Lawmakers face crunch of time, hotel space as special session begins
Legislators were back in Juneau Monday morning, May 23, meeting in special session to resume work on a tangle of critical bills they failed to complete May 18 when the regular 2016 session had to end. It was the legal 120-day limit of the regular session.
One new worry for legislators, however, is whether they might be kicked out of hotel rooms and apartments if the special session extends into June when Juneau’s annual tourism hotel room crunch hits.
“I’m told there are no hotel rooms available in the middle of June,” House Speaker Mike Chenault said. “We may all be sleeping in tents.”
House Majority Leader Charisse Millet said lawmakers could roll out sleeping bags in temporary offices (the capitol building is under renovation) as a former legislator, Vic Kohring, used do, except there are no window shades or blinds in the temporary digs.
Meanwhile, on Monday Gov. Bill Walker presented the first of 10 bills he wants lawmakers to work on, with other set to follow.
On his notice for the special session the governor included the state operating budget, a Permanent Fund earnings bill, various tax measures, an insurance bill, a bill on adoptions and foster care and another on pension benefits for peace officers’ and firefighters’ spouses, if they are killed in the line of duty.
All of the bills were at various stages in the Legislature, some quite advanced, when the House and Senate gaveled out at midnight Wednesday. In a Thursday press conference Walker said he wasn’t sure the bills would be re-introduced in the form they were last in or the original versions introduced, or some new “hybrid” version.
The operating and capital budget bills are well advanced and could be completed quickly once final agreements are made. A House-Senate conference committee has been at work for some time resolving differing versions of the operating budget.
Important Permanent Fund earnings bills, which could reduce the deficit and draw on state cash reserves, were in the House and Senate Finance committees as identical bills, a signals that agreements had been reached on at least the form of these, although whether there are enough votes to actually pass the bill is unknown.
There is talk in the capitol building hallways that some funds cut from the operating budget may be restored, reversing reductions made to K-12 education and the University of Alaska in the latest version of the budget bill.
These are believed to be on the list of demands by the 13-member House Minority whose votes are needed to withdraw funds from the Constitutional Budget Reserve to balance the budget.
The state capital budget has been passed by the Senate and was on the House floor when the regular session was adjourned. Among other items it contains about $19 million to fund the state’s continued negotiations on commercial terms for the Alaska LNG Project.
The state administration had planned to spend more during 2016 and 2017 on gas pipeline work, but money was cut for a marketing initiative for state-owned LNG since it is increasingly likely the big project may be delayed.
However, several agreements are still needed soon among the project partners, which include the state, before final engineering can begin.
The most contentious issue in the special session will be the revamp of the state’s oil and gas tax credit incentive program, which was the issue that bogged down much of the regular session.
In the days before the regular session adjourned the House passed a version of this, which was considered in the Senate and sent back, with major changes. The House rejected those changes and the issue was set to go to a House-Senate conference committee when the gavel came down late Wednesday.
This is a complex bill with parts that affect oil and gas companies in different ways and much of the churn on the bill all spring has been on how various versions affected different parts of the industry — explorers, small producers and large producers.
Walker’s intent in sponsoring the original bill, House Bill 247, was to lower the heavy cost of the tax credits to the budget, which amount to several hundred million dollars a year in the form of cash rebates to the companies, who are mostly small independents.
The big push-back against cutting the program sharply came from legislators who felt rapid cuts to the credits was unfair to companies who had made financing decisions on projects based on the program.
Some of these projects could be producing 25,000 barrels per day to 30,000 barrels per day by 2018, paying state royalties and taxes, so there is a direct loss to the treasury to a short-term decision to cut off the credits quickly.
Some legislators, in defense of the current program, argue that it has actually accomplished its goals of getting new companies exploring in Alaska, new exploration wells drilled and oil and gas discoveries made.
For example, new gas resources discovered in Cook Inlet since 2010, aided by the tax credits, eased concerns over a regional gas shortage and ended, for now, plans to import LNG.
On the North Slope there have new oil discoveries by Pioneer Natural Resources, Caelus Energy, Brooks Range Petroleum, Repsol and Armstrong Oil and Gas that were arguably aided by the program.
However, critics of the tax credits say it’s hard to defend them with state budget deficits of over $4 billion. Lawmakers would have to explain to constituents, as the August and November elections draw near, why cash payments for tax credits to oil and gas companies should have a priority over school or university budgets.
Some of the earlier versions of HB 247, as alternatives to the governor’s original bill, had a more gradual wind-down of the credits, but the most recent substitute bills, from the Senate, would wind down the credits more rapidly.
As for the regular session, in an after-midnight briefing for reporters last Thursday morning, tired and exhausted House leaders, including Chenault, Rules Chairman Craig Johnson and Majority Leader Charisse Millet, said a last-ditch effort on a budget compromise would have put many things the Minority wanted back in the budget including schools and the university.
Chenault said the Senate had also signed off on these.
The deal fell apart when the Minority brought up new issues at the last minute, he said.
In the Minority’s briefing Thursday morning Rep. Chris Tuck, the House Minority Leader, said one sticking point was over terms in the Senate-passed oil tax incentive bill, HB 247. A particular concern was the confidentiality language in the bill, Tuck said.
The Minority wanted more transparency, on who was getting the oil tax credits. The bill that came from the Senate had only the amounts and types of credit payments, but not companies receiving them.
Tuck said the House Minority supports the concept of the incentive tax credits, but for the “companies who need them,” meaning independents, and not the large companies. The tax bill from the Senate included provisions that were of more benefit to larger companies, he said.
Tuck also said the Minority voted against a 10-day extension because if that failed and a 30-day special session followed it would push a final budget approval too close to July 1, he said.
That is the start of the fiscal year and when the government must shut down if there is no budget. He said the Minority was willing to go for a one-day extension or something a little longer but Chenault said the Majority rejected this because there was no assurance a short extension would make a big difference.