Midway through session, lawmakers looking for fiscal fix

JUNEAU — Alaska legislative leaders say they are committed to taking major steps to address the state’s multibillion-dollar budget deficit this year, even if that means working beyond 90 days.

House and Senate leaders say they would like to finish on time in April but are in Juneau to do a job.

“Honestly, if it takes going over a little bit in order to do the right thing for the future of Alaska, personally, I’m prepared to do it,” House Speaker Bryce Edgmon told reporters Tuesday, two days before the scheduled 90-day session reached its midway point.

Here are some things to watch for:

Permanent fund

Many legislators and Gov. Bill Walker see a use of earnings from Alaska’s oil-wealth fund, the Alaska Permanent Fund, as unavoidable to help the state dig out of its hole. The mere suggestion of this would have been seen as political suicide not that long ago.

While fund earnings have long been available to lawmakers to spend, they have been reluctant to go there for fear of being accused of raiding the fund. The annual dividend Alaskans receive from the state’s oil wealth comes from fund earnings.

The state is in its fifth year of deficits, a problem exacerbated by chronically low oil prices, and Legislative Finance Division Director David Teal has said neither cuts nor taxes appear capable of filling the hole.

In a presentation to lawmakers, Teal called the use of earnings the most powerful tool available.

Differences

During a committee hearing on a permanent fund bill Tuesday, Sen. Mike Dunleavy, R-Wasilla, proposed calling for an advisory vote of the people on changing the dividend calculation and the amount available from earnings. That proposal failed.

Sen. Cathy Giessel, a fellow Republican who voted against it, said special election turnout can be unpredictable and said she wasn’t convinced people would understand the ramification of a yes or no vote.

All the permanent fund proposals currently in play would annually draw from fund earnings a percentage of the fund’s market value and change how dividends are calculated.

A bill from the Senate Finance Committee pairs that concept with a proposed new limit on future spending, a priority for the Senate’s GOP-led majority. A House Finance Committee permanent fund bill calls for reinstituting a personal state income tax.

Compromise?

The challenge will be avoiding a repeat of last year, when gridlock prevailed.

The Senate has said it hopes to lop $300 million off the budget for next year, and Senate Majority Leader Peter Micciche has said he’d like to see a focus on passing a permanent fund bill before delving into politically divisive topics, like taxes.

The House majority, composed largely of Democrats, is eyeing changes to oil tax and credit policy along with a broad-based tax and permanent fund bill as part of a comprehensive fiscal plan.

The House majority has faced criticism from minority House Republicans over its handling of the budget, which is still being worked on.

Edgmon said he has a good relationship with Senate President Pete Kelly.

“The important part, and the thing that heartens me, is, we have a very good dialogue going,” Edgmon said.

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