James Brooks

Nageak says he's not leaving lawsuit

In Thursday morning courtroom testimony, Rep. Benjamin Nageak, D-Barrow, said he’s not giving up on his attempt to overturn an August primary he lost. “Yes, I do want to continue to be a party in this case,” Nageak told Anchorage Superior Court Judge Andrew Guidi by phone. Nageak, who represents House District 40 (encompassing the North Slope and Northwest Arctic Borough) is challenging the results of August’s Democratic primary. He lost that race, 825-817, to fellow Democrat Dean Westlake. With no Republican in the race, the winner of the primary wins a seat in the Legislature. Over the weekend, Nageak attorney Tim McKeever filed a motion to withdraw Nageak from the lawsuit and replace him with several North Slope voters. Under state law, an election challenge can be filed either by the losing candidate or by 10 voters. McKeever appeared to subsequently withdraw that motion, but the action left confusion about Nageak’s role in the case. On Wednesday, Nageak said under oath that he didn’t have a problem with voters taking his place as plaintiff in the lawsuit. “I can’t do anything with it,” he said. “I need help, and I think there’s people out there who can do that for me, to speak on my behalf.” “To me, the testimony was clear,” said Thomas Amodio, an attorney for Westlake. On Thursday, under questioning from assistant attorney general Margaret Paton-Walsh, Nageak said he was unable to properly hear the questions and answered incorrectly. Nageak, who has hearing problems and uses a hearing aid in the Legislature, had been testifying by phone from a restaurant in Massachusetts. “I’m sorry, I’ve been over on the other side of the world, and I couldn’t hardly hear anybody,” he said. “I was in a really crowded place yesterday, in the middle of the street, sirens were blaring, and I’m in a quiet place now. I don’t want to be dropped from the lawsuit.” Under further questioning, Nageak said he was not aware that his attorneys were filing a motion to drop him from the lawsuit. In subsequent briefs, McKeever said the request to change the list of plaintiffs “inadvertently omitted Benjamin Nageak from the caption and list of parties.” The state and Amodio have challenged that assertion, believing that Nageak wants out of the lawsuit, and the addition of voters was an attempt to allow him to leave while continuing the suit. The trial is expected to conclude Monday, with Guidi rendering judgment soon thereafter. Speaking to attorneys Thursday, however, Guidi said the case “is apparently inevitably bound for appeal” to the Alaska Supreme Court. James Brooks can be reached at  [email protected]

Nageak wants out of election lawsuit

An Alaska lawmaker suing to challenge the results of his August primary defeat said on Wednesday he no longer wants to participate in the lawsuit. “I can’t do anything with it,” said Rep. Benjamin Nageak, D-Barrow, in testimony given Wednesday morning in Anchorage Superior Court. “I need help, and I think there’s people out there who can do that for me, to speak on my behalf.” Nageak testified by phone from Massachusetts. According to official, recounted results from the Alaska Division of Elections, fellow Democrat Dean Westlake defeated Nageak 825-817 in the House District 40 primary. That district encompasses the North Slope and Northwest Arctic boroughs. No Republicans have filed to run in the district, meaning that whoever wins the primary wins a seat in the Legislature. Since late last week, Nageak attorney Tim McKeever has filed a confusing array of motions that first withdrew Nageak from the lawsuit, then reversed that decision and left him as one of the plaintiffs. Under Alaska law, an election can be challenged legally by “a defeated candidate or 10 qualified voters”. The original complaint against the state listed four district 40 voters in addition to Nageak. In an amendment dated Sept. 23, Nageak was removed from the lawsuit and seven district residents added as plaintiffs. Also added was Randolph “Randy” Ruderich, the former chairman of the Alaska Republican Party, who does not live in District 40. That amendment was subsequently reversed, and in court documents, Nageak remains the primary plaintiff alongside four North Slope voters. In an order filed late Wednesday, Judge Andrew Guidi, who is overseeing the case, said Nageak’s testimony “raises the issue of whether Mr. Nageak is a party plaintiff.” The judge said that if Nageak’s involvement remains confused, he will have to testify again at 9 a.m. Thursday. If the court accepts the plaintiffs’ substition, the lawsuit can move forward without Nageak’s involvement. Under state law, the plaintiffs face a steep challenge in overturning the results of August’s primary. They must not only prove mistakes, they must prove those mistakes represented “malconduct, fraud, or corruption on the part of an election official sufficient to change the result of the election.” Wednesday was the second full day of a trial held in an Anchorage courtroom, and the trial is expected to continue through the end of the week. Guidi has said he wants to reach a verdict in the non-jury trial by Oct. 3 in order to allow the Division of Elections time to prepare for early voting ahead of November’s general election.

Fiber-optic cable connects Juneau and Haines with 28,800 lanes

On a cloudy Friday morning, in a tent on a windblown beach near the ferry terminal here, Rick Chislett delicately fed a glass fiber the thickness of a human hair into a piece of electronic equipment. “The first one’s OK,” he said after a minute. “We can see Juneau.” For northern Lynn Canal, those little words mean a great deal. After spending nearly $11 million and years in development, Alaska Power and Telephone has completed a fiber-optic cable from Haines and Skagway to Juneau. The cable is the first fiber-optic link between Juneau and the northern end of Lynn Canal and the first significant undersea fiber link constructed by AP&T. When it begins operating in mid-October, it will bring faster, more reliable internet service to Haines and Skagway — and possibly to Juneau and the Yukon. “We’re on a country road here,” said Tom Ervin, AP&T’s project manager, of existing internet service in Haines. “This is a six-lane superhighway.” That’s more than a little understatement. Right now, Haines and Skagway are connected by a microwave communications link to Juneau, where large undersea cables link the capital city to the outside world. That microwave link is about 70 percent saturated, and the percentage is rising rapidly as residents watch more movies on Netflix, play more video games and stream more music on almost a daily basis. It’s a global trend, not just one in Alaska. “Our microwave network will be maxed out next year,” Ervin said. The limits of AP&T’s network are apparent when cruise ships visit. “What happens, when we get a cruise ship here, the whole town is down,” said Mary Crann, a Haines resident who stopped while walking her dog to watch the work. “You can’t get a phone call. It’s worse, too, when you try to call — you can’t make calls out of here.” Don Phillips has lived in Haines for 53 years and remembers when residents had to only dial four numbers to make a local phone call. He now works for AP&T and is looking forward to retiring in a year and a half. “Hopefully it’ll alleviate some backing up, like when the tour ships come in. You can’t hardly make a cellphone call,” he said. “This is a big deal. … It never ceases to amaze me: Something so fine can do so much, so I think this is really going to help out the town.”   Rainbows and highways AP&T, Alaska’s third-largest telecom company, serves about 40 communities statewide, and upper Lynn Canal is its heartland. “This is really where the demand is: Upper Lynn Canal,” Ervin said. On Friday, contractors from International Telecom, a firm based in Atlantic Canada, pulled AP&T’s new connection ashore. A ship — the Silver Arrow — rested just offshore, trailing a line of buoys demarking the cable, which was maneuvered by divers and a guide rope into a conduit that led to shore. An AP&T pickup truck slowly pulled the guide rope through the conduit and a manhole vault. Following was the cable itself. Laying alongside Haines’ Lutak Highway, it was unassuming, a one-inch diameter snake with barber-poled yellow and black stripes obscured by gray muck. It was heavy and tough, like one of the cables holding the Golden Gate Bridge, and International Telecom’s Kevin DeMont revealed its construction as he cut into it with a grinder. The classic image of a cable is a thin layer of insulation packed with wires. In a spray of sparks, DeMont revealed the lie. He tore away one layer of wound steel wire, then another. “See, Mother Nature is just so powerful that you have to armor it,” explained Rob Copp of International Telecom. “It’s wrapped in steel, all the way around. It’s like single strands going around it and around it and around it, so that even if somebody grabs hold of it by mistake and starts to pull it, it’ll protect it.” Below the layers of wire was a plastic seal, another layer of steel wire, a copper tube, then three colored strands slightly thicker than high-test fishing line. Delicately, DeMont and Chislett (also of International Telecom) used wire strippers to cut the strands apart, revealing individual fibers color-coded for identification. One at a time, even more carefully, they removed microscopic color-coding and cladding to reveal the hair-width glass fibers within. These fibers, only one-quarter of a millimeter wide, are why AP&T has spent millions. They’re the bones of the internet here, in Juneau and around the world. No other mainstream technology can carry information as effectively and in such large volume. When Chislett said he could see Juneau, his equipment could literally “see” flashes of laser light sent 71 miles to the capital city and returned to him. A traditional copper telephone line can send one channel of information — one telephone call per line. A fiber-optic cable uses wavelengths of light to send its information, and many wavelengths can be transmitted simultaneously. Imagine a sunbeam as one channel of information. That sunbeam can be broken into a rainbow — many channels of information. Each color is a different wavelength, but all are within that same sunbeam, transmitted at the same time. AP&T has the capability to use 40 wavelengths in a single fiber — and there are 36 fibers in AP&T’s new cable. If AP&T’s existing service to Haines and Skagway is a two-lane road, a single wavelength is a 20-lane road. A single fiber is an 800-lane road. The cable as a whole is a road with 28,800 lanes.   Planning and paying Michael Garrett is AP&T’s current chief operations officer and spearheaded the development of the Lynn Canal Fiber system. At the end of this year, Garrett will replace Robert Grimm as the company’s CEO. Grimm is retiring after 44 years in the role. Standing in Juneau’s airport before a flight to Haines to inspect the cable, Garrett explained that for AP&T’s customers, the cable means upgrades in speed. Right now, Haines and Skagway customers are limited to 8-megabit home connections. When the cable is turned on, AP&T will be able to offer up to 30-megabit connections, speeds equivalent to what ACS offers in Juneau. For the company, the new bottleneck will be in Juneau, where ACS and GCI own the southbound cables and AP&T must buy access — at a high price, Garrett said. The cable has so much capacity that AP&T plans to initially use only four of the 36 fibers within. The others will remain dark until the company’s next plan comes to fruition. Currently, Whitehorse and much of the Yukon Territory accesses the internet through a single, often-severed overland cable. Backhoes and forest fires have severed the connection at various times this summer. “We’re ready, you know. We’ve got a pretty good idea to get to the border, but it’s them guys that need to figure out the funding and politics to get beyond the NorthwesTel monopoly,” Ervin said. A link over the border from Skagway to Whitehorse would give the Yukon a second route for Internet traffic, making service more reliable and faster. “The potential to empower the lives and livelihoods of residents in this region is tremendous,” Garrett said in the company’s latest annual report. Juneau and the rest of Southeast Alaska could also benefit. This region relies on undersea cables to Southcentral Alaska and the Lower 48 for its ordinary telephone and internet service. In 2014, an undersea landslide, triggered by an earthquake, severed an ACS cable and caused outages. Had the Lynn Canal cable connected Juneau to Whitehorse, internet traffic could have been routed overland — there would have been no outages. While AP&T provides some home and business internet services, it ordinarily operates as a “middle mile” company, one that prefers to sell internet services to other companies, which in turn sell to ordinary consumers. To fully resolve the cruise-ship-caused cellphone problems, companies like AT&T or Verizon would have to buy more bandwidth from AP&T’s cable. AP&T is making a big bet that those companies are willing to do that. The cost of the cable is equivalent to almost one-quarter of its entire gross revenue in 2015. Last year, it obtained a $9.9 million financing option for the project, but the company’s annual report noted that AP&T had shouldered most of the project’s burden to that point. Ironically, buying the fiber is one of the cheapest parts of the project. The associated electronics and the cost of laying cable represent the lion’s share of the cost. Forty people were mobilized on Friday to handle the landing, 31 aboard the Silver Arrow, which is being leased at $100,000 per day. At Lena Point on Wednesday afternoon, cable started splashing into the water over the ship’s stern. By Thursday night, it had reached Haines. Work at Skagway was expected Saturday. “This is the easy part for us,” Copp said. “Getting here is the hard part: all the paperwork, all the permits. Us laying? Simple. Simple.” It appeared so on Friday. AP&T had scheduled an entire day to get the cable ashore, but the work was finished by 11:30 a.m. Hard work remains — the cable must be spliced into connections on land, and new electronics must be installed (they’re being tested in Wasilla already), but the end of the beginning appears to be here. “It’s always nice when things go like they’re supposed to,” Phillips said.

Begich out - not considering run for Senate

The Alaska Democrat who lost his U.S. Senate seat two years ago is not planning a return this year. On Thursday morning, Mark Begich used a morning Anchorage talk-radio program to announce that he will not conduct a write-in campaign for Senate this fall. “What the future holds is unknown, but at this point in time, I feel it’s not right for me,” he told KENI-AM 650’s Mark Rydell. This fall, incumbent Republican Lisa Murkowski is defending her seat from a constellation of challengers including independent Margaret Stock, Democratic candidate Ray Metcalfe and Joe Miller, who has been a shooting star over the past six years. In 2010’s Republican U.S. Senate primary, Miller unexpectedly defeated Murkowski. The incumbent responded by launching the first successful write-in campaign for U.S. Senate since 1954. Miller ran for Senate again in 2014 but lost to Dan Sullivan in the Republican primary. Sullivan went on to defeat Begich in the general election. This year, Miller is running as the Libertarian Party's candidate, having announced his campaign on the last possible date. When that happened, Alaska Democrats began calling Begich, urging him to run. Their thinking: Miller, running to the right of Murkowski, might siphon votes from the incumbent, opening the door for a candidate to the left. “I have had — since Joe Miller got into the race — you can imagine the conversation,” Begich said. Begich said he was “surprised and honored” by the calls and emails he received, but “I feel it’s not the right time for me and my family.” “Sometimes politics is timing, but you’ve got to manage these things very carefully,” he said. Rydell asked Begich if he would predict a victory for someone or endorse a candidate. “I think it’s Lisa’s race to lose, to be frank,” he said. Despite that, he said no one should underestimate Joe Miller, who appears to have learned a great deal since he was defeated by Murkowski in 2010. “If you listen to Joe Miller, Joe has a much more controlled presentation. He’s not like he was six years ago. I think that election gave him a lot to think about,” Begich said. “Low turnout favors Miller, and I think it’s going to be low turnout … on the other hand, Lisa has a pretty broad base, and you have two other candidates.” A popular belief among state politicos is that Begich will be among the challengers to Gov. Bill Walker when he comes up for re-election in 2018, and Rydell asked Begich directly about that. “We’ll let the cards play out,” Begich said in response. He also referenced an editorial published by the Empire urging his selection as Secretary of the Interior if Hillary Clinton is elected president. “Speculating on me is more speculating than speculating on the stock market,” Begich said about the editorial. While Begich made no firm commitments, Rydell believes a run for governor is in his future. “I imagine Walker’s people are pulling their hair out right now, because that’s what this implies,” he said after Begich hung up the phone.

State certifies District 40 election results but recount imminent

The official results are in: Dean Westlake has defeated incumbent Rep. Benjamin Nageak by four votes, 819-815. The official word isn’t likely to be the last word, however. “I can safely say they will ask for a recount,” said Maridon Boario, a staffer for Nageak, by phone on Tuesday afternoon. The four-vote margin is significant because five ballots from Nageak’s House District 40, which covers the North Slope, remain uncounted. The ballots, absentee votes from the village of Ambler, were received on time by local officials but had not arrived in Juneau to be counted by Tuesday. Why not just wait for them to arrive? “We did ‘just wait,’” said Josie Bahnke, head of the Division of Elections. Alaska statute 15.15.440 declares that “A(n) (election) certificate not actually delivered to the director by the close of business on the 15th day after the election may not be counted at the state ballot counting review.” That would have made the deadline Thursday evening, but Bahnke waited through Friday and Tuesday as a precaution. In that time, more than a dozen absentee ballots arrived (and were counted) from District 40’s Browerville precinct, allowing Nageak to close the gap to just four votes. In addition to the tardy Ambler ballots, the state still has not received absentee ballots from rural portions of the Kodiak archipelago, St. George Island, or Arctic Village. Alaska statute 15.15.440 gives the director of elections the ability to use his or her judgment to call the election, and Bahnke made that decision Tuesday. “We waited beyond the time we needed to, and I think due to the closeness of the primary, we had hoped to receive them today, but at some point, we had to draw the line,” Bahnke said. “I’m sure I’ll get criticized for my judgment on it, but we decided to wait after that (Labor Day) holiday weekend and we would reconvene.” Factoring into Bahnke’s decision is the fact that Ambler, close to challenger Dean Westlake’s home town, voted heavily for Nageak’s opponent on Election Day. Of the 36 known votes cast there, 33 have gone to Westlake. The five outstanding absentee votes would have to completely break from that trend in order to affect the result of the election. Nageak — or 10 registered voters in House District 40 — must send a letter to the Division of Elections to request the recount. Because the race is within 20 votes or 0.5 percent of the total ballots in the district, the state will pay for the recount. Bahnke said the division is prepared to conduct the recount within a day if requested. “I can’t predict that they’re going to request it (but) I’m expecting them to,” she said. Even though it’s just a primary election, the Nageak-Westlake contest matters because the winner will face no competition in the general election. Whoever wins here will join the Legislature in January. Nageak is a conservative Democrat who serves as a member of the Republican-led House Majority. In the primary, the Alaska Democratic Party and many traditional Democrats threw their weight behind his challenger. In November, Democrats hope to earn enough support in the House to force a restructuring of the majority, and replacing Nageak would be one step of that process. Republicans, meanwhile, have thrown their support behind Nageak in hopes of preserving their majority. In a statement Thursday, GOP chairman Tuckerman Babcock called the House District 40 election “illegal.” “Not only in Shungnak, but in the Barrow precincts as well, the process was so flawed that no one knows how the people really voted,” he said.

Telecom CEOs offer differing takes on Alaska economy

Alaska has two major telecommunications companies, each with its own target market, corporate strategy and — as was on display this week — belief in the future of Alaska’s economy. In the first week of August, General Communications Inc. and Alaska Communications Systems Group Inc. announced their second-quarter financial results, but what was more notable was their CEOs’ attitudes about the stability of Alaskan business in the wake of the Alaska Legislature’s failure to completely erase a multibillion-dollar budget deficit. “The governor and the Legislature have basically given up” on balancing the state’s budget in the near term, GCI CEO Ron Duncan told investors and analysts in a remarkably pessimistic phone call on Aug. 3. The following day, Alaska Communications CEO Anand Vadapalli showed a notably upbeat attitude toward the future. “We expect an acceleration of growth,” he said of his company’s forecast. The companies’ different views are a microcosm of the way Alaskans themselves are divided about what the state’s unresolved deficit means for Alaska. At current rates of spending, according to Gov. Bill Walker, Alaska will run out of savings to balance the budget by 2020. Even before that deadline, Alaskans will see economic impacts — the loss of the Alaska Permanent Fund Dividend being only the most obvious example. If nothing is done by 2020, the state will confront a choice between bankruptcy or enormous tax increases to balance the books. Lawmakers and the governor are expected to take action before that 2020 deadline, but the effect of spending cuts and possible tax increases is unknown: Will it trigger a 1980s-style Great Alaska Recession, or has the state diversified enough to shrug off a reduction in government spending? “We’re expecting the size of the market to compress rather than continue growing,” Duncan said. “We’re going to see some loss of population over the next several years up here.” For GCI, that would have a significant impact. GCI makes a large proportion of its money from individual consumers, people who buy cellphone plans and home Internet. Fewer Alaskans means less business for GCI. While AT&T has the most Alaska cellphone customers of any single provider, according to published figures, GCI is No. 2 and is No. 1 by far in home internet. Duncan was the founder of of Alaska’s Future, a coalition intended to pressure the Legislature into action to balance the budget. That didn’t work, and Duncan has now laid out a dim forecast. GCI is now cutting back its plans for new construction in 2017. Instead of spending $210 million on infrastructure, it now expects to spend between $158 million and $168 million. Duncan said he expects any effects of the Legislature’s actions (or lack thereof) to show up in the fall, but GCI is already seeing a rise in prepaid cellphone customers and a drop in postpaid customers, people who pay bills as a result of a defined contract. Prepaid cellphones are more popular among poorer Americans and those whose financial situation is unstable. Over the past year, GCI’s share price has declined from $19.06 per share to $13.70 per share. “We are seeing the state economy having an effect,” said GCI’s Chief Financial Officer Peter Pounds. Look through the lens of Alaska Communications, GCI’s principal Alaska-based competitor, and the view is different. Alaska Communications focuses on service to businesses, not individuals, and those sales grew 8.6 percent when compared to the same period last year. CEO Vadapalli said he expects to improve in the second half of the year. Because Alaska Communications doesn’t have “the same exposure to the consumer business that our competition does, there’s a difference in how we are positioned in the marketplace,” he said. Alaska Communications’ share price was $1.70 per share on Thursday, down from $2.12 per share a year ago. Vadapalli said that “without doubt, there are some tough choices ahead for the state,” but Alaska isn’t in the same place it was in the 1980s, when plunging oil prices caused a recession, a series of bank failures, and a collapse in housing prices. The state’s economy is more diverse, and there are more businesses in the state that are divorced from oil and government. That doesn’t mean those businesses won’t see some effects from a drawdown in oil and government, however. “From our perspective, businesses are really thinking hard and thinking out of the box” to mitigate those effects, he said. Thinking outside the box might include better integration into the Internet economy, online marketing or other things that Alaska Communications makes possible. “Frankly, as I like to say, when oil is $100 a barrel, there is no incentive for people to think differently,” he said. He referred to an Anchorage Economic Development Corp. report that called the state’s current economic situation a “pinch,” not a “punch.” “I believe that Alaskans and Alaska businesses are more resilient than people give us credit for,” Vadapalli said. “I have that confidence in us.” Contact Empire reporter James Brooks at [email protected] or 523-2258.    

Senate follows House's lead, adjourns special session with no budget fix

JUNEAU — Lawmakers have officially ended the fifth special session of the 29th Alaska Legislature. At 11:45 a.m. Monday, Senate President Kevin Meyer, R-Anchorage, dropped the gavel on the Senate’s session, following in the path of the House, which gaveled out on Friday. Under Article II, Section 10 of the Alaska Constitution, if the Senate had not gaveled out, it would have forced the House to return to Juneau for additional work. With the House unable to make progress on a fix to the state’s $3 billion budget deficit, that action had been considered unlikely. “It is disappointing … to stand ready to work and have our friends in the other body not be able to move forward,” said Sen. Anna MacKinnon, R-Anchorage. MacKinnon’s remarks followed those of Senate Majority Leader Berta Gardner, D-Anchorage: “To say I’m disappointed feels inadequate.” During the 29th Legislature second regular session and the two special sessions that followed ─ 157 working days in total ─ the Senate took the lead on most of the substantive bills passed by lawmakers this year. Medicaid reform, criminal justice reform, the state budget, reform of the Power-Cost Equalization program, reform of community revenue sharing and a new military code of justice came from the Senate before advancing to a divided House of Representatives. In their valedictory addresses Monday, senators said they accomplished much, even if they didn’t fix the state budget. Sen. Pete Kelly, R-Fairbanks, called that missing action a “cornerstone” piece of legislation. Sen. Dennis Egan, D-Juneau, declined to deliver remarks he prepared for the end of the session, but in a copy of the speech he provided to the Empire, he says he wishes “we’d have stayed to figure out how to pay for the stuff in the budget ─ long term. There was room to work on what the (Permanent Fund Dividend) amount should be. There was room to work on what the budget should be.” According to Gov. Bill Walker, the Legislature’s inability to pass a budget-balancing bill leaves Alaska, as of July 1, with 36 months of savings. • Contact reporter James Brooks at [email protected]  

Alaska has 36 months of savings remaining

JUNEAU — The Alaska House of Representatives has adjourned the fifth special session of the 29th Alaska Legislature. At 2:31 p.m., lawmakers agreed to leave Juneau after five days. House members held no committee hearings or votes on resolving Alaska’s $3 billion budget deficit, and they also failed to muster enough support to override any of the $1.3 billion in budget vetoes signed by Gov. Bill Walker on June 29. “Alaska’s indeed in a fiscal crisis. It’s epic. It’s huge, and we’re all in shock of it,” said Rep. Wes Keller, R-Wasilla, speaking on the floor before adjournment. While the Alaska Senate passed a measure to partially resolve the deficit by spending a portion of the earnings of the Alaska Permanent Fund, the House failed to even vote upon the approach, which failed in the House Finance Committee. As a result, at present rates of spending, the state of Alaska will run out of financial reserves in 36 months, according to an analysis presented Thursday by Walker. Earlier in the week, the House formally requested to meet in joint session to override one or all of Walker’s 41 budgetary vetoes. The Senate, which is controlled by a majority that favors larger budget cuts than the House majority, turned the invitation down. “We’re elected to get the job done. What we did ─ my personal opinion is we should’ve tackled each one of those vetoes veto by veto. I’ve got time to spend. That’s what we’re elected to do,” said Sen. Dennis Egan, D-Juneau and a member of the Senate minority. Speaking Friday, Senate President Kevin Meyer said Walker’s vetoes were actually what the Senate majority was seeking. “There were some advantages to the vetoes in the sense that (Walker) did actually reduce the budget,” Meyer said. The Senate is scheduled to meet at 11 a.m. Monday and is all but certain to follow the lead of the House and officially end the special session. Before Speaker of the House Mike Chenault requested to adjourn the House for good, representatives stood up and offered their thoughts on their failure to consequently address the deficit. With the primary election one month away and the general election less than four months distant, most of the remarks had the air of campaign addresses. “There’s political gain to throw different political entities and people under the bus,” said Rep. Lance Pruitt, R-Anchorage and a candidate for re-election. Several lawmakers laid blame for the budgetary failure on Walker, with Rep. Craig Johnson, R-Anchorage and a candidate for state Senate, issuing the hardest words. “In my opinion, Walker has stolen $1,000 from each and every (Alaskan),” Johnson said, referring to Walker’s halving of the Permanent Fund Dividend. Instead of $2,000 per person, the dividend will be $1,000 per person. Johnson said that cut is the equivalent of a regressive income tax. “It will suck the life out of our economy,” he said. Johnson also spoke about Walker’s comprehensive plan for erasing the deficit with mild tax increases and spending from the earnings of the Permanent Fund. “This governor has not proposed a fiscal plan. What he has proposed is a spending plan. More spending, more taxes, more government and less money in the pockets of Alaskans,” he said. Rep. Shelley Hughes, R-Palmer and a candidate for the state Senate, agreed with Johnson’s sentiment. “I think it’s a blessing in disguise,” she said of the budget crisis, explaining that it is forcing Alaskans to consider the correct size of government and may force them to pull together. Rep. Cathy Muñoz, R-Juneau and a candidate for re-election, took the opposite approach. “I think the governor demonstrated a great deal of courage in his actions,” she said. While she may not agree with all of his vetoes, she said she supports his restructuring of the Permanent Fund and urged her fellow legislators to “avoid the blame game.” Rep. Bob Herron, D-Bethel and a candidate for re-election, said the governor should have vetoed the entire dividend in order to force legislators to act. He added that he regrets that he didn’t get a chance to vote on each element of the governor’s plan. “We should’ve debated them all,” he said. “We should have voted on them all. You can defend a ‘yes’ vote. You can defend a ‘no’ vote. But indecision cannot be defended.” Pruitt, seeming to speak to Alaskans at home as well as his fellow lawmakers, urged them to keep hope alive. “The one thing that I want to ask of you … is don’t give up on Alaska,” he said. “Don’t give up on Alaska. Don’t give up on the process. Don’t give up on the people.” James Brooks can be reached at [email protected]

Rep. Wilson files ethics complaint against Gov. Walker over press release

Rep. Tammie Wilson, R-North Pole, has filed an ethics complaint against Gov. Bill Walker for a statement included in a press release issued from Walker’s office on Wednesday morning. The press release, which accompanied a six-page report outlining the consequences if the Legislature fails to balance the state budget, concluded with this paragraph: “I will ask every legislator and every candidate for the Legislature to choose which of these three plans they support. Failure to choose a plan will constitute support for the No Action Plan (NAP). After Alaskans become familiar with the type of Alaska each of these three plans represents, voters will be much better informed about who should represent them in Juneau.” The Alaska Republican Party, in a statement responding to the governor’s press release, said in part that “‘I will ask every legislator and every candidate…’ is code language for using the governor’s bully pulpit as a campaign stump.” In a press conference Thursday morning, Walker said he has not ruled out the possibility of offering his support to legislators or candidates for the Legislature in this fall’s election. Given his recent veto of half the Permanent Fund Dividend, “right now, I don’t know if I could help anybody,” he said. “I’m not sure if that would be any help.” Wilson said she agreed with the Republican Party’s assertion and “to me, what he said today actually sealed it. He meant exactly what he wrote and then said.” While it’s not illegal for a sitting governor to support a candidate for office, the governor cannot use state resources to do so. The Alaska Executive Ethics Act states that a public official cannot “use or authorize (a) ... government asset or resource for partisan political purposes.” In this case, Wilson’s complaint alleges that Walker’s official press release was used to do so. Walker responded to the Republican Party’s accusation with a prepared statement Wednesday. “I want to clarify that I am not trying to influence an election. I am trying to inform the public about what the legislature’s own analyst has called the ‘gravest fiscal crisis in state history,’” Walker wrote. “I want Alaskans to know the consequences of action and inaction. I regret any misunderstanding this may have created.” Similar complaints have frequently been levied against sitting governors. In 2014, Gov. Sean Parnell was the target of a complaint by the Alaska Democratic Party. Gov. Sarah Palin was a frequent target of ethics complaints (most were dismissed) before she resigned. In a 2009 legal opinion pertaining to one of the complaints against Palin, the Alaska Department of Law outlined the process that is followed when a complaint is filed against a sitting governor. Normally, the attorney general investigates ethics complaints. When the complaint is against the governor, the state personnel board appoints an independent counsel to act instead. The counsel investigates the issue and may dismiss the matter. If the complaint is not dismissed, the counsel issues a public accusation. This is followed by an evidentiary hearing in front of the personnel board. In the hearing, the board may penalize the defendant if the complaint is justified. Jonathan Woodman, an attorney with the Alaska Department of Law who is familiar with the process, said there is no set timeline for the process. Wilson isn’t the only person filing a complaint, either. On Thursday morning, Andrée McLeod of Anchorage announced she was filing a complaint along the lines of Wilson’s. In a letter attached to her complaint, she says the governor’s press secretary and assistant “can’t actively run a political campaign from his state office for or against legislators and candidates.” McLeod’s complaint also states that Walker’s “plan to identify, target and brand legislators and candidates during this election season also runs afoul of campaign finance laws and regulations within the purview of the Alaska Public Offices Commission.” McLeod was a frequent watchdog when it came to the Palin administration. She repeatedly filed requests for information and ethics complaints in an attempt to make sure public officials follow public records laws when they communicate, she said in 2009.  

Senate to decline veto override session

JUNEAU — The Alaska Legislature is poised to adjourn its fifth special session without taking any action to address the 49th state’s multibillion-dollar deficit. On Thursday, Alaska Senate President Kevin Meyer said by phone that the Senate will turn down an invitation from the House to consider overriding any of the budgetary vetoes signed by Gov. Bill Walker on June 29. “It does appear there isn’t the support to accept the invitation to meet with the House for potential veto overrides,” he said. The Senate’s decision leaves the deadlocked House with few options but to adjourn. Speaker of the House Mike Chenault, R-Nikiski, said the House Majority will meet in closed caucus to decide its next action. The House is scheduled to meet at 1 p.m. Friday. The Senate will meet at 11 a.m. Friday. Both floor sessions are in Juneau’s Terry Miller Building. There is little appetite in the Senate to override any of Walker’s $1.3 billion in vetoes, an act that would increase the state’s deficit. On the opposite side, there is little appetite in the House to consider any revenue increases similar to those passed by the Senate. The House has failed to hold a hearing on any matter since the start of the 29th Legislature’s fifth special session on Monday. Due to oil prices’ plunge, the state is expected to earn about $1.5 billion per year. To make ends meet, it needs $4.5 billion per year. The state is expected to exhaust its available savings by 2020 unless matters change. Earlier this year, the Senate approved Senate Bill 128, a measure that would allow the state to spend almost $2 billion per year (at present values) on state services from the earnings of the Alaska Permanent Fund. The House Finance Committee failed to advance SB 128 to a floor vote in the previous special session, an act that killed the best chance for significant new state revenue. Few minds have changed in the House since then. The Alaska Constitution requires 45 votes from the 60-member Legislature to override a gubernatorial veto of a financial item. “Forty-five is such a big number,” Meyer said. “Forty-five is three-quarters of the Legislature, and getting three-quarters of the Legislature to agree on anything is pretty hard.” While most members of the House are in favor of overriding at least one veto, they don’t agree on which ones. Democrats have tended to favor the restoration of education and university spending. Republicans have tended to favor the restoration of the Permanent Fund Dividend, which was halved from $2,000 to $1,000 by Walker. Furthermore, not all the members of the House are expected to be present on Friday, and an absent member is just as good as a “no” vote when it comes to the final tally. “We can all do the math,” Meyer said, and even if all 38 of the House members expected to attend voted to override a veto, “that would still require at least seven from the Senate to support them. That’s pretty tough to do.” “If you don’t think you’ve got the votes to pass it, then why pay the expense to do it when you know that you’re going to fail?” Meyer asked. Some in the House have responded that it’s worth it to simply try, he added. “I get that, but I also get that they’re also running for election,” he said. In this year’s budgeting process, the Senate suggested significant cuts to the state budget. To gain the votes of the House majority, the Senate had to restore some funding. To get the votes of the House minority, senators had to reverse themselves still more. As Meyer explained, Walker’s vetoes gave senators what they wanted — bigger cuts to government. In a press conference Thursday morning, Walker said he’s done everything he can do to address the state’s fiscal crisis. “Sixty Alaskans hold Alaska’s future in their hands,” he said. “It’s really in their hands at this point.” James Brooks can be reached at [email protected]

Little optimism in House to succeed in veto overrides

JUNEAU — The Alaska House of Representatives has asked the state Senate to join it for a joint session at noon Friday for the purpose of overriding some or all of $1.2 billion in budgetary vetoes signed by Gov. Bill Walker. That includes Walker’s cut to the Permanent Fund Dividend. Before the state fiscal year began July 1, Walker demanded that the Legislature implement a comprehensive fiscal plan to erase Alaska’s multibillion-dollar budget deficit. When lawmakers failed to do so in a regular session, an extension of that regular session, and in a special session, Walker halved the dividend ($666 million), eliminated $430 million in oil and gas drilling subsidies and cut $190 million from agencies and education from K-12 to the university system. The Alaska Constitution requires the Legislature to override a veto within five days of the start of a special session following the veto. Friday will be the fifth day and the last opportunity to override any of Walker’s decisions. Daniel McDonald, a spokesman for the Alaska Senate Majority, said by email that senators “received the letter and the issue is being discussed among the caucus.” If the House and Senate agree to meet on Friday, they will go line by line through each of the 41 vetoes. There must be a “yes” vote from 45 of the Legislature’s 60 members to override the veto. It will not be easy. “Most legislators don’t think there’s any chance,” said Rep. Mark Neuman, R-Big Lake. While there is broad agreement on voting to override some of Walker’s vetoes — House majority leader Charisse Millett, R-Anchorage, and House minority leader Chris Tuck, D-Anchorage, are working together — there is broad disagreement about what exactly should be restored. “Every one of us has a priority of the items that were vetoed … but I also think that there’s such as spread in what was vetoed that it will be very difficult for any one individual item, perhaps, to get the support to be overridden,” said Rep. Sam Kito III, D-Juneau. Kito said he favors an override on the governor’s cuts to education, school bond debt reimbursement and to the university system. “We still have to educate our students. We still have to make sure we’re supporting our schools,” he said. Of the opposite viewpoint is Rep. Lynn Gattis, R-Wasilla. “I’m pushing for a Permanent Fund Dividend veto override. I would have to say that it’s not just my thought, but the folks in the Mat-Su are mad,” she said. “They want me to push for that. I think for them, it’s about how dare this governor think that he’s going to do this without making the significant cuts and the cuts to all government?” Kito and Gattis are emblematic of the Legislature’s divide and the divide in Alaska as a whole. At a Wednesday afternoon Senate State Affairs Committee meeting in Wasilla, Sen. Bill Stoltze, R-Chugiak, offered plenty of barbs for administration officials as the chanting of demonstrators was clearly audible through the walls of the Wasilla Legislative Information Office. Early Wednesday, Walker’s staff released a six-page report explaining that there will be dire consequences if the Legislature fails to raise new revenue through taxes, spending from the Alaska Permanent Fund, or some combination of the two. By 2020, the state would be forced to operate with as little as one-third of the budget it has today. That would result in prisoners being released from jail early, mass layoffs and other unsavory actions, the report states. But big cuts have big support in some areas of the state. Gattis said she doesn’t see all of the bullet points on Walker’s report as bad things. “I choose to say that it allows us to take action, the very action we need,” she said. With other industries cutting back, it makes sense for government to do the same. “When you don’t have money — and it’s kind of a bumper sticker — but if you’re broke, you have to act like it.” “It’s clear now: We have a serious fiscal crisis,” Walker said in a prepared statement. “How we deal with this crisis will define us all — with no less than Alaska’s future hanging in the balance. I therefore expect, and all Alaskans should demand, compromise and affirmative action by this Legislature on a comprehensive solution to our massive budget deficit during this special legislative session.” Walker went on to say that after Alaskans become familiar with the options in front of them, “voters will be much better informed about who should represent them in Juneau.” The Alaska Republican Party issued a statement saying it considers Walker’s statement a threat to campaign against lawmakers who vote against his fiscal ideas. If that’s the case, it could be a violation of the state’s Executive Ethics Act, which prohibits “use or authorize the use of state funds, facilities, equipment, services, or another government asset or resource for partisan political purposes.” “Gov. Walker issued a press release this morning in which he not only threatened sitting legislators, but strongly inferred he would campaign against anyone who doesn’t answer his specific questions about addressing the budget gap,” said Rick Whitbeck, vice chairman of the Alaska Republican Party, in a prepared statement. “He has stepped over the line when it comes to misusing the office. Alaskans have to ask themselves if he’s violated the Executive Branch Ethics Act.” “It might’ve hurt him a little bit with some of his relationships with legislators,” said Tuck, the leader of the House Democrats. Later Wednesday, Walker issued a statement regarding the ethics charge: "While it has been determined that the statement I made about the upcoming election was not a violation of the ethics act, I want to clarify that I am not trying to influence an election. I am trying to inform the public about what the legislature's own analyst has called the 'gravest fiscal crisis in state history.' I want Alaskans to know the consequences of action and inaction. I regret any misunderstanding this may have created.” Contact James Brooks at [email protected]

Another special session called after House fails to pass fiscal plan

JUNEAU — It’s over, but not done. At 11:46 a.m. Sunday, the Alaska Senate adjourned the fourth special session of the 29th Alaska Legislature. Forty minutes later, Gov. Bill Walker issued a proclamation stating that the fifth special session will begin on July 11. On its agenda will be three items: Using the earnings of the Alaska Permanent Fund to pay for government operations, reforms to the state’s system of oil and gas tax credits, and a suite of tax increases. “I am absolutely convinced that if we don’t fix this now, then our challenges next year will be even more magnified,” Walker said in a press conference Sunday afternoon. All three items were on the agenda for the fourth special session, too. “I feel horrible about it. We didn’t get anything done,” said Sen. Dennis Egan, D-Juneau, after the Senate adjourned Sunday morning. “Alaska’s still in a deep fiscal strait and it’s got to be fixed.” Despite 149 days of work so far, the Legislature has failed to pass measures that would balance Alaska’s state budget without deep draws from the state’s savings accounts. Walker proposed a 13-point plan to resolve the deficit, but lawmakers failed to pass any measures raising taxes or providing new revenue. While lawmakers did cut hundreds of millions of dollars from the state budget — which is now down approximately 30 percent from two years ago — Alaska still has a $3.2 billion-plus deficit in the fiscal year that starts July 1. “It would’ve been nice to be able to complete (a fiscal plan), but to be fair, these are tough decisions,” said Senate Majority Leader John Coghill, R-North Pole. “There’s no easy decisions left, and so the House and Senate just could not agree on a methodology.” Walker implied Sunday that the Legislature’s inaction means he will use his veto pen liberally before the budget takes effect. “The size of government may be quite a bit different once this budget is complete,” he said. He has 11 days to make vetoes before signing the budget. Walker did not rule out cuts to the Permanent Fund Dividend, even when pressed on the issue. “I’d say at this point, all options are on the table,” he said. The biggest of the many stumbling blocks between the governor and Legislature was Senate Bill 128, which called for a 5.25 percent annual draw from the Alaska Permanent Fund. The draw, which would be from a five-year average of the Fund’s value, would pay for the Permanent Fund Dividend and provide money for state services. “This doesn’t fix all the problem, but this is the cornerstone of it,” Walker said of the bill. As a side effect of the bill, however, the Dividend would be cut as low as $1,000 in the version passed by the Senate. The House Finance Committee amended language to increase this year’s PFD to $1,500, but committee members still failed to move it to a floor vote. Without SB 128, or a line item veto, the dividend is expected to be about $2,000 this fall. The Senate voted 14-5 in favor of the bill earlier this month, but the House Finance Committee voted 5-6 on Friday against advancing the bill to a vote of the full House. Walker has previously said that preserving the full dividend is unacceptable. Without changes, he has said, the state will not have sufficient savings to take major action next year. “Do we have to run out of savings before we fix the problem?” Walker asked rhetorically. “The time to act is now, and we support the governor on that,” said Senate President Kevin Meyer, R-Anchorage, about the House’s failure to pass the bill. Special session agenda Neither of the two failed bills made it onto Walker’s agenda for the fifth special session. That agenda is headlined by SB 128. “I spoke with the governor this morning, and obviously the main bill that he wants is SB 128,” Meyer said. The agenda also includes tax increases that gained no traction in the House and additional reforms to the state’s system of oil and gas subsidies. The tax package also includes the possibility of a sales tax, which many legislators have said their constituents could support as a broad-based tax over the administration’s income tax proposal. Proponents of a state sales tax tout it as a way to extract revenue from the nearly 2 million visitors to Alaska each year. Walker and members of his administration have reiterated since introducing the income tax idea in December that implementing the mechanics of a sales tax in rural areas of the state would be a significant challenge. Additionally, a standard percent of purchase sales tax would almost unavoidably hit remote communities harder than urban areas even with traditional exemptions for essential items, given the higher cost of all goods and services. Walker said he has not decided whether to veto House Bill 247, passed by the Legislature during its fourth special session. That bill contains cuts to the credit system but preserves a mechanism that allows North Slope explorers and producers to receive refunds or deductible production tax credits for operating losses incurred during periods of low oil prices or high development costs. Some lawmakers, particularly in the House, said the bill does not cut the subsidy enough. Walker could propose further cuts or veto the bill entirely as a means to force action. He told reporters they shouldn’t “read too much into” the inclusion of oil and gas tax credits again on the special session agenda. “A lot of good work was done on (HB 247). I appreciate that and I will evaluate that and take that into consideration,” he said. Walker said he expects lawmakers to “do what they need to do” during the interim, including talking to constituents. Asked whether the interregnum between special sessions could result in reduced support for SB 128, Meyer said he doesn’t think that’s likely in the Senate. “I think the Senate’s pretty comfortable in the vote that they made, and we would make that same vote again in July,” he said. “I don’t think there’s any risk on our part of losing support in the Senate.” He said he’s received more positive comments than negative ones since the Senate voted on SB 128, and he believes that some House members might change their opposition if they listen to constituents before the start of the fifth special session on July 11. No benefits for families of slain police The Senate’s adjournment kills two bills passed by the House in the final days before its adjournment. HB 4002, which passed the House in a 34-0 vote Saturday, calls for 10 years of medical benefits for the spouses and children of police and firefighters who are killed in the line of duty. The children must not be older than 19, or 23 if they are still attending college. The benefits cover any peace officer or firefighter who is a member of the Public Employees Retirement System. This includes many municipal officers, corrections officers and some volunteer firefighters statewide. House Bill 246, which passed the House 30-6 on Friday, sets up an oil and gas infrastructure loan program under the state-owned Alaska Industrial Development and Export Authority. Under the bill, drilling companies would have been allowed to apply for low-interest loans as a subsidy instead of using the state’s controversial tax-credit incentive program. Meyer suggested the two bills could be revived in the 30th Alaska Legislature, which will convene in January 2017. Journal reporter Elwood Brehmer contributed to this story.

House committee kills bill to use Permanent Fund earnings

JUNEAU — The Alaska House Finance Committee has failed to advance the heart of Gov. Bill Walker’s 13-point plan to erase the state’s deficit, leaving the state on track to run out of savings within six years. About 12:40 p.m. Friday, the committee voted 5-6 against advancing Senate Bill 128 to a vote of the full House. SB 128, already passed by the Senate, calls for a regular draw from the Alaska Permanent Fund to pay for state services and the Permanent Fund Dividend. Despite months of advocacy by the governor and his staff in town-hall meetings across the state, many Alaskans remain opposed to the measure, which includes cuts to the Dividend. On Friday morning, members of the House committee said they were listening to their constituents’ opposition and voting against the bill, even though it would go further than any other measure to close the state’s deficit and stretch Alaska’s savings accounts for years. “We have not cut the budget enough, and our constituents don’t support it,” said Rep. Dan Saddler, R-Eagle River, before voting against the advance.  

Nearing end, Legislature rebuffs most of Walker’s deficit plan

JUNEAU — After 137 days in regular and special session, the Alaska Legislature may be nearing an end to its work. “I know we’re not done yet, but I think we’re close,” Senate President Kevin Meyer, R-Anchorage, declared on June 6. Both houses of the Legislature have stopped work to allow Juneau’s biennial Native event, Celebration, to take place. No significant Legislative action is scheduled before June 13. While the Legislature may be nearing the end of its long stay in Juneau, its long-term goal remains unfulfilled: Alaska still has a multibillion-dollar budget deficit. In December, Gov. Bill Walker proposed a 13-part plan to resolve that deficit by 2019. Here’s where each part of that plan stands: • Permanent Fund spending: passed Senate, awaiting House. The biggest part of Walker’s plan to erase the deficit is the notion of using earnings from Permanent Fund investments to partially fund state operations. Senate Bill 128, drafted by Sen. Lesil McGuire, R-Anchorage, calls for a 5.25 percent annual draw from the fund’s Earnings Reserve. At current amounts, that would generate about $1.8 billion. As a consequence, the Permanent Fund Dividend would be $1,000 for the next three years and lower after that. Without changes, the dividend was expected to be about $2,000 this year. • Capital budget: passed Senate and House. The state’s capital construction budget passed the Legislature in the special session on the last day of May. It contains less than $100 million in state money; most of that will be used as matching funds for $1.2 billion in federal transportation money. • Operating budget: passed Senate and House. The Legislature passed an operating budget worth about $4.3 billion. That’s a cut of almost $800 million from the current fiscal year, but the Legislature also approved some expenses that don’t fall within the new budget: There’s $430 million in subsidy payments to oil and gas companies, for example, and Gov. Bill Walker has argued that the Legislature’s cuts are somewhat of a mirage. • Mental health budget: passed Senate and House. The budget for the state’s comprehensive mental health system is a separate item every year, and it tends to be uncontroversial. This year’s was no different. • Oil and gas tax credit reform: passed Senate and House. House Bill 247 promises savings of up to $10 million in the next fiscal year, but the savings add up in future years, reaching more than $200 million per year by 2025. Still, that’s much less than had been offered by a version of the bill that passed the House but was rejected by the Senate. • Oil and gas loan program: unpassed. House Bill 246, introduced by the governor, was intended to create a loan program replacing the state’s oil tax credit subsidy for drillers. The reform bill that passed the Legislature failed to eliminate the tax credit subsidy, so the need for HB 246 is uncertain. • Mining tax increase: unpassed. House Bill 4005 would increase by 2 percentage points the tax on mines with profits of more than $100,000 per year. The result would be about $7 million more per year for the state. The bill as yet lacks the votes to pass the House, lawmakers have said. • Fisheries tax increase: unpassed. House Bill 4006 would increase most fisheries taxes by 1 percentage point and increase the permit fees for many state fisheries, generating $20 million more per year for the state treasury. The bill has not been brought up for a House vote because it lacks the votes to pass. • Motor fuel tax increase: unpassed. House Bill 4003 would raise the taxes on fuel for boats, cars, jets and propeller-driven aircraft, generating about $40 million more per year for the state. The tax on a gallon of gasoline for your car would rise from 8 cents per gallon (the lowest rate in the nation) to 16 cents per gallon (the second-lowest rate). The increase would be halved if oil prices rise above $100 per barrel and eliminated if oil rises above $120 per barrel. The motor fuel tax increase has the most support of any proposed tax hike, but it has not yet been brought to a vote in the House or Senate. • Alcohol tax increase: unpassed. No separate legislation exists in the special session for the governor’s proposal to double the state’s alcohol taxes. Alaska already has some of the highest alcohol taxes in the nation, and doubling them would give the state the highest alcohol taxes across the board. The governor’s original proposal, House Bill 248, promised $40 million more in revenue per year to the state. Per existing law, half that increase would go toward alcohol abuse-prevention programs and treatment. • Tobacco tax increase: unpassed. No separate legislation is being considered in the special session to raise the state’s tobacco tax. During the regular session, Walker proposed House Bill 304, which would have raised $24 million for the state by increasing taxes on cigarettes, other tobacco products, and electronic cigarettes. Of that increase, $2 million would have gone to a fund that fights smoking. • Cruise ship head tax increase: unpassed. No separate legislation is being considered in the special session to raise more state revenue from the tourism industry. During the regular session, Walker proposed House Bill 252, which would have raised $16.6 million per year for the state by prohibiting cruise agencies from deducting local passenger head taxes from their state tax liability. The bill also would have closed a loophole in the existing head tax. • Income tax: unpassed. House Bill 4004 would establish a state income tax equivalent to 6 percent of a person’s federal income tax. If someone owed $100 to the IRS, they would also owe $6 to the state. Anyone who pays no federal income tax would pay no state income tax. The bill promises $200 million in new revenue to the state, but it remains the most unpopular part of the governor’s 13-part proposal and has not received significant attention. While lawmakers have not acted on all 13 points of Walker’s plan (nor are they expected to), they have taken significant action in areas not on Walker’s agenda. House Bill 137, brought forward by Rep. David Talerico, R-Healy, increases many Fish and Game hunting and fishing license and tag fees, generating an extra $9 million per year. A pair of comprehensive reform bills — one aimed at prison sentencing reform, the other at Medicaid reform — also promise several million dollars in savings immediately. Lawmakers have said that passing any one of those reform measures would have been the highlight of a regular Legislative year. In this year, however, they’ve been overshadowed by the state’s continuing budget trouble, and even with all the actions taken to date, Alaska will continue to rely on its savings to balance its budget.  

Special session starts May 23 after party-line split in House over extension

JUNEAU — Alaska’s budget talks have failed. Shortly before midnight May 18, the Alaska Legislature adjourned without fixing the state’s $4 billion annual deficit and without providing a budget that keeps the state operating after July 1. Without a budget, all nonessential government services will end July 1. Alaska’s government will shut down. To avert that disaster, Gov. Bill Walker has ordered lawmakers into a special session starting 11 a.m. Monday. Topping the special session’s agenda will be the state’s operating and capital construction budgets. Also on the agenda will be bills to reduce or entirely erase the deficit: tax increases and spending cuts. “It’s not a real bright day for Alaska right now,” Speaker of the House Mike Chenault, R-Nikiski, said at the close of a press conference early Thursday morning. “I think we were very close to be able to put together a budget. Unfortunately, we just ran out of time,” said Rep. Craig Johnson, R-Anchorage and the House Rules Committee chairman. The Alaska Constitution limits lawmakers to 121 days of regular session. Lawmakers can extend that limit for up to 10 days with a two-thirds vote of the House and a two-thirds vote of the Senate. The Senate voted 16-3 in favor of an extension, but the House vote was 26-12, one vote shy. The vote was exactly along the divisions in the House: Every member of the Republican-led majority voted to extend the session and continue budget negotiations; every member of the Democratic-led minority voted to end it and break off negotiations. Rep. Matt Claman, D-Anchorage, and Rep. Mike Hawker, R-Anchorage, were each absent from the vote. “We just weren’t able to come to an agreement, and the Senate (adjourned) underneath us,” said House Minority Leader Chris Tuck, D-Anchorage. Impasse in the House The cause of the budget logjam is a disagreement in the House between the majority and the minority over the state’s $8.2 billion Constitutional Budget Reserve. With Alaska running a $4 billion annual deficit due to low oil prices, spending some of the reserve will be necessary to balance the budget, even under the most optimistic plans to cut spending and increase tax revenue. Using the reserve requires a three-quarters vote of the House and a three-quarters vote of the Senate. That vote is relatively straightforward in the Senate, where the Republican-led majority has a 16-4 advantage. In the House, it’s far less straightforward. The majority there has only 26 members, the minority 13 members, and there is one representative who is a member of neither caucus. Getting a three-quarters majority requires the support of both Democrats and Republicans. Multiple lawmakers said negotiations between the two sides involved only the state budget and the three-quarters vote. Democrats sought to reverse cuts to various state programs ─ including education ─ and Republicans needed Democratic support to spend a portion of the reserve. Extension or special session The House minority had been pushing for a one-day extension of the session, but the Senate rejected that notion. With the clock nearing midnight and the constitutional end of the session, the Senate voted to adjourn, leaving no alternative for the House but to adjourn as well. Walker had previously vowed to call lawmakers into special session, and Rep. Sam Kito, D-Juneau, said the choice to enter a special session rather than extend the regular session is a strategic one for minority Democrats. The end of the regular session means every bill not on the governor’s special-session agenda will die. “They would still be there in an extended session,” Kito said. Among the bills that concerned Democrats was House Bill 379, which would have eliminated merit raises for state employees when oil prices are low. He called that bill “a distraction from trying to get a funded and sustainable budget” and said lawmakers “need to focus on trying to make sure the budget is funded and that we have the ability to pay for that budget.” House Majority Leader Charisse Millett, R-Anchorage, said the end of the regular session means “a lot of lost work” because every bill on the special session agenda must now be reintroduced, considered by committee, and advance to a floor vote in a deliberate process. “To not be able to extend for 10 days, which I think was a reasonable ask … is incredibly unfortunate,” she said. Kito disagreed. “I don’t know that they really slow down that much because we’ve done a lot of the work to this point,” he said. Shutdown’s effects loom The Alaska Constitution implies that lawmakers must pass a budget each year, but it does not specifically state when that budget must be approved. “I think as long as we have a budget passed by … June 30, we have met our constitutional obligations,” Johnson said. “I don’t know if there’s a time limit on it,” Chenault said. While lawmakers may not be required to approve a budget until the final day of June, Alaskans will begin seeing the effects much sooner. Last year, thousands of state employees began receiving layoff warnings as early as June 1. Union contracts require 30 days’ notice before a layoff, and Chenault said state employees should expect to receive those notices again this year. Even if the special session moves quickly when it begins on May 23, he said he expects the state will need several days of advance planning to prepare, then mail those “pink slip” layoff notices. If the Legislature doesn’t finish its work by the middle of next week ─ something that may not even be technically possible ─ the pink slips will be in the mail. If the Legislature can’t finish its work in the 30-day special session, many of those pink slips will become more than just warnings. Contact Empire reporter James Brooks at [email protected] or 523-2265. On the agenda Here’s a brief list of what’s on the special session agenda ordered by the governor. The initial versions of the bills have yet to be selected, and each will be renumbered for the special session. House Bill 256 - operating budget HB 257 - mental health operating budget Senate Bill 138 - capital construction budget HB 245 or SB 128 - diverting a portion of the Alaska Permanent Fund’s earnings reserve to pay for state services HB 247 - cuts state subsidies for oil and gas drilling and production Establishing an income tax Raising the gasoline/motor fuel tax Raising the alcohol tax Raising mining taxes Reducing state subsidies for mining Raising fisheries taxes Marijuana taxes Raising tobacco taxes HB 200 - modifying adoption rules HB 27 - foster care reform

Legislature quits without finishing work

Alaska’s budget talks have failed. Shortly before midnight Thursday morning, the Alaska Legislature adjourned without fixing the state’s $4 billion annual deficit and without providing a budget that keeps the state operating after July 1. Without a budget, all nonessential government services will end July 1. Alaska’s government will shut down. To avert that disaster, Gov. Bill Walker has ordered lawmakers into a special session starting 11 a.m. Monday. Topping the special session’s agenda will be the state’s operating and capital construction budgets. Also on the agenda will be bills to reduce or entirely erase the deficit: tax increases and spending cuts. “It’s not a real bright day for Alaska right now,” Speaker of the House Mike Chenault, R-Nikiski, said at the close of a press conference early Thursday morning. “I think we were very close to be able to put together a budget. Unfortunately, we just ran out of time,” said Rep. Craig Johnson, R-Anchorage and the House Rules Committee chairman. The Alaska Constitution limits lawmakers to 121 days of regular session. Lawmakers can extend that limit for up to 10 days with a two-thirds vote of the House and a two-thirds vote of the Senate. The Senate voted 16-3 in favor of an extension, but the House vote was 26-12, one vote shy. The vote was exactly along the divisions in the House: Every member of the Republican-led majority voted to extend the session and continue budget negotiations; every member of the Democratic-led minority voted to end it and break off negotiations. Rep. Matt Claman, D-Anchorage, and Rep. Mike Hawker, R-Anchorage, were each absent from the vote. “We just weren’t able to come to an agreement, and the Senate (adjourned) underneath us,” said House Minority Leader Chris Tuck, D-Anchorage.   Impasse in the House The cause of the budget logjam is a disagreement in the House between the majority and the minority over the state’s $8.2 billion Constitutional Budget Reserve. With Alaska running a $4 billion annual deficit due to low oil prices, spending some of the reserve will be necessary to balance the budget, even under the most optimistic plans to cut spending and increase tax revenue. Using the reserve requires a three-quarters vote of the House and a three-quarters vote of the Senate. That vote is relatively straightforward in the Senate, where the Republican-led majority has a 16-4 advantage. In the House, it’s far less straightforward. The majority there has only 26 members, the minority 13 members, and there is one Representative who is a member of neither caucus. Getting a three-quarters majority requires the support of both Democrats and Republicans. Multiple lawmakers said negotiations between the two sides involved only the state budget and the three-quarters vote. Democrats sought to reverse cuts to various state programs ─ including education ─ and Republicans needed Democratic support to spend a portion of the reserve.   Extension or special session The House minority had been pushing for a one-day extension of the session, but the Senate rejected that notion. With the clock nearing midnight and the constitutional end of the session, the Senate voted to adjourn, leaving no alternative for the House but to adjourn as well. Walker had previously vowed to call lawmakers into special session, and Rep. Sam Kito, D-Juneau, said the choice to enter a special session rather than extend the regular session is a strategic one for minority Democrats. The end of the regular session means every bill not on the governor’s special-session agenda will die. “They would still be there in an extended session,” Kito said. Among the bills that concerned Democrats was House Bill 379, which would have eliminated merit raises for state employees when oil prices are low. He called that bill “a distraction from trying to get a funded and sustainable budget” and said lawmakers “need to focus on trying to make sure the budget is funded and that we have the ability to pay for that budget.” House Majority Leader Charisse Millett, R-Anchorage, said the end of the regular session means “a lot of lost work” because every bill on the special session agenda must now be reintroduced, considered by committee, and advance to a floor vote in a deliberate process. “To not be able to extend for 10 days, which I think was a reasonable ask … is incredibly unfortunate,” she said. Kito disagreed. “I don’t know that they really slow down that much because we’ve done a lot of the work to this point,” he said.   Shutdown’s effects loom The Alaska Constitution implies that lawmakers must pass a budget each year, but it does not specifically state when that budget must be approved. “I think as long as we have a budget passed by … June 31, we have met our constitutional obligations,” Johnson said. “I don’t know if there’s a time limit on it,” Chenault said. While lawmakers may not be required to approve a budget until the final day of June, Alaskans will begin seeing the effects much sooner. Last year, thousands of state employees began receiving layoff warnings as early as June 1. Union contracts require 30 days’ notice before a layoff, and Chenault said state employees should expect to receive those notices again this year. Even if the special session moves quickly when it begins on May 23, he said he expects the state will need several days of advance planning to prepare, then mail those ‘pink slip’ layoff notices. If the Legislature doesn’t finish its work by the middle of next week ─ something that may not even be technically possible ─ the pink slips will be in the mail. If the Legislature can’t finish its work in the 30-day special session, many of those pink slips will become more than just warnings.   Contact Empire reporter James Brooks at [email protected] or 523-2265.  

Senate approves $1.6B state construction budget

JUNEAU — The Alaska Senate has voted 16-4 to send the state’s $1.6 billion capital construction budget to the House. The $1.6 billion budget is in many ways a bare-bones appropriation and went unchanged from a version previously approved by the Senate Finance Committee. Of the budget, $1.3 billion will be funded by federal dollars administered by the state. Only $77.5 million will be spent in undesignated general-fund dollars as matching funds needed to unlock that federal money. The remainder of the budget will be funded with various other state accounts. “It’s tough times; it requires tough decisions, and the Senate has risen to the occasion,” said Sen. Anna MacKinnon, R-Anchorage. Most of the budget is allocated for transportation-related construction projects, which are matched at better than a 9-to-1 rate by the federal government. The biggest point of contention in the budget was the lack of a $7.2 million appropriation for the Kivalina school in the Northwest Arctic Borough. Gov. Bill Walker had requested $7.2 million to finalize the settlement of a lawsuit alleging unequal treatment between rural and urban school funding. According to an analysis of the settlement provided by the Alaska Department of Law, the state must provide $50.4 million for a new Kivalina school. Last year, the Legislature appropriated $43.2 million for the school. Walker’s request would have covered the remaining amount, but it was removed by the Senate Finance Committee. “Our attorneys last year gave us a different number,” MacKinnon, co-chairwoman of the finance committee, said in a floor speech. In a memo dated May 13, 2016, legislative counsel Megan Wallace wrote MacKinnon to say that the state is obliged to fund only $43.2 million. While the Legislature could choose to provide more money, Wallace concluded, “the Legislature’s decision whether to appropriate those amounts cannot and will not lead to any violation of the consent decree.” Instead of additional money for the Kivalina school, the capital budget includes a statement declaring that the Legislature believes it has already met the requirements of the settlement. That language and the removal of the Kivalina money was opposed by members of the four-member Democratic Senate minority and Sen. Donny Olson, D-Nome and a member of the Senate majority. Olson represents Kivalina in the Senate. The budget also includes $12.5 million to purchase an Anchorage office building for use by the Legislature. Speaking on the Senate floor, Sen. Gary Stevens, R-Kodiak and chairman of the Legislative Council, implied that the purchase is the best of a series of bad options for the Legislature. It cannot purchase its existing downtown Anchorage building because of a veto threat from the governor. It cannot continue to lease the downtown building because the lease was ruled illegal. Moving into the state-owned Atwood Building would require renovating that structure and finding interim space for lawmakers while the renovations take place. The Senate Minority offered an amendment to strip the $12.5 million from the budget, but that was rejected 4-16. Members of the Senate Majority said that on a square-foot basis, the $12.5 million purchase will work out to 57 cents a square foot. Sen. Bill Wielechowski, D-Anchorage, retorted that on a square foot basis, the new building is so large that every Anchorage legislator would be getting 2,000 to 3,000 square feet of office space. “Do you really need 2-3,000 square feet per legislator?” he asked. Members of the Senate majority also rejected amendments that would have de-funded the Knik Arm Bridge and Bragaw Road extension projects in Anchorage. The capital budget moves to the House for consideration.  

Last-minute substitute to oil tax credit bill passes House

JUNEAU — After a month of debate, the Alaska House of Representatives has approved legislation that cuts the annual state subsidy for the oil and gas industry. In a 25-12 vote, the House approved a modified version of House Bill 247, proposed by a pair of Republicans: Rep. Tammie Wilson, R-North Pole; and Rep. Paul Seaton, R-Homer. With an amendment, the pair tossed out a version proposed by the House Rules Committee and substituted their own. The new bill is an ambitious compromise proposal that incorporates Democratic and Republican measures alike. “We were able to get to that common place where we could agree,” Seaton said. “Everybody was a little bit out of their comfort zone, but it was, you know, a compromise.” The Wilson-Seaton proposal, according to a Department of Revenue analysis, will save between $5 million and $25 million in the fiscal year that starts July 1. Savings rise in subsequent years, peaking as high as $470 million in fiscal year 2021. Gov. Walker’s original version of HB 247 promised savings as high as $305 million in the next fiscal year, with savings rising to as much as $515 million in fiscal year 2019. The Rules Committee’s version promised savings of up to $10 million in the next fiscal year, rising to $370 million by fiscal year 2022. The bill is the second-largest part of a plan to solve Alaska’s $4 billion annual deficit, and its passage removes a key stumbling block for further budget negotiations. A carry-forward problem The state subsidizes oil and gas operations in Alaska with a series of different-flavored tax credits. Some are refundable, meaning they are effectively worth cash. Others can be sold or traded to other companies and used to erase the taxes a company would otherwise pay to the state. One of the biggest problems in the system is that oil prices are so low that North Slope oil producers are losing money with every barrel they pump through the trans-Alaska Pipeline System. That makes them eligible for a credit intended just for companies starting up operations — a period when a company would be expected to invest in new equipment and spend more than it earns in production. These “net operating loss” credits, combined with a loophole in the state’s existing tax system (which was created in 2013 through Senate Bill 21), allow producers to reduce their effective production tax rate to zero. The Wilson-Seaton proposal forbids companies producing more than 15,000 barrels of oil per day from collecting net operating loss credits. That only solves part of the issue. By the end of the fiscal year, companies will have already earned hundreds of millions of dollars in these credits, which can be rolled forward to future years. That could wipe out much of the state’s oil tax revenue for years to come. According to Department of Revenue estimates, Walker’s version of HB 247 would have left companies with more than $1.2 billion in credits by 2020. The rules committee version would have reduced that stockpile to $685 million. The Wilson-Seaton proposal reduces it to $516 million by 2020 and eradicates it entirely by 2024, something no other plan does. “That’s a huge fiscal impact,” Seaton said. Investment as solution Under the Wilson-Seaton proposal, oil companies would be encouraged to sell their outstanding credits for cash, something they might need as oil prices stay low. The buyer would be the Alaska Retirement Management Board, which governs the state’s public employee retirement system. The ARM Board, as it is known, could offer 60 cents on the dollar for the credits. That might be attractive for cash-strapped companies. In turn, the state would buy back the credits over time from the ARM Board at 70 cents on the dollar. That allows the state to spread out the expense and it guarantees the public retirement system a 10 percent return on its investment. According to a memo dated May 11 from Alaska Department of Revenue Commissioner Randall Hoffbeck and supplied by Seaton: “I have reviewed the language of the amendment with Gary Bader, (Chief Investment Officer) for the ARM Board, and we agree that as proposed this would be a viable investment for the ARMB and support this amendment.” Changes in Cook Inlet Until oil prices plunged and net operating loss credits became a problem, drilling operations in Cook Inlet, which produces natural gas for use in Anchorage and the Kenai Peninsula, accounted for about half the state’s annual subsidies to the oil and gas industry. According to figures from the Department of Revenue, oil and gas companies spent $1.09 billion in Cook Inlet between fiscal year 2007 and fiscal year 2015. About $450 million of that was provided by the state. Those subsidies were implemented when it appeared Anchorage was in danger of running out of natural gas, its principal source of electric power and home heating. Rep. Liz Vazquez, R-Anchorage, was a board member of Chugach Electric, Anchorage’s principal power company. Speaking on the House floor, she said the company was within six months of signing a long-term deal to import natural gas from overseas. Under the Wilson-Seaton proposal, all Cook Inlet subsidies will expire by Jan. 1, 2018, and limits on oil and gas taxes in the region (which has a different, much lighter tax structure than the North Slope) will expire in 2019. The Wilson-Seaton proposal calls for a Legislative working group to come up with a new Cook Inlet tax and subsidy system before that expiration. Opposition on the floor While House Bill 247 passed out of the House with more than the minimum 21 votes needed, it was a close-run thing. The rules committee’s version of the bill was on the agenda when the House convened its Friday session, and the pair of Republicans had to offer their plan as an amendment overwriting that rules committee proposal. The amendment passed by a single vote, 21-16. “To me, this is a recipe for disaster,” said Rep. David Talerico, R-Healy, of the Wilson-Seaton plan. Talerico and others in the House criticized the idea of limiting net operating loss credits to companies producing less than 15,000 barrels of oil. Doing so would keep the North Slope’s three big producers — ConocoPhillips, BP, and Exxon — from receiving loss credits. “Over the next few years, we need to keep oil in the pipeline,” Talerico said. Rep. Lance Pruitt, R-Anchorage, went even farther. “This is a jobs bill, if the job you’re talking about is dismantling the pipeline,” he said. Rep. Craig Johnson, R-Anchorage and chairman of the Rules Committee, said he’s concerned that taking away subsidies in Cook Inlet will lead to higher natural gas prices in Anchorage. “This is particularly troubling to me, living in Anchorage,” he said. Despite the opposition, the amendment vote passed, and so did the vote to send the bill to the Senate. Work in progress Wilson said the work to craft an alternative to the Rules Committee’s work started about two and a half weeks ago, about the time the House and Senate were forced from their Capitol offices by construction. In a story last month, Nat Herz of the Alaska Dispatch News described how Wilson and Seaton ran into each other while shopping at Juneau’s Fred Meyer grocery store and began talking. Wilson and Seaton are at the opposite ends of the Republican Party’s split — Wilson toward the Tea Party end and Seaton toward the moderate end. While they might differ on other subjects, they found common ground on the issue of subsidies to the oil and gas industry. “For us, we started the conversation,” Wilson said, but the proposal wouldn’t have gotten as far as it did without others’ support. “This is a group that did it,” she said. “It wasn’t just the two of us.” The Senate is scheduled to hear the bill at 9:30 a.m. Saturday. “I expect they will tweak it,” Wilson said. In the House, the vote is expected to open the door to other matters. “We hope it breaks things open,” Seaton said. “The budgetary things are what’s next, and hopefully the finance committee can start working on other things now.” Like an operating budget, Wilson added.  

Board advances in-store pot use

The Alaska Marijuana Control Board has voted unanimously to ask the public to comment on draft regulations allowing recreational marijuana users to enjoy pot products inside retail stores. The regulations are the first of their kind in the United States and are a rough equivalent to the nation’s first legal pot cafes. Once formalized, public comment will open in the coming weeks. After the public comment period expires, the board will consider the regulations again before approving or disavowing them for good. “I think this is probably one of the provisions that is going to give elected officials the most angst, and I don’t want to disappoint them by doing it wrong,” said board chairman Bruce Schulte before joining other members in approving the draft. When Alaska voters approved recreational marijuana use in 2014 with Ballot Measure 2, the state began a two-year process leading to the opening of the state’s first retail marijuana stores. The first commercial marijuana cultivation businesses will receive their licenses in the second week of June; the first retail businesses will begin selling marijuana in the second week of September. As the board began drafting regulations to define the new industry, prospective business owners approached the board and said they were concerned that tourists and renters might not have a place to use legal marijuana. The state permits the sale of marijuana, but consumption “in public” is prohibited, and the state has adopted an expansive definition of “public” that leaves few legal spaces outside one’s home. In response to concerns about selling people marijuana they have no place to use, the board voted 3-2 in November to carve a narrow exemption into the definition of “public.” That exemption allows retail stores to apply for an “onsite consumption endorsement” to their licenses. If a store receives that endorsement, it can set aside an area for people to consume marijuana. Under the draft regulations sent for public comment, the area must be enclosed, with a separate door, a ventilation system and oversight by staff. On-site consumers will be limited to a limited “menu” and held to a much tighter purchase limit than regular retail customers in order to prevent stoned driving and other problems with overconsumption. The on-site consumption area will also be restricted in ways similar to alcohol bars. Stores will not be able to give away marijuana, serve intoxicated customers, give “happy hour” discounts or discounts for special customers. In Juneau, the consumption area will also be subject to the City and Borough of Juneau’s strict antismoking rules, which prohibit indoor tobacco and marijuana use, even if an area is set aside for that use. Without a change to the CBJ’s regulations, a consumption area in Juneau would be open to edible and drinkable marijuana products only. When the board voted to create the on-site endorsement in November, board member Loren Jones, also a City and Borough of Juneau assemblyman, voted against the idea. On Wednesday, he joined all other board members in voting to send the regulations to public comment. He said by phone that his views on the endorsement haven’t changed, but he thinks it’s time for the public to have its say. “I’m hoping there will be enough comments related to the definition of public” to change the board’s mind, he said. In other business Wednesday, the board approved several companies planning to offer marijuana-handling training required of all marijuana licensees and store employees. As of April 20, the Alcohol and Marijuana Control Office has received 277 applications for marijuana licenses. One hundred and sixty-three of those are for cultivation facilities; three are for testing facilities. Retail and marijuana product manufacturing licenses (bakeries and the like) make up the remainder. The board is scheduled to meet next on June 9 to approve the first licenses for marijuana cultivation and testing businesses. • Contact reporter James Brooks at [email protected]    

Legislature heading for overtime

JUNEAU — The second session of the 29th Alaska Legislature reaches its 90th day today, but don’t expect lawmakers to be finished with their work anytime soon. Whether lawmakers decide to spend extra days in the regular session or decide to call an immediate special session, all signs indicate that deep divisions on the budget and how to resolve a $4.1 billion annual deficit mean no solution will come in time to meet the standards of a voter initiative approved in 2006. “I don’t want to diminish the optimism for the end of the session,” Gov. Bill Walker said on KINY-AM Thursday about the call for a special session, but “that decision will probably be happening Sunday night.” Ninety-day sessions started with the 2008 Alaska Legislature, and this is the ninth. Only two have finished before midnight on the morning of Day 91 without being followed immediately by a special session: 2009 and 2013. The 2010 session ended close to the deadline: It finished just after midnight. This year, the legislative logjam is the issue of subsidies for the oil and gas industry. Next year, according to estimates from the Alaska Department of Revenue, the state of Alaska will be liable for $775 million in tax credits owed to oil and gas producers and drillers. With the state of Alaska facing a $4.1 billion annual deficit, many in the Alaska Legislature are requiring significant cuts to that subsidy before they vote for tax increases or spending from the Alaska Permanent Fund. “For me and for us, this oil tax bill really is the foundation for everything else,” said Rep. Chris Tuck, D-Anchorage and the House Minority leader. “We simply do not want to see Alaskans … give up their Permanent Fund for the oil industry.” On the opposite side are lawmakers representing districts whose local economies rely upon the oil industry. They contend that with oil prices in the basement and oil companies losing money, cutting subsidies is the equivalent of cutting jobs — and jobs lost now mean lower production when oil prices rebound. “I’m willing to give a little bit, but I think we need to be very careful with the changes we make to the tax structure,” said Speaker of the House Mike Chenault, R-Nikiski. In an ordinary year, the Legislature would simply work past the 90-day limit, ignoring the voter-imposed statute and holding to the 121-day limit in the Alaska Constitution. This year, that isn’t possible. Construction on the third and final year of seismic reinforcements to the Alaska Capitol is expected to begin later this week, making continued Legislative work impossible. Many Anchorage lawmakers support moving the session to Anchorage if needed — a resolution stating as much has passed the Senate and is awaiting a vote in the House. Juneau lawmakers are hoping legislators move simply down Main Street, perhaps to Centennial Hall, which has figured into contingency plans written by the City and Borough of Juneau. If the Legislature stays on course for overtime, lawmakers will be on the move. The only question is whether they’ll move down the street or north in the state. “We’ll make that decision Sunday night, as far as where, if there is a need for the special session,” Walker said.

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