Bills moving, but Legislature will miss Easter adjournment

  • Senate Majority Leader Peter Micciche, R-Soldotna, makes a floor speech in support of Senate Bill 63, his proposed ban on indoor smoking, on March 27. Micciche said the Senate will miss its target of $300 million in budget reductions as “it’s not as easy to find cuts as it was three years ago.” (Photo/James Brooks/Juneau Empire)

JUNEAU — The Legislature will be at day 75 on March 31, 15 days away from its scheduled adjournment April 16, which is Easter Sunday.

Few in the capitol believe lawmakers will really gavel out the 2017 session on Easter — too much work remains — but no one wants a repeat of the 2016 extended legislative session that drug into July, either.

Almost all of the major bills for 2017 were being worked on by legislators last week, including a proposed increase in the state fuel tax, changes in workers’ compensation and an overhaul of a criminal justice reform bill passed last year.

A bill expanding prohibitions on smoking in buildings including places of work, in Senate Bill 63, passed the Senate March 27 and is now in the House.

On the budget — one of the big issues of the session — the Senate Finance Committee took up the state operating budget after formally receiving the House version in House Bill 26.

That bill was delayed in the House almost two weeks because of an extended period of floor action, five days in fact, with 134 budget amendments being advanced by House minority Republicans.

There were additional delays as House majority leaders tried to work with Republican minority on agreeing to an effective date clause for the budget, which the minority had failed to agree on when HB 57 finally cleared the House.

So as it is now written, the House version of the budget would become effective 90 days after final passage. In other words, to have the budget effective July 1, the start of the 2018 fiscal year, its final passage by the Legislature must come by April 1, which will not happen.

The effective date of the budget can be changed in the final conference bill for the spending plan, but it is one more procedural wrinkle that could add complications at the end of the session. If it is not done the state has no authority to spend money after June 30.

On other issues, the House Finance Committee spent the week mostly working on its version of Permanent Fund restructuring along with a personal income tax, both in House Bill 115.

Public hearings were held later in the week. Legislative committees traditionally write revised versions of bills soon after public hearings, so HB 115 may be moving out of the committee soon.

Meanwhile, the Senate’s version of Permanent Fund restructuring, in Senate Bill 26, is now in the House Finance Committee after having passed the Senate. It also contains a statutory spending cap of $4.1 billion that increases only by inflation.

The fuel tax increase, in SB 25, seemed likely to move from Senate Finance Committee by the end of the week. Sen. Anna MacKinnon, R-Eagle River, had asked for final amendments to the bill by March 29, a signal that the bill would soon move.

The fuel tax increase is generally favored by legislators because it is a kind of user fee, providing revenues that would be designated for highway and airport maintenance, for example.

The criminal justice reform bills, SB 54 and SB 55, are in the Senate Finance Committee, which held hearings last week.

The bills mainly solve problems that were spotted after a comprehensive bill passed last year, in SB 91. Merchants objected to a lessening of penalties in SB 91 for minor theft like shoplifting. That is being addressed SB 54 and SB 55 this year.

Another major bill of the session, House Bill 111, which raises taxes on oil producers, is being worked on behind closed doors in the House Finance Committee. A revised version will surface soon but there is no date yet, according to Finance Committee Vice ChairRep. Les Gara, D-Anchorage, who spoke in a March 28 briefing by House leaders.

The oil tax bill will likely be brought up for action after HB 115, the Permanent Fund and income tax bill, is voted out of the Finance committee. HB 111 is being promoted as a “fix” for problems with oil incentive tax credits not done last year in HB 247, which made some changes to credits and ended most in Cook Inlet.

This year’s bill does address tax credits but it also raises the minimum production tax paid by oil producers by 25 percent, from 4 percent to 5 percent, and makes other changes that indirectly raises taxes by reducing the per barrel production credits.

Senators will take a dim view of any oil tax increase, but Senate Majority Leader Sen. Peter Micciche, R-Soldotna, said the body is open to tinkering with tax credits, mainly because of concerns for obligations of state cash payments for the credits.

“We believe we have some exposure on the tax credits but anything we do will be to sharpen the program. We think that will be best for the state,” Micciche said in a March 20 briefing by Senate leaders.

On the budget front, in the March 27 briefing Micciche said the Senate operating budget will likely wind up with about $200 million in reductions to state agencies, which is short of the senate Majority’s goal of a $300 million cut this year. However, he said there will be efforts to gain another $100 million in savings through various systematic changes that will be pursued through the summer.

“We’re finding it’s not as easy to find cuts as it was three years ago,” Micciche said March 27. Many state agencies are now “right-sized,” and any major savings now have to come from structural changes involving major policy decisions, he said.

One area the Senate will pursue is health care costs, which are still rising and are a burden through all state agencies and public institutions, such as school districts, he said.

“We considered a tax on health care providers,” which many states have, Micciche said, “but the providers asked us to hold off for a year and to work with us over the interim. We will be assembling a panel of experts to tackle the issue,” over the summer, a process similar to that done with SB 74 last year, a bill that did a major overhaul of the state Medicaid program.

Legislators are waiting for a major study of state health care services that is due in June, and which is expected to make recommendations on changes that can save money including the pooling of state health benefit programs with those of school districts.

“I do believe there are significant savings that can be achieved by initiatives like these, and without affecting the classroom or other vital services,” Micciche said.

The House budget now before the Senate, in HB 57, did make a $62 million reduction in state agency spending, House Majority Leader Chris Tuck in a March 28 briefing. The overall total for the House budget, however, appears to be similar to amounts being spent in the current year.

Tuck said state spending has been substantially reduced in recent years and that it is now down to what was expended in 2007.

“However, if you adjust for inflation and population growth, we’re really back to 1977,” in the amount being spent per capita, he said.

Tim Bradner is co-publisher of Alaska Legislative Digest and a contributor to the Journal of Commerce. He can be reached at [email protected].

03/30/2017 - 1:43pm