Work in the state Capitol is now focused on what has to pass this year and what can wait until 2010. Bills introduced in the first session of a two-year Legislature remain alive through the second session if they are not passed in the first year.

Several bills are active as the 2009 session enters its final week including a proposed increase in the state minimum wage and a separate bill that would give cruise ships more time to meet stringent requirements for discharges from the vessels set out in a law created by citizen initiative.

U.S. Sen. Mark Begich, D-Alaska, speaks to a joint session of the Alaska State Legislature as Senate President Gary Stevens, R-Kodiak (left), and House Speaker Mike Chenault, R-Nikiski, listen in House chambers April 7 at the Capitol. AP Photo/Seanna O' Sullivan

House Bill 134, the cruise ship extension sponsored by Rep. John Harris, R-Valdez, has passed the House and is now in the Senate. The minimum wage increase, Senate Bill 1, sponsored by Sen. Bill Wielechowski, D-Anchorage, was scheduled to be acted on by the Senate April 8.

Two energy-related bills that likely will see activity include a bill that would extend the state motor fuel tax suspension, Senate Bill 14, and legislation eliminating the expiration of a $1 per kilowatt hour ceiling in the rural power cost equalization program, Senate Bill 88.

If the PCE bill doesn't pass, assistance on residential power cost assistance in rural communities will drop from the $1 ceiling to 52.8 cents per kilowatt hour, resulting in a substantial hike in residential electricity costs for residents in many small communities. The Senate approved the bill April 7.

Likewise, if the extension of the motor fuel tax suspension fails, the state's 8 cents-a-gallon tax on gasoline and diesel will kick in again in September. SB 14 was in the Senate Finance Committee on April 8.

In a briefing April 6, House Speaker Mike Chenault, R-Kenai, said there aren't many bills that must pass this year except for the budget, but he did say a bill providing a financial backstop to the state student loan corporation is a priority for him and many other lawmakers because without it the student loan corporation won't be able to sell bonds to fund higher education loans for the 2010-2011 school year.

Chenault also said he hopes a bill will pass that expands the authority of the Alaska Natural Development Authority, but the prospects for the bill are uncertain. The authority's enabling statute requires it to work on a pipeline and LNG project at Valdez and on getting gas to Southcentral Alaska. The bill would expand its authority to the supply of gas to any Alaska community.

Several bills will be held for interim work, including the governor's proposal for a restructuring of the Southcentral-Interior railbelt utilities through the creation of a jointly owned entity that would fund construction of new generation capacity. Some hearings have been held on the proposal, but legislators say it came in too late during the session and still does not have the uniform support of the six electric utilities in the railbelt. Power plants in the region are aging and need replacement, and some form of a jointly owned entity would allow the utilities to work together in financing new construction.

Chenault said the operating budget should be in conference committee by midweek. There are no significant differences between the House and Senate versions of the operating budget, and so reconciliation of the two should come quickly.

Meanwhile, work is continuing on the state capital budget, a separate appropriation measure. The capital budget is expected to be bare bones, with only the required state match to federal programs, a few critical state infrastructure items, and the federal stimulus projects.

Traditionally the capital and operating budgets are among the last items of business before adjournment, so final decisions on spending are typically not made until the very end, particularly in the capital budget.

The controversy over the federal stimulus funding seems to be waning. The governor has said she supports accepting mainly the capital items and an expansion of Medicaid funding through the stimulus program, amounting to about two-thirds of the $900 million-plus available to Alaska.

However, the governor said she does not support accepting the remaining one-third, which is mostly operating programs, much of it for education, because of strings attached that would affect the state budget when federal dollars run out.

Legislative leaders, however, say their investigation shows few if any strings attached, and are acting on resolutions to accept all funds available, Chenault indicated. Palin's views on this recently are unknown but she may have the last say in this through her veto power of items in appropriation bills. The Legislature must put the stimulus funding in an appropriation bill). Even if the Legislature were to override the vetoes, the governor must still instruct state agencies to apply for the funds

One new late-session initiative in the state House, by Rep. Clarisse Millett, co-chair of the House Energy Committee, is legislation creating a new state Department of Energy that would bring together energy functions now spread through many state agencies, such as the Alaska Energy Authority, Alaska House Finance Corp. and the Alaska Natural Gas Development Authority. House Bill 218 was introduced April 6.

There is no expectation that the proposal would be adopted in the days remaining in the 2009 session, but that it would be the subject to further work, including an energy summit between sessions. In a press release issued April 6, Gov. Palin endorsed the proposal.

In a longer-term perspective, it won't be known until this summer how much of a draw the state will have to take from the constitutional budget reserve to cover deficits in the current fiscal year, 2009, and the next fiscal year, 2010, which begins July 1.

The expectation at this point is that about $2.5 billion to $2.7 billion will be needed to cover the combined deficit, a significant portion of the approximate $6.6 billion now in the reserve.

Alaska North Slope crude oil prices have ranged between $45 per barrel to $50 per barrel in recent weeks, and as of April 6, the average price for the 2009 fiscal year so far was $69.15 per barrel compared with the Department of Revenue's estimate in December of $77.66 per barrel, considered the price needed for revenues in the current budget year to cover spending.