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KNBA News - Gov. Bill Walker calls special session after Legislators fail to adopt a budget

May 19, 2016

Governor Bill Walker calls special session after Legislators fail to adopt an operating budget

By Joaqlin Estus, KNBA  - Anchorage

Governor Bill Walker called for a special session last night minutes after Legislators adjourned. Legislators hadn’t approved an operating budget for the fiscal year starting July first.

House Speaker and Nikiski Republican Mike Chenault said negotiations fell apart over taking money out of savings. Minority coalition votes are needed to take money out of the Constitutional Budget Reserve, which he calls Alaska’s best option for covering a four billion dollar deficit.

“It’s the best for the state of Alaska. But we were not able to come to that agreement so now we will unfortunately we will gin up new bills when the governor calls us back in,” said Chenault. “Bills will have to be put in place. Bills will have to go through the committee process again, which is time consuming.”

Chenault said the minority wanted funding restored for education and the university system among other items.

Another piece of unfinished business has to do with oil and gas tax credits. The House had passed a bill a few days ago that would have tightened requirements for oil companies getting tax credits. The Senate Finance Committee loosened those requirements. Senate Finance Committee chair and Eagle River Republican Sen. Anna McKinnon, said the companies who are getting the refunds are not major producers, and need the money as an incentive to invest in Alaska.

“Mr. President, if we’re paying out $700 million dollars it’s to producers who don’t do not receive or do not have a tax obligation to the state,” said McKinnon. “If we are writing checks to somebody it’s because we owe them money and they’re small. Mr. President, there are 40 different companies that are receiving those tax credits.”

Anchorage Democrat Sen. Bill Wielechowski offered a dozen amendments he said are needed to ensure Alaskans are getting the maximum benefit from resource development, as required under the state Constitution. He said when oil prices were high, oil companies made plenty of profit.

“The oil companies made 45 billion dollars in profit in seven years under ACES. I just read something recently it was actually they made 62. They made 60 billion dollars in this state,” said Wielechowski. “We pick up 75 percent of the exploration costs, 65% of the operating development costs in some cases. It’s a net profits loss. They’re able to write off all their losses forever under the current bill.”

None of the minority amendments were adopted in the Senate.

When the oil and gas tax credit bill returned to the House, Homer Republican Rep. Paul Seaton spoke against the Senate’s changes.

“We’ve gone through this large exercise of trying to cut the budget and save money through all our departments,” said Seaton. And here we have more than doubled the cuts that we worked so hard to do being allocated to pay additional -- beyond the statutory required limit -- oil tax credits, refundable tax credits.”

The House voted down the revised bill 24 to 14.

A move to extend the session failed in the House, and both houses adjourned a little before midnight.

Within minutes, Governor Bill Walker issued his call for a special session to deal with the budget, oil and gas tax credits, withdrawals from Alaska Permanent Fund earnings and taxes. He also put adoption, foster care, and health insurance rates and medical insurance coverage for survivors of peace officers and firefighters on the Legislative agenda.

The special session is scheduled to begin Monday.

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