Deal struck on capital budget

The Legislature is headed back to Juneau.

Don’t expect lawmakers to stay long.

On July 27, the Legislature will convene what is expected to be a one-day special session to pass the state’s capital construction budget.

“We have conducted a straw poll, and the 27th is the day,” Senate Majority Leader Peter Micciche said by phone Thursday.

The capital budget funds road construction and building projects across Alaska, and most of its funding will come from the federal government, but it — like the state’s multibillion-dollar operating budget — was caught in the political divide between the Democrat-led House Majority and the predominantly Republican Senate Majority.

An agreement between those two sides has now been reached.

The Legislature failed to pass the capital construction budget before the July 1 start of the state fiscal year, and that failure has begun to have consequences.

For example, the Alaska Department of Transportation has long planned a $40 million effort to rebuild nine miles of the Haines Highway. The project was supposed to go out to bid in late July, but with no capital budget, it hasn’t. Aurah Landau, a spokeswoman for the DOT’s Southcoast Region, said that if the Legislature delays the capital budget until July 27, the project will be delayed.

Other projects have also been affected, according to a list provided by DOT. Those include the effort to replace the ferry Tustumena, and projects to renovate roads and bridges from Ketchikan to Fairbanks.

During this year’s regular legislative session, the House passed one version of the capital budget; the Senate passed another

Informal negotiations between the House Majority and Senate Majority have reached the harvest phase, and lawmakers will take formal action next week.

“We wouldn’t risk coming down if we didn’t feel like there was a comfortable agreement,” House Minority Leader Charisse Millett, R-Anchorage, said by phone.

She said her caucus was preparing to arrive in Juneau by the evening of July 26, ready to start work the next day.

Under the Alaska Constitution, the approval of two-thirds of the Legislature is necessary to call a special session.

Gov. Bill Walker could also call a special session, but he is required to give 30 days’ notice beforehand.

If lawmakers call themselves into action, they can act more quickly.

Micciche said allowing informal negotiations outside of session will allow lawmakers to conclude their work quickly next week. Unlike during the first and second special sessions this year, lawmakers will not be collecting per diem payments while waiting for a small group of negotiators to finish their work.

“I think it’s a better operating philosophy, instead of being in special session, to do the one-dayer or two-dayer,” Micciche said. I think when we get to the end of the regular sessions, these remaining conference committee-type issues —it doesn’t require the entire Legislature waiting in Juneau doing technical sessions.”

Details of the compromise capital budget have not been officially released, but legislators familiar with the compromise said it does not include a boost to the Permanent Fund Dividend. Members of the House suggested including money in the capital budget to raise the dividend to $2,200 per person, but that idea was rejected by the Senate.

The agreement will also decide the future of funding for several Alaska megaprojects, including Juneau Access and the Knik Arm Bridge. Gov. Bill Walker has said the state will not advance Juneau Access, but funding for the road north out of Juneau has not yet been recommitted to other projects.

According to an outline of the deal obtained by the Alaska Journal of Commerce, the capital budget will look a lot like the version that passed out of the House Finance Committee in mid-June.

It is likely that half of the money remaining for the Juneau Access project will be reappropriated to other projects in the Lynn Canal area, as well as to fund a new school for Kivalina — a court-mandated project.

Similarly, half of the remaining funds for the Knik Arm crossing are to be divided amongst the Kivalina school, state ferry maintenance and other highway projects, according to the draft budget deal.

There is $5 million in state funds for the Knik Arm crossing and $47 million in Juneau Access funds available to be moved to other projects, according to DOT.

The plan would use about $122 million from the Statutory Budget Reserve Fund, which has $288 million left in it.

The agreement is also expected to determine how much money the state will spend on cashable tax credits to oil and gas explorers and small producing companies. It would add $20 million to the $57 million approved for oil and gas tax credit payments in the operating budget, bringing the total between the two to the statutory calculation of about $77 million, according to the outline.

Last week the Legislature passed a bill immediately ending cash outlays for the credits, but the state still owes almost $1 billion in already-outstanding subsidy claims.

Additionally, the deal would not pull any of the roughly $100 million the Alaska Gasline Development Corp. has to advance gasline projects. An amendment quietly added to the Senate’s capital budget — largely a political statement — would’ve pulled $50 million from AGDC for other state expenses.

House Finance Co-chair Paul Seaton, R-Homer, said in May when the move was made that the AGDC money would be duplicative, as the programs it would’ve supported were already funded in early versions of the operating budget. Seaton also said his caucus did not want to pull the rug out from under the administration’s pursuit of the Alaska LNG Project by taking back the previously appropriated money.

Contact reporter James Brooks at james.k.brooks@juneauempire.com. Journal reporter Elwood Brehmer contributed to this report. He can be reached at elwood.brehmer@alaskajournal.com.

Updated: 
07/21/2017 - 1:40pm

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