Alaska policymakers agree on Permanent Fund restructure, not much else

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JUNEAU, Alaska (KTUU) - Democratic and Republican lawmakers with sway in the Alaska Capitol say they are unwilling to adjourn this year without passing a law that taps into Permanent Fund earnings to help close the $2.7 billion budget gap.

Snow falls in front of the Alaska Capitol in Downtown Juneau in March 2017

Even if they were willing to walk away without a plan like the one outlined in S.B. 26, Gov. Bill Walker says he would consider calling them back for a special session.

While the concept of reducing dividends paid to Alaskans and drawing a couple billion dollars a year to help pay for government -- which in its most recent form would reduce the deficit by two-thirds -- there is little agreement on what to do about the remaining one-third.

Rep. Gabrielle LeDoux, an Anchorage Republican who caucuses with the House Democratic majority, expressed a sentiment that is widely held in her faction during a Tuesday news conference.

"I want to make this perfectly clear: if the Senate thinks that we are going to get out of here with just a (Permanent Fund restructure), they've got another thing coming," she said.

The Democrat-led House majority coalition believes that an income tax must also be implemented and that oil and gas tax reform legislation must pass as well.

However, Senate President Pete Kelly, R-Fairbanks, said in an interview Tuesday that his members will not support an income tax or any other broad-based tax, and he said that the House-endorsed oil tax reform bill, H.B. 111, is too sweeping.

Senate Republicans believe that only the $1 billion-plus cash credit liability should be addressed, while the latest version of H.B. 111 calls for a broader overhaul that would also raise production tax rates.

As the Legislature is now barreling toward the 121-day constitutional limit to regular legislative sessions, there is no obvious path to resolve those differences.

But policymakers of all political leanings are committed to a lengthy bout of overtime, as there will be a contentious campaign cycle next year, with many vying for the governor's job and many more anxious to hit the campaign trail.

Walker, for example, said he is "anything but optimistic" that unpopular bills implementing a broad-based tax could be successful next year, even if he believes such a plan is needed.

"We need to have a plan in place, passed and approved, so we can stand up and say, 'It's done. A plan is in place. The fiscal deficit is over,'" the governor said in a news conference. "Then we can move on."

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