State senator says House oil-tax proposal should go in the shredder, suggesting oil-tax deal is far off

After months of public disagreement on oil taxes, the Alaska Legislature held a committee hearing Wednesday to, once again, lay out its disagreement on oil taxes.

Democratic House majority members who favor higher taxes on oil companies delivered their talking points from an Anchorage conference room packed with industry supporters, who earlier demonstrated outside the building with signs that attacked the House's latest proposal.

Republican Senate majority members, who have opposed tax increases, phoned in from Juneau, where Sitka GOP Sen. Bert Stedman delivered a string of one-liners blasting the House measure and said it should be placed in the shredder.

While Gov. Bill Walker and a few legislators suggested earlier this week that an oil-tax deal was imminent, the 500 miles separating lawmakers in Wednesday's conference committee seemed an apt metaphor for the distance between them on policy.

And several legislators suggested after the two-hour hearing that they had doubts they'd be able to reach a deal before the end of their special session Saturday.

[Are lawmakers near a deal on oil-tax credits? It depends on whom you ask]

The frustration, and exhaustion, was palpable.

"I've told our five-year-old to go punch his pillow when he's frustrated," Anchorage independent Rep. Jason Grenn tweeted after the hearing. "I guess I should go find a pillow."

The Legislature has been convened continuously since mid-January, with Walker calling two special sessions after lawmakers failed to approve an annual operating budget by the end of their 90-day regular session, which itself was extended to 121 days. The Legislature finally approved a budget late last month, but it still hasn't passed any substantial legislation to fix the state's $2.5 billion deficit.

Walker has asked lawmakers to pass an array of deficit-reduction bills. But he's currently limited their special session agenda to oil taxes alone, saying the Legislature needs to tackle one measure at a time.

With the clock ticking toward Saturday's deadline — and as most senators returned to Juneau for the final days of the special session — House majority members said they called Wednesday's committee meeting to make clear that they're still trying to reach an oil-tax compromise with the Senate majority.

But they also acknowledged the chances of that are growing increasingly remote, which is why many House members have stayed in their home districts.

"I think the public was entitled to an update," said Rep. Andy Josephson, D-Anchorage. But, he added: "We're not in Juneau because it's really dubious there's going to be a settlement."

That was evident from the start of Wednesday's hearing. As soon as Anchorage Democratic Rep. Geran Tarr called it to order, she faced a string of procedural questions from Stedman, which prompted her to threaten to call off the hearing altogether.

Over the ensuing two hours, the two sides laid out their still-boiling disagreement over oil-tax policy, which centers on how to replace a state program that makes cash incentive payments to oil companies trying to bring new projects online.

The Senate majority wants to allow companies to replace the cash payments with tax deductions at the same rate, while the House says the rate should be lower.

Members of each caucus argued at Wednesday's hearing that their side had agreed to concessions. But their core dispute over the payments and deductions remains.

The three committee members who were present in Anchorage — Josephson, Tarr and Golovin Democratic Sen. Donny Olson — were greeted at the Legislature's offices by a crowd of dozens of industry supporters, many from organized labor.

Among their signs: "taxes kill jobs" "more oil=more jobs," and a third, waved by GOP activist Steve Strait, depicted a clown driving a car.

Fairbanks Democratic Rep. Scott Kawasaki summed up his view of the situation in his own tweet.

"I'm literally getting dumber every second in Juneau," he said. "Alaska Air flight home tomorrow!"

"They just need to get serious, and they're not right now," Strait said.