Alaska remains on course for statewide shutdown; second special session begins

Governor abandons plans for deficit fix to focus solely on one year of budget

After its first special session ended in failure, the Alaska Legislature is still searching for a way to avert a July 1 statewide government shutdown.

 

On Monday, lawmakers are poised to renew debates on how to bridge a political gap between the coalition House Majority and the Republican-led Senate Majority.

Gov. Bill Walker called both the House and Senate into special session on Friday, but after brief floor sessions, each body adjourned until Monday.

Speaking to reporters Friday afternoon, Walker said he is confident that the Legislature can avert an economically catastrophic shutdown. For better or worse, however, the issue is largely out of his hands. Under the Alaska Constitution, the Legislature is the body that approves the state’s budget, and it’s the Legislature that must reach an agreement.

“The worst thing we could do is have government shut down … and have even greater uncertainty out there than we have today,” Walker said.

Walker does have the power to set the agenda for the special session, and his to-do list includes just one item: a state operating budget.

Walker said he hasn’t changed his mind about the need for new revenue to erase a $2.7 billion annual deficit, but the state has enough savings to cover that deficit for one year without significant consequences.

“At this point, I must focus solely on one issue and one issue alone, and that is the operating budget so we do not have a shutdown in this state,” he said.

The Senate Majority agrees with Walker’s approach, its leaders said in a press conference Friday noon.

“Let’s focus on the people of Alaska instead of trying to get other items onto the agenda that are not on the agenda,” said Sen. Lyman Hoffman, D-Bethel and co-chairman of the Senate Finance Committee. “Let’s close this down and let’s get the people’s business done.”

The House Majority appears to be standing firm in its requests for a plan that addresses both Alaska’s long-term deficit and the pending government shutdown.

The House Majority’s plan, passed through the House months ago, includes new taxes that have not been endorsed by the Senate. While both the House and Senate favor diverting some money from the earnings of the Alaska Permanent Fund (reducing Permanent Fund Dividends in the process), the House is asking for more, including more money from the oil industry and some kind of progressive tax to balance the regressive elements of a dividend cut.

“We said from the very beginning that we were not going to be taking the only source of new revenue being a reduction in PFDs. That became a crux of the problem,” said Rep. Paul Seaton, R-Homer and co-chairman of the House Finance Committee.

On Thursday night, the House Majority attempted to force the Senate into action by passing a budget and immediately adjourning. That left the Senate with a choice on Friday: Pass the House’s budget, effectively agreeing to its demands, or reject the budget and continue the countdown to shutdown.

The Senate chose the latter path.

Senate President Pete Kelly, R-Fairbanks, called the House’s “unorthodox adjournment” and strategy unacceptable and said it employed “trickery” to force a decision.

Senate Rules Chairman Kevin Meyer, R-Anchorage, said the House’s take-it-or-leave-it approach violated the norms of negotiation and compromise.

“You just don’t do that. You just don’t do that, out of respect to the process,” he said. “I was personally shocked by that.”

The failure of the House’s move leaves the Legislature in an uncertain position. If the House Majority gives up its demand for a long-term deficit-fighting plan, it might avert a shutdown, but it would weaken its bargaining position in the long run.

Senate Minority Leader Berta Gardner, D-Anchorage, pointed out Friday that the budget “is the tool that allows for negotiation on other things.”

If the House and Senate pass a shutdown-averting deal that doesn’t address the deficit, “it makes it harder to bring the Senate to the table” on other issues.

From the Senate’s perspective, wavering on the House’s demands would mean backtracking on adamantine opposition to new taxes.

Speaking to reporters, Kelly said the House can have some victories if it comes to the table and begins negotiating on the operating budget alone.

“There’s plenty of compromise to come at the table if they will come,” he said.


Contact reporter James Brooks at james.k.brooks@juneauempire.com or call 419-7732.


Topics

Daniel Donkel 10 days ago
For 50 years Alaska's oil and gas laws have been unfairly influenced by big oil so only a few majors can control 95% of all oil markets and this helps keep Alaskans and other smaller explorers out, so the state is mostly locked up by a modern day monopoly and a rigged system that is hard to fix! They hide this well and they own the media in my opinion!

As the majors slowed or stopped exploration and the rigged oil and gas Agencies keep Alaskans and smaller competitors out of Alaska's oil prodcution, the results are this broken system that keeps oil prodcution and income at a steep decline from 2 million barrels of oil per day to 500,000!

With $70 Billion in the oil fund and saving accounts, ( Permanent fund) , now the state is crying broke and the Governor vetoed the cash credits that the state use to induce non producers and smaller investors, this did not affect the majors!

The bait and switch came when the Alaska Governor vetoed $600 million which was 1% of the $60 billion the state has in the fund, how wrong was that! 

This veto not to pay what was promised tells the investment world a lot about the state of Alaska. This is in part why Alaska is hurting, they shot themselves in the foot!

These earned cash credits by the state of Alaska was aimed to encourage risky exploration so the state can increase its royalty and taxes but the majors keep its tax benefits as they write it off the top and get paid by not having pay billions in taxes but with the smaller competitors they don't anything until the veto is corrected or who knows what or when! That is wrong to hurt the small competitors and enrich the big oil companies that have a monopoly and many unfair advantages! 
Lee D Ault 9 days ago

The question seems to be whether or not theSenate Majority will bully their way into passing an unacceptable short-termfix again, instead of allowing passage of the House’s comprehensive long-termsustainable fiscal plan that supports Alaska residents.  If the Housebuckles under now, let's all brace ourselves for the continuation of the "deathof a thousand cuts" policy: more Senators swinging their virtual machetesslashing holes in social safety nets, state lay-offs, etc. If an income tax ispassed without fixing the "oil tax credit" aka "black hole*in the budget", then we can expect our monies to be swirling down thatdrain. The oil companies will take every cent we confiscate from residents togive them. Why wouldn’t they? Profit is the name of their game. At least, wenow have the House that is listening and supporting us. The Senate continues todisrespect us and our children’s futures.

 

As described by Rep. LesGara.

Michael Bishop 8 days ago
Admantine? Really? This is just a fluff piece that covers up for their utter failure and ignorance regarding a bleak and dismal future I fear. 
Michael Bishop 8 days ago
Personally shocked was ConocoPhillips employee spokesman Kevin "undertaker" Meyer and the other ConocoPhillips employed spokesman Peter micheche also I'm sure.  
Bill Yankee 7 days ago
I've mentioned (below) that our legislators tend to vote as their constituents want and I would like to add to that, here, that things get a little dicy when it comes to Meyer and Micheche.  Their positions are somewhat compromised, due to their being employed by ConocoPhillips.   
Bill Yankee 8 days ago
As someone who has followed this situation for several years now, I'm of the opinion that our legislators must have their own constituencies that are unawares of the ramifications of a government shutdown.  I also am thinking the only way they can be made aware of these ramifications is to see it up close and personal with an actual "shutdown," as disruptive as that may be.  
Someone will have to give IMO, but until that someone is chosen (by their constituencies hollering the loudest), our legislature seems to be at a stalemate.
Let's hope that there is no un-repairable damage done while this choosing takes place.
WILLIAM BURK 8 days ago
The state is no different than the legisllators in Washington!   They both act like children and DO NOT represent the people that alected them into office.
Bill Yankee 8 days ago
I must disagree here William!  These legislators clearly know how their constituency feels (they get emails, etc.) and job 1 is to be re-elected IMO.  Thus they are not going to vote against their people who put them there.
For whatever reason, compromise is not on the table, and its my guess that someone's constituents are going to have to holler uncle (after a government shutdown gores their particular ox).   
WILLIAM BURK 8 days ago
They might get somthing done if they STOPPED hanging out at the Triangle Bar every nigh until it closes!

Bill Yankee 8 days ago
Until they get their marching orders from their constituents, they have no intentions of doing anything IMO.   
Gerald Newton 8 days ago
There are about 355,000 working Alaskans,  A $2.7 billion annual deficit comes to $7,600 per working Alaskan.  All that has to be done is tax each working Alaskan $7,600 per year and be done with it.  
Bill Yankee 7 days ago
Typical simple solution to a complex problem that can only work if all working Alaskans could afford such a tax, Gerald.
Your solution would put a large number of working Alaskans in the poorhouse and how could this "be done with it?"  
Joseph Mehrkens 7 days ago
The Governor;s press release on Alaska's deteriorating bond ratings is an excellent explanation of the issue and provides the best rationale on why we cannot afford the Senates pseudo fix for the third year year in a row. 

By kicking the can down the road the Senate  will economically penalize the common citizen long before any of our key industries.  It will substantially increase the cost of borrowing for even the most basic infrastructure, education and public safety -- as our savings will no longer be sufficient.

Most important the Senate's obstruction simply extorts the House majority, the Governor and the rest of us with their nuclear option of a catastrophic government shutdown 


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