JUNEAU — The Alaska House on Sunday abruptly canceled a scheduled floor vote on the bill to increase oil taxes and rewrite the state's tax credit subsidy program for oil companies, casting the fate of the legislation into question.
House Speaker Mike Chenault, R-Nikiski announced the decision at the end of a two-and-a-half-hour floor session in which lawmakers passed four other bills, saying in an interview afterward that his colleagues were "scattered" and "not ready to vote."
"Trying to draw people together in order to pass a bill," he said, describing Sunday's events..
The cancellation came after a two-hour, closed-door caucus by Chenault's Republican-led majority earlier in the day, with another caucus set for first-thing Monday morning. Chenault characterized his caucus as split on the legislation, House Bill 247, which would gradually scale back the state's tax credit regime that's projected to pay out subsidies of $775 million to small oil companies next year.
The bill was originally submitted by Gov. Bill Walker, whose version would have reduced the cash subsidies by $400 million next year while raising about $100 million in increased taxes from big North Slope oil producers, compared to the current situation.
But in the House finance and resources committees, Republican leaders said they didn't want to jeopardize oil development begun under the existing tax regime. And they reduced the impact of the legislation. The Walker administration now projects it will save a maximum of $20 million next year.
The problem? The current version of the bill, from the finance committee, still makes changes that some pro-industry Republicans don't support, like one that would end a generous tax deal for newly developed oil after five years. One wing of Chenault's caucus appears to remain opposed to the bill, with members arguing that the proposed changes are too abrupt.
"I cannot support it," Rep. Lynn Gattis, R-Wasilla, said in an interview late Sunday. "We should not change tax regimes willy-nilly."
The majority holds 26 of the House's 40 seats, and another way to pass HB 247 could be to cobble together votes from both majority and minority members.
But currently, the legislation also lacks the endorsement of the House Democratic minority, which supports steeper taxes and quicker reductions to the tax credit program. Minority members were preparing to propose amendments Sunday that would allow them to support the bill.
"We feel that we can make a lot of good, substantive changes," said Rep. Scott Kawasaki, D-Fairbanks. "We are going to work with everybody that's willing to work with us on the floor to make it a better bill."
The divisions were reflected in House Finance Committee members' recommendations on the latest version of the bill — the one that's now up for consideration on the House floor.
Of the committee's 11 members, just one, co-chair Steve Thompson, R-Fairbanks, gave a "do pass" recommendation. Four gave a "do not pass" recommendation: Tammie Wilson, R-North Pole; Lance Pruitt, R-Anchorage; Gattis; and Kawasaki.
Dan Saddler, R-Eagle River, and Mark Neuman, R-Big Lake, gave no recommendation. And Les Gara, D-Anchorage; David Guttenberg, D-Fairbanks; Bryce Edgmon, D-Dillingham; and Cathy Munoz, R-Juneau, recommended "amend."
The challenge now is for lawmakers to strike some type of balance that can draw enough votes from one side of the political spectrum without losing too many votes from the other.
"If you go too far one way, then you lose votes on the majority side. If you go too far the other way, you lose votes on the minority side," Chenault said. "It could go either way."
He suggested that some of the responsibility for recruiting the necessary votes belongs to Walker.
"It's not my bill, so I don't go around and carry a chit sheet to see who's going to vote and who's not going to vote," Chenault said. "It's the governor's bill, and they don't know how many people they have voting for it."
Walker's communications director, Grace Jang, responded with an emailed statement: "Gov. Walker will continue to work with legislators to put Alaska on a sustainable path forward and to fix the problem this year."
The debate over tax credits has been one of the most contentious of this year's legislative session. The state, with a $4 billion budget deficit, is set to pay more than $750 million in the cash, tax-credit subsidies to small oil companies next year — $200 million of which represent payments deferred from last year — at the same time lawmakers are considering revenue-generating legislation that could reduce Alaskans' Permanent Fund dividend checks.
The issue has the potential to become a potent one for lawmakers' campaigns.
Brad Keithley, a budget hawk and oil and gas consultant who spent roughly $100,000 attacking and supporting candidates in the 2014 election cycle, wrote in a Facebook post Sunday that he's already created an Excel spreadsheet to compare lawmakers' votes on tax credit and Permanent Fund legislation.
"If they don't make significant, significant cuts to the oil-tax credits, they're just leaving themselves wide open for a clear attack," said Sen. Bill Wielechowski, D-Anchorage.
In the Senate, the companion version of HB 247 is still in its first of two committees, with just one week to go in the 90-day legislation session. Wielechowski said he sees no "coherent endgame" from the Republican-led majority.
"I just think they have conflict within their caucus and they can't come up with a decision," he said in a phone interview Sunday. "They're hard decisions to make."
Asked how he'd explain his chamber's current predicament, Chenault acknowledged that the path forward for the tax credits legislation isn't clear.
"I really don't have an answer," he said. He added: "That's why we're kind of working on it — to make sure that there are the votes there."