Sen. Gary Stevens, R-Kodiak, and Rep. Paul Seaton, R-Homer, speak at a Homer City Council meeting in May after the end of the regular session.-Photo by Michael Armstrong, Homer News

Sen. Gary Stevens, R-Kodiak, and Rep. Paul Seaton, R-Homer, speak at a Homer City Council meeting in May after the end of the regular session.-Photo by Michael Armstrong, Homer News

Legislators predict tougher session next year

It took until last Thursday, but after endless days where most legislators waited for majority and minority leaders to reach a compromise, the Alaska Legislature finished its one big job: passing a budget.

On Monday in separate phone interviews, Homer’s legislators, Sen. Gary Stevens, R-Kodiak, and Rep. Paul Seaton, R-Homer, reflected on the tortured path to borrowing about $3 billion from the Constitutional Budget Reserve and funding the state’s fiscal year 2015-2016 budget.

“I would call it really, really painful,” Stevens said from Kodiak.

To pass a budget by dipping into the CBR requires a three-quarters vote in both houses. To get that vote meant the cooperation of the Democratic Party minority.

“We always find a compromise,” Stevens said. “It just took a long time getting there.”

Seaton said in the end the dollar-for-dollar the budget passed by the Senate was the same as the House had passed before the end of the regular session. He said the main difference was intent language put in the bill that said next year if oil prices stayed low the Legislature might not fund pay raises negotiated in state worker contracts.

“That’s what took us another two weeks and got us into pink slips,” Seaton said, referring to layout notices the governor had to send out as the fiscal year deadline loomed of June 30. “It was a little frustrating after a lot of work and negotiations for the Senate to say we can renegotiate better with the House.”

 

Stevens said the bipartisan cooperation he practiced when he was Senate President might have helped reach a solution sooner.

“It really does work. You have to bring people into the tent. I think a mistake was made leaving the minority out until the very, very end when you needed the three-quarters vote,” he said.

Looking ahead, if this year was tough, next year will be even tougher. The CBR only has about two more years of spending until the balance of about $6 to 7 billion runs out.

“We have this huge deficit we’re facing,” Stevens said. “Without any revenue coming in, we’ve just got to face the music and live within our means.”

That means not just cutting the budget further, but raising money through other methods, like an income tax, a state sales tax, a state property tax, and changing oil and gas production tax credits. Stevens likes to point out that even eliminating every state job the deficit would still only be cut in half.

“The harder thing for us in the coming year and the year after that is to reduce the budget somewhat and find ways to find revenues and maybe find ways to reduce credits to oil companies,” he said.

Oil company credits could represent a $490 million line-item expenditure. For the 2015-2016 budget just passed, credits went up $95 million. Some of that is a credit against other taxes owed, but if the credit goes to a company that has not yet produced, that’s a cash payment. In areas like Cook Inlet, there isn’t a production tax, Seaton noted.

“That’s why people have been saying the gas that goes into Cook Inlet has been subsidized,” he said.

Seaton participated in Gov. Bill Walker’s conference in Fairbanks, “Building a Sustainable Future: Conversations with Alaskans.” At the workshop, small groups played with a model where they could adjust factors like budget cuts and revenue enhancements.

“You have to turn on a whole lot of things. You have to reduce gas credits. You have to have some kind of cap on the Permanent Fund Dividend or maybe some usage of the Permanent Fund earnings,” he said. “All seven groups, only a couple of them met the goal of the CBR exceeding 2017 and not have the Permanent Fund decline in value.”

Working toward a solution in the next session will be complicated by the fact that 2016 is an election year, both legislators said.

“There are probably going to be a lot of legislators who won’t vote on an income tax and run for election,” Stevens said.

Seaton has already touched the third-rail of income taxes. In the latest session, he introduced a bill that would impose an income tax on individuals, limited liability corporations and other entities currently not paying corporate income taxes. That bill didn’t go anywhere.

“I’m not seeing a whole lot of enthusiasm for doing revenue enhancements,” Seaton said.

Despite all the drama of passing a budget, Stevens said it served to educate the public about the fiscal challenges ahead.

“One of the good things is the public understands how this is a serious problem,” he said. “You just can’t cut your way to fiscal stability.”

That was an awareness Seaton saw happening at the governor’s conference.

“Everybody was looking at numbers and different ways to solve the problems — solutions. That’s what we haven’t been talking in the Legislature yet, solutions.”

Michael Armstrong can be reached at michael.armstrong@homernews.com.


More in News

Coast Guardsmen and state employees load the Together Tree bound for the Alaska Governor’s Mansion on a truck on Nov. 29, 2021 after the Coast Guard Cutter Elderberry transported the tree from Wrangell. (USCG photo / Petty Officer 2nd Class Lexie Preston)
Governor’s mansion tree arrives in Juneau

No weather or floating lines could stay these Coast Guardsmen about their task.

The Kenai Community Library health section is seen on Tuesday, Oct. 26, 2021. The Kenai City Council voted during its Oct. 20 meeting to postpone the legislation approving grant funds after members of the community raised concerns about what books would be purchased with the money, as well as the agency awarding the grant. The council will reconsider the legislation on Wednesday, Dec. 1, 2021. (Camille Botello/Peninsula Clarion)
Kenai council to consider library grant again

The council earlier voted to postpone the legislation after concerns were raised about what books would be purchased.

EPA logo
Alaska Native group to receive EPA funds for clean water projects

The agency is handing out $4.3 million to participating tribal organizations nationwide.

fund
Study: PFD increases spending on kids among low-income families

New study looks at PFD spending by parents

Image via the Alaska Department of Environmental Conservation
Nikiski soil treatment facility moves ahead

The facility, located at 52520 Kenai Spur Highway, has drawn ire from community residents.

Commercial fishing and other boats are moored in the Homer Harbor in this file photo. (Photo by Michael Armstrong/Homer News)
Seawatch: Bycatch becomes hot issue

Dunleavy forms bycatch task force.

Rep. Chris Kurka, R-Wasilla, leaves the chambers of the Alaska House of Representatives on Friday, March 19, 2021, after an hour of delays concerning the wording on his mask. On Monday, Kurka announced he was running for governor in 2022. (Peter Segall / Juneau Empire)
Wasilla rep announces gubernatorial bid

Kurka said he was motivated to run by a sense of betrayal from Dunleavy.

The Joint Base Elmendorf-Richardson star is Illuminated on the side of Mount Gordon Lyon on Wednesday, Sept. 11, 2019, just east of Anchorage, Alaska, in observation of the 18th anniversary of the terrorist attacks. A crew from the base went to light the 300-foot wide holiday star, but found that only half of the star’s 350 or so lights were working, the Anchorage Daily News reported. Airmen from the 773rd Civil Engineer Squadron Electrical Shop haven’t been able to figure out what was wrong and repair the lights, but they plan to work through the week, if necessary, base spokesperson Erin Eaton said. (Bill Roth/Anchorage Daily News via AP)
Avalanche delays holiday tradition in Alaska’s largest city

ANCHORAGE — A holiday tradition in Alaska’s largest city for more than… Continue reading

AP Photo/Gregory Bull,File
In this Saturday, Jan. 18, 2020, photo, George Chakuchin, left, and Mick Chakuchin look out over the Bering Sea near Toksook Bay, Alaska. A federal grant will allow an extensive trail system to connect all four communities on Nelson Island, just off Alaska’s western coast. The $12 million grant will pay to take the trail the last link, from Toksook Bay, which received the federal money, to the community of Mertarvik, the new site for the village of Newtok. The village is moving because of erosion.
Federal grant will connect all 4 Nelson Island communities

BETHEL — A federal grant will allow an extensive trail system to… Continue reading

Most Read