oil company debts

The state House, in a 23-15 vote, passed a bill to allow the state to borrow money to pay cash tax credits owed to companies that either aren't producing oil in Alaska, or are producing small quantities.

House Bill 331, sponsored by Walker, is designed to clear a liability of nearly $1 billion in tax credits.

The Legislature created the cash tax credit program years ago to encourage more natural gas production in Cook Inlet, near Anchorage, and more oil production by new companies on the North Slope. Since oil prices, and Alaska's oil revenue, crashed in 2014, lawmakers have largely phased out the state's cash tax credit programs.

[Related: Oil companies in Alaska say they're owed $800 million. Lawmakers have been slow to advance the governor's plan to pay them.]

But the state, which has been facing a huge deficit, still hasn't paid all the credits claimed by companies that spent money searching for oil or developing projects in Alaska before the cash tax credit system was eliminated. Eligible companies do not include major producers like ExxonMobil or ConocoPhillips.

Some policymakers, including officials in Walker's administration, said the unpaid debts were slowing down the development of oil company projects, and stopping Alaska residents and companies from being hired to work on them.

"The uncertainty around these tax credit payments has led to projects being stalled and credit being frozen. HB 331 says, 'Let's find a way to solve this problem,' " Anchorage independent Rep. Jason Grenn, who carried the legislation on the House floor, said in a prepared statement.

The legislation was slow to advance in the House; more than half of its largely-Democratic majority caucus voted against the bill. The legislation got broad support from the Republican minority.

The legislation is seen as a key bargaining chip in the Legislature's end-of-session negotiations about the state's annual budget and a plan to fill most of its deficit with investment earnings from the $65 billion Permanent Fund.

To fill the remaining deficit with cash from a special state savings account that requires a three-fourths majority to tap, the House majority, with just 22 members in the 40-member chamber, will need cooperation from members of the Republican minority.

A parallel version of the borrowing bill has already advanced through one of the two Senate committees to which it's been referred.

Correction: House Bill 331 allows Alaska to borrow money to pay cash tax credits for oil companies that either aren't producing any oil, or are producing small quantities. The cash credits are tied to the amount of production, rather than to whether companies have found oil, as the story initially suggested.

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