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7/20/2017
Local legislators reflect on session

By ZACHARY HALASCHAK
Daily News Staff Writer

Alaska legislators found the glass slipper they were looking for this past Saturday night as an agreement on oil tax subsidies was reached with midnight — and the special session deadline — just minutes away.

Odd hours and late nights have become par for the course this year in the state capitol as lawmakers bounce from one deadline to the other, often struggling to reach agreement on key budgetary issues.

The latest showdown, over oil tax credits, came to a resolution Saturday evening after House Bill 111 passed both the House and Senate.

The fight was not over ending cash payouts to oil companies, which both parties and chambers seemed to agree on, but rather centered around tax deduction rates for those companies, with the Senate wanting bigger tax deductions and the House wanting smaller ones.

The debate is framed by the fact that Alaska is currently facing a $2.5 billion deficit and the House and Senate are controlled by two ideologically disparate coalitions.

Sen. Bert Stedman, R-Sitka, told the Daily News on Wednesday that he was pleased that an agreement was finally reached. He said that the legislation cut to the heart of what was important to lawmakers — ending cashable credit payments to oil companies.

“The overall structure is sound,” Stedman said. “I think it’s workable — it ends cashable credits, which have been structurally flawed since day one.”

Stedman was a key player in negotiations over HB 111. Last week during a conference committee Stedman railed against the House version of oil tax credit legislation saying that lawmakers should “put it in the shredder.”

Stedman’s comments originally led many to believe that a compromise was further off than anticipated, but ultimately, an agreement was reached before the clock struck midnight.

Rep. Dan Ortiz, I-Ketchikan, told the Daily News that much of the contention in the Legislature came during discussions how taxes of these oil companies would be structured.

“We basically said OK, whatever write-offs you have or whatever costs you have, at a minimum, you have to pay at least a four percent tax on the oil you sell,” Ortiz said. “By us hardening the (tax) floor, at least we will get some revenue even in this low-price environment, which is important.”

Ortiz said that he was pleased that an agreement was reached. Even though the legislative session has been divisive, he said that cooperation on issues like oil tax credits is ultimately a good thing for everyone in the state.

“I wouldn’t say that I was disappointed, I would say that it was really important that we end cashable credits, that is an important thing,” Ortiz said. “That’s a big positive for the state’s fiscal situation.”

Ortiz said he was also encouraged by the inclusion of a bipartisan working group in the compromise bill.

“I feel good about the fact that as part of the bill itself there is the agreement that there will be a bipartisan working group moving forward to address potential further reforms that would be needed in our oil tax credit structure,” Ortiz said. “Did we get everything we wanted? No. But it’s my hope that some of those other reforms that I would be looking for are still possible and maybe even likely in the future when this working group gets together and further looks at the issue.”

One group who is upset by the compromise is the Alaska Oil and Gas Association. In a statement put out Monday, the group railed against the bill, which it says will decrease oil investment in Alaska and reduce new oil projects.

“Enough is enough,” said Kara Moriarty, president and CEO of AOGA. “If this bill is signed into law, the oil industry, which remains, by far, the largest contributor to the state’s unrestricted revenues, will be giving even more. If Alaskans want to see exciting new oil fields developed and new oil flowing through the pipeline, then fiscal stability must be established in Alaska.”

The Senate voted to recommend another special session to discuss the capital budget, but the House did not take that same action. Ortiz said this was because the House wanted to make sure there is a plan in place before spending per diem money to keep legislators in Juneau.

“We’d be there, we’d be drawing per diem, and it would be adding cost to the state,” Ortiz said. “Why not wait until there is an agreement?”

In a statement released following the oil tax credits agreement, Gov. Bill Walker said he is confident that a resolution to the capital budget will come, and that he would call a special session as soon as negotiations conclude.

“The state does not need to spend thousands of dollars in daily expenses simply for the parties to negotiate,” Walker said. “I have been assured, however, that legislators will reach a compromise in time to pass a capital budget before July 31. Once a deal is reached, I will immediately call them back into session.”

Stedman told the Daily News that he also expects another special session to be called and an agreement reached by the end of the month.

“The discussion is currently ongoing by the co-chairs,” Stedman said. “We’re not very far apart.”

For now, after one regular and two special sessions defined by fits and starts, residents will have to again exercise patience as lawmakers tackle this last budgetary hurdle.