Alaska’s Legislature will have another 30 days beginning on July 11th to pass a long-term fiscal plan for funding state government. That’s because Governor Bill Walker called them back for another special session. Legislators had a mixed response to the call. Some say they’re open to working on new proposals they expect from Walker. But others are skeptical toward the governor’s approach and say the Legislature can return to the issue next year in the regular session.
Walker said Alaska doesn’t have time to wait for a long term solution to state finances. That’s why he supports drawing about 5 percent in earnings each year from the Permanent Fund to pay for the state budget. The plan also includes cutting Permanent Fund Dividends. Without changes, his administration projects the state will run out of savings in four years.
“Do we have to run out of savings before we fix the problem? And I’m saying we don’t have to, we absolutely don’t have to,” Walker said. “So, it’s about getting the job done now. Is it politically uncomfortable? Of course, it’s politically uncomfortable.”
But it’s not certain the Permanent Fund bill will come up for a vote. The Senate passed its version of the legislation, Senate Bill 128. But the House version never advanced from the House Finance Committee.
And House Rules Chairman Anchorage Republican Craig Johnson said he’s not interested in bringing a Permanent Fund restructuring up for a vote until the level of state spending is lower.
“Is everything we’re paying for – do we really need to be? What is the role of government?” Johnson asked. “I think it’s going to take a deeper look than what we can put together in 30 days.”
Johnson said it could take one or two more years to go through that process. He also said he could bring up Permanent Fund legislation if there’s support in the Legislature. But he said he wants substantial backing from the majority caucus to make any change, not just an alliance of majority-caucus moderates and the minority caucus.
“This is an exceptional bill and, you know, the caucus can make a decision,” Johnson said. “But that would be – I would want to continue maintaining the rules that we’ve used since I’ve been there.”
Eagle River Republican Senator Anna MacKinnon said she’s interested in the specifics of what Walker proposes the Legislature look at in the session.
“It seems a bit overwhelming at this time, since we’ve been in session for almost six months,” MacKinnon said. “But I understand the governor’s perseverance at trying to set Alaska on a fiscal path that is sustainable.”
Some minority-caucus Democrats want to ensure that the Legislature consider more than just the Permanent Fund bill in the session. They also want the Legislature to consider additional tax, like a statewide income or sales tax, as part of what they and Walker see as a balanced plan.
Juneau Democratic Representative Sam Kito the Third said Walker’s special session proclamation has given the Legislature the focus it needs.
“I do think that there all the pieces on the table now with the governor’s call to put a package together that can save the state money and move the state forward into a more sustainable budget,” Kito said.
Kito also would like to see the Legislature take action to cut tax incentives to large oil producers. And he’d like to see it consider the other taxes as well.
“The reason that the governor is calling us back – the reason that we’re doing this issue is because we do have to deal with more than just the Permanent Fund restructure,” Kito said. “And more than just the Permanent Fund restructure means looking at those components of the oil and gas tax bill that were not addressed this past time.”
One factor that could affect the session is how Walker handles the state budget. He has until July 1st to decide whether to veto budget line items. These changes could affect Permanent Fund dividends or oil and gas tax credits.