This Legislature’s fourth special session began midday Monday when legislators were given bills to address two of Gov. Bill Walker’s 10 original agenda items.
Those bills were an omnibus tax bill and a seemingly noncontroversial bill providing health insurance to families of emergency responders killed in the line of duty.
It took two special sessions in 2015 to pass the budget, and a third special session was held last fall to buy out TransCanada’s share in the Alaska LNG Project.
The big items, an oil and gas tax credit bill; legislation establishing an annual draw from the Permanent Fund earnings account to fund government; and the operating and capital budgets were not introduced in House and Senate floor sessions.
Those will undoubtedly be introduced soon as administration officials spent the weekend devising new bills.
Walker added an 11th item to the special session call Monday — his legislation to establish a state oil and gas project development loan fund to be run by the Alaska Industrial Development and Export Authority.
The loan program would help offset significant cuts to the state’s expensive and contentious tax credits by providing low interest capital to small companies, but was all-but ignored in committee hearings.
The administration largely adopted the key points of the omnibus tax bill — formerly House Bill 249 and now House and Senate bills 4001 — that was stuck in the House Finance Committee at the end of the regular session.
However, the governor’s proposal to reinstitute a state income tax at 6 percent of federal obligation was added to the bill with the group of industry and sin tax hikes.
The tax increases are a primary piece of Walker’s New Sustainable Alaska fiscal plan to pull the state out of its $4 billion budget hole and balance the budget by fiscal year 2019. Higher industry, alcohol and tobacco taxes were expected to raise roughly an additional $250 million per year as first pitched by the administration.
The income tax would bring in about another $200 million per year.
Each tax started as its own piece of legislation, but they were combined by House Finance when several industry leaders of the impacted trades, commercial fishing, mining and transportation, said they were willing to absorb higher taxes as long as other groups felt similar financial pain.
Walker has said he is amenable to changing or deleting the higher taxes from his fiscal plan as long as the revenue gap can be bridged elsewhere.
Under the tax package most of the state’s fuel taxes would double. Alaska’s general motor fuel and aviation fuel taxes are currently among the lowest in the nation. The 8 cents per gallon highway fuel tax has not been raised in over 40 years.
The administration is pushing for a higher tax on large mining operations than was in the bill at the end of the regular session. The House committees had proposed a 1 percent tax increase on large mine operators’ net income, from 7 percent to 8 percent, before the bill died.
The administration reintroduced a 9 percent tax, but compromised on the length of a tax exemption for new mines. Currently, new mines do not pay an income tax for the first 3.5 years of production. The House cut that back to three years and the new tax bill sets a two-year exemption. The tax exemption was eliminated in Walker’s original mining tax bill.
Most fisheries landing taxes would be raised 1 percent, as in the regular session legislation; the major exception being a tax decrease from 4 percent to 1 percent on developing commercial fisheries.
Elwood Brehmer is a reporter for the Alaska Journal of Commerce. He can be reached at elwood.brehmer@alaskajournal.com.
