Next year’s legislative session is under a month away, and lawmakers have big plans for the year ahead. It’s a chance for legislators to pick up on initiatives left unfinished last year, and also take on new challenges. And there’s a lot to discuss, from a possible gas pipeline to Gov. Mike Dunleavy’s promise to deliver a plan to stabilize the state’s finances.
Alaska Public Media’s Eric Stone joined Wesley Early on Alaska News Nightly to talk about what lawmakers are looking forward to in the year ahead.
This transcript has been lightly edited for length and clarity.
Wesley Early: What’s on lawmakers’ minds?
Eric Stone: Well, Wesley, lawmakers are looking at a tight budget this year, just as they were last year. Oil doesn’t make up as much of the budget as it used to — only about a quarter of the unrestricted portion of the state budget, which is what lawmakers have to fight over. Permanent Fund earnings are likely to be about two thirds of the unrestricted budget this year, which if you step back and think about it, is really something. But oil is still really important — each dollar in the price of oil is $25 to $35 million in the state budget — and oil prices are low.
WE: So, maybe not too many presents under the tree this year.
ES: That is correct — not tons of money for new initiatives, capital projects, and so on. And I would definitely not count on a large Permanent Fund dividend this year. Gov. Dunleavy, as he always does, proposed dividends around $3,600, but I would expect the final figure to be a lot smaller. When I spoke with Sitka Republican Sen. Bert Stedman earlier this month, he said he was expecting it to be similar to this year’s $1,000 dividend — maybe even less.
Sen. Bert Stedman: It's going to be extremely difficult to hold a $1,000 dividend in the next couple of years if oil prices dip — if they stay where they're at and go lower, particularly if they get in the high fifties. We've got to make payroll.
ES: And right now, North Slope oil prices are just a little over $60.
WE: OK, so probably another year of low dividends. What else are lawmakers hoping to address this session?
ES: A big thing I’ve been hearing from a lot of lawmakers is preparing for the gasline. The Alaska LNG project, the 800-mile pipeline that would take North Slope gas south, is nearing a final decision on whether it’ll go forward. And that’ll likely be a big focus this year.
Sen. Bill Wielechowski, an Anchorage Democrat, says state lawmakers may need to take a look at how the state calculates oil and gas taxes. He says he wants to avoid a situation where companies are able to reduce their taxes by deducting the money it costs to build a pipeline.
Sen. Bill Wielechowski: We're seeing the impacts of that with the Willow project and how ConocoPhillips is spending a billion, a billion and a half dollars, and then writing off hundreds of millions of dollars off of their production taxes. The same situation exists with the natural gas pipeline.
ES: Another thing for lawmakers to consider — whether it’s this session or one in the future — is the question of whether the state should actually put up some of its own money and invest in the pipeline. The state could invest in as much as a quarter of it. Wielechowski says it’s worth looking at.
Wielechowski: Obviously, there's risk involved. If there are cost overruns, the state could be on the hook on potential costs. At the same time, I think most people, in retrospect, would would agree that the state probably should have taken an interest in TAPS, for example
ES: TAPS is, of course, the Trans-Alaska Pipeline System.
And there’s kind of a tightrope for lawmakers to walk here — most would like to see a gas line built, and for it to be built, it has to be profitable. But at the same time, lawmakers have to make sure they don’t wind up with a bad deal for the state. Here’s Senate President Gary Stevens, a Kodiak Republican.
Sen. Gary Stevens: There's two elements. First is, we want to make sure that we encourage development of Alaska's natural resources by the industry. And on the other hand, we want to make sure that we protect Alaskans and that we get our fair share out of our natural resources. So that's the dichotomy we're facing.
ES: And that’ll be a focus this year.
WE: What about education? That’s been a big topic the past few years. Schools around the state are still looking for more cuts, even after lawmakers approved more funding this year. So what are you expecting? Should we expect it to dominate the session again this year?
ES: I don’t think so. There will certainly be some talk about it — maybe some changes around the edges — but I am not expecting it’ll be quite as dominant an issue this year as last year. But I am hearing some lawmakers would like to take this session to consider inflation-proofing school funding. That’s one thing Wielechowski and independent Sitka Rep. Rebecca Himschoot mentioned as a priority for this year. But I wouldn’t expect it to be a big focus, and if I were running a school district, I wouldn’t count on lots of extra money this year.
WE: Just a couple of months ago, Western Alaska was devastated by the remnants of Typhoon Halong. Recovery work has been scaled back a lot for the winter, and lots of folks are still displaced. Is there anything the Legislature can do on that front?
ES: That’s a question I put to Rep. Nellie Jimmie, a Democrat from Toksook Bay. And she says she’d like to see the Legislature beef up public safety funding so that people in the region can better prepare and respond to emergencies. She says it was heartbreaking to see the toll the storm took.
Rep. Nellie Jimmie: That was very hard to see. It just opened my eyes that we do need an emergency response for rural (areas) just like they do in the urban areas.
ES: So she’d like to see more money for village public safety officers and other public safety investments in rural Alaska.
WE: Finally, Eric, Gov. Mike Dunleavy says he’s going to unveil a fiscal plan next month. Do you think lawmakers will make any progress this year?
ES: Well, a fiscal plan requires a lot of hard choices and tough votes. And it’s an election year. This is an issue lawmakers have been trying to crack for a long time.
Wielechowski has a few things he’d like to see to stabilize the state’s finances — beefed up oil taxes, a corporate tax bill Dunleavy vetoed this year, and a few other things. But it’s a tough nut to crack.
Big Lake Republican Rep. Kevin McCabe says he’d support a cap on state spending, a constitutional amendment saying there’ll be a dividend every year and he says he wants the state to raise revenue through resource development. He says a 2021 fiscal policy task force had some good ideas that are worth revisiting.
Rep. Kevin McCabe: I would hope that we would take that entire thing, or at least the major elements of it, and take another hard look at it.
ES: But whether lawmakers can actually get it done, that’s unclear.
