Oil revenue No. 1 issue for legislators

As Sen. Gary Stevens, R-Kodiak, and Rep. Paul Seaton, R-Homer, leave this week for Juneau, both said one issue will dominate in the first session of the 29th Legislature.

“It’s pretty clear: It’s the budget,” Stevens said in a phone interview from his Kodiak home. “That’s what we’ve got to watch carefully and pay attention to — the issues that affect revenues.”

Seaton agreed with that, and added another caution. This is not the year to ask for big-budget capital projects or other appropriations. He said the interaction with constituents about money already has been settled.

“The answer is ‘no’ so far as monetary things,” Seaton said.

Stevens, who represented Homer before reapportionment when Sen. Peter Micciche, R-Soldotna, became Homer’s senator, is back as the lower Kenai Peninsula senator, for Senate District P. Another change in reapportionment moved the lower peninsula, House District 31, out of Micciche’s district.

With oil below $50 a barrel, the Legislature will be taking a hard look at a lot of big money projects, Seaton said. Gov. Bill Walker, a former Republican who ran as an independent on a unity ticket with Lt. Gov. Bryon Mallot, a Democrat, already has set the tone.

“We’re taking these big projects off,” Seaton said, citing the Kodiak rocket launch facility, the Susitna hydroelectric project, and the road to Juneau as example. “In times like this, boondoggles fade away pretty quickly.”

Stevens said capital projects aren’t totally off the table, but only for smaller items.

“We still have money. We’re still able to do things,” Stevens said. “It’s not the year to ask for pie-in-the-sky projects, but it is the year to move ahead on smaller projects, road repairs, water and sewer. It’s not a year we’re not going to spend any money, but it’s a year we’re going to spend less money.”

While it’s also not a year to create new revenue sources like a state sales tax or income tax, the decline in oil revenues offers an opportunity to start those discussions, Stevens and Seaton said.

“This is probably not the time Alaskans are ready to hear additional proposals on revenue, but it is a year to realize what happens when you don’t have revenue,” Stevens said.

Seaton said he could see discussions starting on new revenues. Of three ideas frequently presented — tapping into Alaska Permanent Fund dividends, a state sales tax and an income tax — an income tax is the most favorable, Seaton said. A sales tax and income tax would generate about the same amount, but a sales tax would cost more to implement. A state sales tax also would interfere with the ability of local governments to fund government, he said.

“Nobody wants an income tax, but if you have to look at the economics of those three options, the income tax is the most favorable,” Seaton said.

Neither Seaton or Stevens sees redoing Alaska’s oil and gas tax structure as being back on the table. Stevens noted the strong opposition to Senate Bill 21 in Homer voting districts when a ballot measure to repeal it was narrowly defeated in the primary last August. However, both legislators said they agreed with Walker that a tax credit feature of SB 21 is flawed and costing the state money.

Stevens said tax credits to oil companies will put the state $100 million under this year and $400 million under next year when credits are deducted from production taxes.

“I don’t think we’re going to deal with oil taxes this session,” Stevens said, “I think we can deal with credits and take a good, solid look at those credits. Are we giving away too much?”

Seaton said those tax credits were designed for smaller oil companies, but that there was nothing in SB 21 that capped the amount at so many barrels produced to keep the big oil companies from also claiming tax credits.

In a lean revenue year, cities will have to be careful about how they spend legislative grants already appropriated, Seaton said. For example, at Monday’s Homer City Council meeting, the council considered a resolution asking the Legislature to reappropriate to public safety building design a $1.4 million grant for an east-west corridor to connect Heath Street and Lake Street via Waddell Way. The council postponed action on that resolution.

“It’s quite risky to take money approved by the Legislature and say, ‘We don’t want to spend it on that; we want to spend it on something neither the governor nor Legislature approved,’“ Seaton said.

Walker also has said if money hasn’t been spent within five years, it’s going to be reallocated, Seaton said.

“This is a tricky year,” Stevens said. “We’ll be looking at every dollar. They could be ‘clawed back.’ That’s the phrase they’re using.”

Stevens has a new leadership position this year, chairperson of the Legislative Council, a bipartisan, House-Senate council that runs the Legislature when it’s not in session. He inherited the controversial Anchorage legislative office building as part of that role and will be assigning offices for Anchorage area legislators and others out of the district. Stevens also serves on the Ethics, Labor and Commerce committees. Seaton is chairperson of the Health and Social Services Committee and serves on the Resources, Education, and Community and Regional Affairs committees. 

Both have prefiled or will file bills. Stevens has put forth several education bills. One would like at how data for students in grades kindergarten-12 would be used and shared. Alaska needs some clear standards on how data is used, Stevens said.

He also will file a resolution creating a task force to look at how to educate students in terms of civics and how to make them have a better understanding of what citizenship means.

Seaton will file a bill to create wellness committees for state workers and look at how vitamin D can help reduce health costs. Seaton has been a consistent advocate of the health benefits of taking vitamin D for northern residents who can’t get it from exposure to the sun. He also has prefiled a bill to address the issue of marine invasive species and to allow the formation of B corporations, or benefit corporations. Those would be for-profit corporations that use a portion of revenues for charitable or social-aspect causes. 

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

Legislative Contacts:

Rep. Paul Seaton

Phone: 235-2921 (Homer office number; routes to Juneau session office)

Email: rep.paul.seaton@akleg.gov

Website: housemajority.org/seaton


Sen. Gary Stevens

Phone: 800-821-4925 (toll free); 235-0690 (Homer office, year round)

Email: senator.gary.stevens@akleg.gov


Homer Legislative Information Office

270 W. Pioneer Ave. (corner of Bartlett Street and Pioneer Avenue)

Hours: 8:30 a.m.-noon, 1-5 p.m., Monday-Friday

Phone: 235-7878

Website: homer.akleg.gov