The Legislature didn’t finish its work in time for the scheduled end of the session Sunday, but it became clear that the largest stumbling block is how much and how quickly to scale back tax credits for the oil and gas industry.
House Speaker Nikiski Republican Mike Chenault says it’s a challenge to write a bill that the Republican-led House and Senate majorities can agree on – and that will gain support from the Democratic-led House minority.
“We’re having a hard time getting past the oil tax credit,” Chenault said. “We think that has to be the first piece that passes before we can get buy-in from the minority, or even our members going into closing out the budget and, also, all of the revenue measures.”
Lawmakers also didn’t resolve other major bills they debated this session.
This includes reconciling the House and Senate versions of the state government’s budget.
The House proposed cutting the budget by $283 million, while the Senate would cut it by $345 million. The biggest difference between the two is that the Senate included $100 million dollars in cuts that weren’t allocated to specific areas.
In addition, it’s not clear whether the Legislature will adopt new revenue measures.
Potential revenue sources include drawing money from the Permanent Fund, which depending on the plan adopted, could cause dividend payments to drop to one thousand dollars. Another measure would tax mining, fisheries, and gasoline.
Anchorage Democratic Representative Chris Tuck says the oil and gas tax credit compromise could be based on a provision of a Senate bill that reduces oil tax credits for Cook Inlet production – as well as amendments proposed to a House bill that gained bipartisan support.
“What we don’t want to see happening is we don’t want to see Alaskans pulling money out of their pockets to give to the oil industry,” Tuck said. “You know, we’re taking, we’re paying out more to the oil industry than we’re taking in production taxes – that’s just simply unacceptable.”
For his part, Chenault says the oil and gas tax credit bill is the linchpin. Once it’s resolved, the other pieces will come together. Those may include time limits on any tax increases – so that they will disappear if the economy improves and oil prices rise.
“When you get to the budget, we need to continue to try to reduce the budget where we can to drive the cost of government down where we don’t feel the need or have the need to tax Alaskans or tax Alaskans’ businesses in order to pay for government,” Chenault said. “So we need to keep our thumb on the size of the budget, keep downward pressure on that.”
The budget committees for both houses and the budget conference committee is scheduled to meet Monday.
Andrew Kitchenman is the state government and politics reporter for Alaska Public Media and KTOO in Juneau. Reach him at akitchenman@alaskapublic.org.
