Legislative Report newsletter masthead
June 13, 2017 
Legislative Report newsletter masthead

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Fairbanks: 456-8172
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davidguttenberg
 

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Alliana Salanguit
Seth Whitten
 


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Dear Friends and Neighbors,

It is the 27th day of the Special Session focused on our fiscal issues. I know many of you are frustrated to see a legislative gridlock in Juneau. I too am frustrated, but we are at a critical point in Alaskan history and it is important that we get this right. I am sure I sound like a broken record. You have all heard me say that the house passed a balanced, sustainable fiscal plan that prioritizes Alaskans while the Senate wants to drain our savings and pray that oil revenue goes back up. This was the message I stood behind at the beginning of the session, and it is still the message I stand behind now.

Our plan faces the reality of dropping oil prices and lower production levels. It diversifies our economy and prioritizes Alaskans over oil. Rather than cutting public services, we cut the state’s dependence on oil. We also added a progressive income tax to increase state revenue and fund essential services. Our coalition recognizes that public services are not a cost, but a worthy investment in Alaska and in you. We have set a foundation for Alaska to have a stable economic future instead of being a boom-and-bust state.

In contrast the Senate Majority’s fiscal plan includes:

  • An operating budget with hundreds of millions of dollars in cuts which requires slashing funding for education, senior care and public safety,
     
  • a capital budget with $288 million in oil tax subsidy payments,
     
  • a version of HB 111 – oil and gas subsidy reform—which actually makes our bottom line worse to the tune of about $885 million over the next 10 years,
     
  • a Permanent Fund Restructure as the only revenue generating measure, and a “structural deficit” of about $200 million- meaning the Senate is intentionally running a deficit and burning up our savings.

They rejected three of four components of our stable fiscal plan making compromise difficult. It leaves the state with another unsustainable, unbalanced approach to closing our fiscal gap.

Last week, the Governor released a Fiscal Plan Compromise Package as a recommendation to the legislature. The recommendations falls short of generating sufficient revenue and still leaves a significant deficit. The plan includes SB 12: Employment Tax for Education Facilities which is a regressive tax that will only generate $100 million in new revenue. We are willing to look at this bill if the Senate passes it to us, but there is a lot of work to be done if SB 12 is to be fair to Alaskan. The Governor’s plan also leaves a $300 million deficit in place, increases payments to oil companies by approximately $835 million more than the House’s plan by 2027, and provides a 25% smaller dividend than our plan. We would need to continue draining our savings and cutting vital services. 

Bill Title Version
HB111 Oil and Gas Tax Credit Reform Senate plus 100% ring fencing
SB12 Education Head Tax Senator Bishop structure: target $100 million
HB60/SB25 Motor Fuels Tax Either version
SB26 Permanent Fund Protection Act Senate version
HB57/59 Operating / Mental Health Trust Budget House version
SB23 Capital Budget Governor’s priorities plus Senate deferred maintenance and oil and gas tax credit payment

This is the third year in a row that we have had to go into special session and have had the threat of a government shutdown. These plans don’t absolve us of that for next year. We need to stop kicking the can down the road and solve this problem once and for all. We cannot keep doing this year after year. We need a long-term solution now, the House knows this and we will keep working to ensure that that is what Alaska gets. It is what Alaska deserves. 

When we compromise, the Alaska House Majority Coalition needs be confident that the plan we agree on is not just “doing something,” but doing better. Whatever the plan may be, it needs to prioritize Alaskans over oil and stabilize Alaska’s fiscal future. We cannot settle for anything less than that.

Best Regards,

[signed] David Guttenberg

Ester, Goldstream 1 & 2, Steese East/Gilmore, Steese West, and University Hills