Alaska State Chamber of Commerce Capital Notes
Tuesday, April 06, 2010
Down the Stretch
The legislative session has entered the final stretch. There is less than two weeks left of 2010 legislative session. Depending on which person you ask, what needs to occur at this point is anyone's guess. The only thing that must occur is that the legislature must pass an operating budget for the next fiscal year. Mandated by the constitution, passage of the operating budget must be agreed upon by both houses of the Legislature. As of today, both the House and Senate had passed their versions of the operating budget. Conference committees were being appointed by the presiding officers to work out the differences. The House passed an $8.121 billion operating budget and the Senate passed an $8.153 operating budget. Both budgets were slightly down from the Governor's $8.168 billion budget. Expect the conference committee to meet three or four times to work out the differences with final passage of the budget occurring just before adjournment.
The capital budget process is underway. The Senate is expected to roll out a draft of the budget in the coming days. The secondary budget bill is not required or mandated by the constitution; however most legislators would tell you their jobs often depend upon passing a hefty capital budget to fund local projects. Once passed by the Senate, the House will pass their version with no conference committee appointed to work out differences. Senators will work with their House counterparts to ensure important projects make the final cut in the Senate. The capital budget never seems to get smaller in the process, but the governor, using his line item veto power, may cut it. Normally, the Governor sets a spending line that the legislature almost always tries to break.
Administration and the Governor
The Administration is having a hard time in getting some of their measures passed. The Governor's Performance Scholarship program seems to be going nowhere. The bills, HB 297/SB 224, introduced in each body seem to have become high-centered with election promises, equity concerns and needs-based plans. Some legislators were opposing the idea because it was called the "Governor's scholarship program." Other names came forward, but some legislators found any excuse to be disagreeable. The State Chamber has supported both measures.
The Governor's oil and gas tax measures also seemed to be mired down in politics or for that matter lost in the shuffle with the hundred or so oil and gas bills in each body. The Governor introduced the bills, SB 271/HB 337 in each body to encourage investment in new drilling for oil. But as of today both bills were still stuck in each body's respective resources committees.
Cruise-ship tax, rollback legislation
Both SB 311/HB 442 are making some progress. In recent days, the bills have had lengthy hearings in both the Senate and the House Finance committees. The measures call for a 30% rollback on the existing $50 tax for each passenger. Legislators are split on the existing proposals, but likely some form of the legislation will be passed. According to the Governor's office a deal with cruise-ship companies to drop a lawsuit over the state's right to tax cruise-ship companies may be dropped if the legislature passes some version acceptable to the companies. We will see if the legislature bites on to any sort of negotiation.
Other Oil & Gas Legislation
The legislature has more than 100 bills dealing with Oil and Gas. The issues are complex, profound and depending upon your perspective dire, immediate or unimportant. The State Chamber has supported new investment measures with rollbacks of higher tax rates recently adopted in ACES. There are at least five measures in each body that provide for new investment and rollback provisions. The legislature though is undecided on which measure should be a vehicle for final passage. Some legislators are hopeful nothing happens. A bill to separate the oil tax structure from the gas tax structure did pass the Senate, but legislators in the House seem unwilling to do something similar. At this time and seeing the indecisiveness of the legislators on the many different issues, it is likely nothing will pass with any significant changes. On the bright side, there is some discussion by legislators to give the Alaska Housing Finance Corporation the authority to fully investigate and make final recommendations on a gas line.
There are a number of other issues important to State Chamber members. Mining taxation bills, processors tax credits, Alaska Coastal Zone Management Program legislation, ballot initiative reform, exclusive liability for employers, along with the numerous oil and tax measures. We have devoted time to all of these issues and likely continual work will be necessary in the coming weeks. With an excessive amount of bills stuck in each body's finance committee, it is likely most bills will not pass this year.
There is a push to move some bills associated with property tax exemptions. We see these measures as merely shifting the tax burden from the local property owner to businesses. We are not supportive of any of the bill currently before the legislature regarding local property tax exemptions.
Of late, we have been working on an offerror's preference (procurement issue for Alaska businesses) contained within in HB 225. We sent this bill out in our newsletters for comment in February looking for member input. It was recently noticed that an important provision was being deleted for Alaskan businesses that provided IT services and other technical services to the state on a bidders preference. We have been working with the sponsor and at this time, the sponsor's office seems amenable to keeping the important provision in the legislation.
As always, we are working on a number issues for you and Alaska's businesses. If there is an issue important to you, please feel free to let us know.
Any person can follow the legislative process and access new bills, committee substitutes or find out which legislator is on a particular committee by using the Legislature's Bill Action and Status Inquiry System (BASIS). You can see what committee a bill is in, when it will be heard, how committee members voted, and much more. You can also view all bills relating to your specific areas of interest by selecting "Subject Summary" from the menu on the right. Just click on the link below and bookmark it for later use.