Legislature gears up for final push of session

JUNEAU — With the first session of the 28th Alaska Legislature scheduled to wrap up its business April 14, some big issues remain on the table.

Still to be decided are oil taxes and two big energy projects — a plan for the state to finance trucking of liquefied natural gas from the North Slope and more work on a state-sponsored in-state pipeline — as well as the state budget.

The LNG trucking plan, in Senate Bill 23, has already passed the state Senate and action is pending in the House Finance Committee, the final step before approval by the full House. The in-state gas pipeline plan in House Bill 4 has passed the House, but the Senate’s schedule is tight, Senate leaders warned in a March 27 briefing.

The bill clarifies regulatory issues affecting the project and gives Alaska Gasline Development Corp., the state corporation doing the work, access to funds set aside for it by the Legislature two years ago.

An issue that has flared up recently is Rep. Bill Stoltze’s proposal to repeal the state film tax credit program, which has caused consternation within the state’s budding film production industry.

Alaska companies have made substantial investments in facilities and training to support film companies doing work in Alaska, and all this could be undercut by repeal of the tax incentive, said Joe Mathis, a vice president for NANA Development Corp., one company heavily invested in film support work.

Hearings were underway last week in the House Finance Committee, where Stoltze is co-chair. The bill came out of the House Labor and Commerce Committee with no “do pass” recommendations from its members, even from Rep. Lora Reinbold, R-Eagle River, who is listed as one of the co-sponsors.

There also has been no testimony in favor of the repeal except from Stoltze, who authored the bill. 

However, as co-chair of the Finance Committee, Stolze is in charge of compiling the state capital budget in the House, and few lawmakers will dare to cross him on a favorite bill. It’s unclear why the Chugiak lawmaker wants to repeal the program — his sponsor statement lays out no reasons — and it may be simply an effort to embarrass Sen. Johnny Ellis, an Anchorage Democrat who has championed the program over several years, sources in the Capitol are saying.

On the budget, the Senate was expected to vote on its version of the state operating budget and send it to the House, setting the stage for a budget conference committee that will resolve differences between the two versions.

There is little controversy over the operating budget other than school supporters rallying to get more money for education to address several years of inflation through an adjustment to the Base Student Allocation, the formula that distributes state financial aid to school districts.

Republican House and Senate leaders, and Gov. Sean Parnell, have been reluctant to adjust the funding formula but have provided more money for schools, to help pay high fuel costs for example, through special appropriations in the state capital budget.

That is likely to happen again this year, Republican leaders have said. Senators also may work over the summer to develop a multi-year school funding plan, Sen. Mike Dunleavy, R-Mat-Su, said March 26 in a briefing. Sen. Anna Fairclough, R-Eagle River, said she will push for more energy efficiency upgrades at schools to lower fuel bills.

On the contentious issue of state funds for private and religious schools now being discussed among legislators, Dunleavy said he will introduce a bill soon that will allow businesses to get state tax credits for contributions to private schools.

Once the operating budgets are passed by both chambers, the Finance Committee’s attention will focus on the capital budget, which is likely to be much lower than that passed last year. That totaled about $2.8 billion for fiscal year 2013, the current budget year that ends June 30.

Oil revenues are declining, however. In December, when the governor introduced his budget proposal for fiscal year 2014, which begins July 1, it appeared there might be sufficient revenues for a $2.3 billion capital budget.

That includes the governor’s own proposal for $1.8 billion in capital spending, which includes about $1 billion in federal funds. It would leave room for about $500 million in spending for projects proposed by legislators.

There may be less money available for legislators to add on projects, however. The Department of Revenue’s spring revenue forecast, an update of the December forecast which provided the underpinnings for the governor’s budget proposal, is due this week.

The oil price estimate, one factor in estimating revenues, is expected to be about the same as that made in December, but there is concern that oil production assumptions made in December may be high. If there is less production, revenues for fiscal year 2014 will be lower.

That will set off a scramble among constituent groups to pressure legislators in the last days of the session to get their projects included in the smaller capital budget.

Tim Bradner is a reporter for the Alaska Journal of Commerce.

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