Deep in the throes of a tumultuous legislative season, Gov. Bill Walker said Wednesday he may call a special session on Medicaid expansion and announced that his administration would soon organize a conference so Alaskans can consider all options -- including new taxes and using Permanent Fund earnings -- to balance the state's massive budget deficit.
In a speech at Commonwealth North in Anchorage, Walker also said he will likely veto a legislative measure seeking to limit his options on a natural gas pipeline because it will harm Alaska's chances to get natural gas to world markets with an economic plan.
Walker said House Bill 132, backed by Speaker Mike Chenault and sent to the governor shortly after his speech, would weaken the state's negotiating position for no good reason.
The bill would temporarily bar the state's gas line corporation from carrying out Walker's attempt to upsize a state-run gas line project that some say will compete with the Alaska LNG project that involves the state, Exxon Mobil, ConocoPhillips, BP and pipeline builder TransCanada.
Walker said the bill would force him to negotiate with those other participants in Alaska LNG with "both hands tied behind my back."
It's not clear that Chenault has the votes to override a veto. Walker said he hopes the Legislature does not take that route.
"I don't take the veto lightly," he said. "I'm sorry that perhaps the first piece of legislation that comes across my desk is vetoed. That's not a good way to start a relationship, but I feel very strongly about us having all the options available to us and not handicap ourselves, as the rest of the world is in the marketplace signing up contracts."
Walker said after the speech he did not know if he would immediately veto the measure or continue to try to negotiate a possible solution with lawmakers. Chenault and Senate President Kevin Meyer said recently they had offered Walker the chance to send a team to Houston, Texas, to review plans for the so-called AKLNG project and its confidential details -- but only if he'd promise to come back to the Legislature to get permission to proceed with his alternative.
But Meyer said talks broke down over the requirement that Walker receive legislative permission before $180 million held by the state's gas line corporation could be accessed.
Walker said after the speech he was "hopeful there would be a resolution until it became evident that funding for the project would be withdrawn."
Walker said the state is nearing the point where it will be in negotiations with the major oil companies on commercial terms. He said Alaska has learned over the years that negotiating with only one option puts the state in a weakened position.
He said a number of things could stop the AKLNG project. If that venture stalls, the state's backup 36-inch pipeline plan needs to be advanced enough to ensure it proceeds.
"To me it's about self-determination," he said. "We can be a great participant in the AKLNG but if we don't have that self-determination opportunity I think that weakens our hand."
He said he has talked to the oil companies and they understand what he plans to do and why. He said they have many competing options around the world for liquefied natural gas export projects and it helps the state to have two. He said the way the oil companies "keep their options open is commendable and I think we need to take a page out of that playbook to do that."
Walker said there has been "no significant pushback" from the companies, though he said one company has had more discussion about it than the other two.
Exxon Mobil said publicly in February that Walker's plans would create a project in "direct competition" with AKLNG.
An Exxon Mobil official in the audience, Sofia Wong, said after Walker's speech that she could not comment.
Exxon Mobil's position has not changed, said Aaron Stryk, Exxon Mobil's upstream media relations adviser in Houston, Texas.
"An expanded project will create confusion and uncertainty with federal regulators, potential buyers and the public about the state's intention to fully support and participate in the Alaska LNG project," he said by email after the governor's publicly broadcast speech. "Advancing the Alaska LNG project, with full alignment, is the best way to build confidence for financing, investors and the market."
Walker also said he's assembling a team of experts to closely review all documents related to the AKLNG project. Other partners in the project have supported that idea. The effort will happen over a 45-day period, beginning soon, he said.
"Just to understand really what's it all about," Walker said of the project after the speech. "So much of it is confidential we just don't really know. So many people I have talked to said they have not read this or they cannot read that. So I just need someone to get deep in the details of it."
During his speech, Walker said to laughter that it felt good to be out of Juneau for a day. He told the large crowd at the luncheon that the state needs to create a sustainable budget as soon as possible so it doesn't end up losing another $4 billion in the next fiscal year that begins July 1. He noted that cutting every state employee would still leave a large gap.
"One thing you can do at low oil prices is to make systemic changes to make sure we're not here again," he said.
He said his administration would soon release a computer model similar to one used by the Legislature that will allow Alaskans to plug in various budget scenarios, such as a reinstated income tax or using some of the Permanent Fund earnings, to see its effect on the $3.5 billion hole the state faces this fiscal year amid low oil prices.
"You can put in a certain price of oil, an income tax, some modifications on earnings of the Permanent Fund, see what it does," he said.
"The model is pretty much done and we're going to get it out I think in the next 30 days," he said after his speech.
He hopes families will spend time plugging in different scenarios.
"I just want them to understand what makes a difference and what really doesn't," he said.
Walker said his administration would soon organize something similar to the Conference of Alaskans in 2004, where 55 delegates discussed ideas for balancing the budget the last time oil prices were dangerously low. The proposals, including the first personal income tax since 1980, were soon forgotten. The price of oil began shooting up to record levels and eventually padded the state treasury with multibillion-dollar surpluses, creating savings the state is living on today.
The meeting might be held at the University of Alaska Fairbanks -- with people staying in dorms to save money -- shortly after the spring semester ends in May, Walker said.
Every idea will be on the table, he said.
The governor also paid several compliments to lawmakers during his speech, including saying that they're working extremely hard and looking out for the best interests of Alaskans.
He said it was a big deal that his measure to expand the Medicaid program in Alaska passed its first legislative committee, the House Health and Social Services Committee, late Tuesday night.
The measure, House Bill 148, has advanced to the House Finance Committee. As of Wednesday afternoon, no date had been set for a hearing.
Walker, who told the audience that one in five working Alaskans lacks health insurance, said he's hopeful the bill will pass before the session ends. But he also said earlier in his speech it's possible that the session may head into "overtime."
Asked for clarification later, the governor said it's possible he will call a special session if his Medicaid expansion proposal isn't passed.
House Speaker Chenault has said a special session would be a good way to address the issue of Medicaid expansion, rather than just extending the regular session.
Will Vandergriff, House majority press secretary, said on Wednesday that Chenault continues to hold that view.
Reporter Pat Forgey contributed to this story.