JUNEAU — Alaska lawmakers Wednesday made no public progress on either of the two big problems still facing them on their third day of overtime, though legislative leaders said they're still working behind the scenes.
"There are meetings going on," said House Speaker Mike Chenault, R-Nikiski. "Maybe not a lot of things in the public, but there are conversations going on around the building."
The Legislature now appears set to stay at work in Juneau at least through the weekend and is heading into its fourth day of extra time. Since Sunday, it has held just three formal hearings on the two main planks of Gov. Bill Walker's plan to close the state's $4 billion budget deficit.
The linchpins of the plan, House Bill 245 and Senate Bill 128, would restructure the $53 billion Permanent Fund to generate an estimated $2.4 billion for state government.
The second major piece, House Bill 247 and Senate Bill 130, would scale back the $775 million in cash tax credit subsidies projected to be paid by the state to small oil and gas companies next year.
The four bills are all stuck in the House and Senate finance committees. But the Senate committee didn't meet Wednesday, and the House committee held hearings on the Legislature's major criminal justice reform initiative, Senate Bill 91, instead.
While the committees failed to take up the key issues Wednesday, there were two promising signs. One was a briefing for lawmakers on the Permanent Fund legislation, delivered by Walker's administration.
A second was a scheduled 2 p.m. meeting of the House Rules Committee. That's where a heavily amended version of Walker's oil tax bill has been resting since last week, when the legislation was pulled off the floor because it lacked the votes to pass.
The rules committee meeting, however, was postponed until Thursday, with the committee's chairman, Anchorage GOP Rep. Craig Johnson, saying it had been scheduled as a placeholder in case closed-door negotiations produced a deal that could get 21 votes in the 40-member House.
That deal failed to emerge Wednesday. But even with the meeting's postponement, there was clearly work being done on the legislation, with key lawmakers from both parties and staff from the House Resources Committee heading into and out of offices.
Chenault wouldn't say who, exactly, was negotiating a solution, but he acknowledged that "some people" were meeting quietly.
"Maybe the issue is it's trying to come up with an agreement and they don't want to hear from outside sources," he said. "They don't want to hear from the oil industry; they don't want to hear from those against the oil industry. Maybe that's what they're trying to do."
The oil tax legislation is just one piece of the state's financial puzzle that will take several more pieces to solve.
But Democrats and Republicans say the issue is holding up everything else, since the savings from scaling back cash tax credit subsidies will help determine how lawmakers vote on other legislation, like the restructuring of the Permanent Fund or a proposed new tax on personal income.
While the Republican-led majorities control both the House and Senate, the oil tax legislation will also likely have to satisfy House Democrats. The Democrats have criticized the cash tax credit subsidies, and have enough votes to block spending from a state savings account that's expected to be needed to cover next year's deficit.
The Permanent Fund bills, meanwhile, saw no action in either the House or Senate on Wednesday, though lawmakers gathered in the afternoon for an unusual briefing and back-and-forth on the legislation with Walker and top members of his administration.
The meeting, in Juneau's Centennial Hall convention center down the hill from the Capitol, was held at the request of the co-chairs of the House Finance Committee, whose members appear divided about whether to spend Permanent Fund earnings on government.
Even though the House Finance Committee has made significant adjustments to the governor's Permanent Fund bill, co-chair Mark Neuman, R-Big Lake, said it was Walker's responsibility to convince lawmakers of its merits.
"That was the message to the governor: It's your bill," Neuman said in an interview. "So get out there and sell the damn thing."
The briefing drew about two-thirds of the Legislature — all four members of the Senate Democratic minority, most of the 13-member House Democratic minority, and about half the Republican-led House and Senate majorities.
Chenault sat front and center, while most others sat farther back, some noshing on sandwiches. A half-dozen lobbyists sat in the back.
The dry nature of the presentation — Attorney General Craig Richards at one point referred to a statistical measure called an R-squared coefficient — left several legislators fiddling with their phones, while at least one, Anchorage Republican Rep. Bob Lynn, occasionally nodded off.
Walker and his administration talked for an hour before lawmakers began peppering him with questions. Democrats wanted to know about the Permanent Fund plan's disproportionate impact on lower-income Alaskans, while Republicans pressed Walker on the details of some of his tax proposals and on what would happened if they delayed action for a year.
They also asked for more financial modeling — so much modeling, in fact, that Chenault said Walker's administration would need a new swimsuit by the time the work was done.
Administration officials, meanwhile, pressed their case that restructuring the Permanent Fund is the only way to avert sharp cuts to government services in the future and an eventual elimination of the dividend program.
The tax proposals would still leave Alaska at the bottom of the list when it comes to overall tax burdens, and it would still be the only state to write its residents dividend checks each year, said Revenue Commissioner Randy Hoffbeck.
Walker also offered lawmakers political cover.
"When it's all said and done, if there's any credit to be given, I'm happy to let you have the credit," he said. "I'll take the blame and Alaska will be the better for it."
Walker warned his audience that taking action on the Permanent Fund and oil taxes — the two biggest pieces of his financial plan — would not be enough.
The plan also includes a personal income tax and increased taxes on resource extraction and consumption, and Walker has told lawmakers this year that a failure to pass some type of broad-based tax would likely cause him to call them into a special session.
"We need all the pieces together," Walker said, when asked what would happen if lawmakers passed the Permanent Fund legislation but not his tax proposals. "If you leave out other pieces, you don't close the gap; you don't finish the job."
There's been no movement, however, on Walker's income tax or tax increases since the session went into overtime.
While the House has held several finance committee meetings on other legislation, the Senate has had plenty of time to vet Walker's tax bills. Since Monday, the Senate has held just three meetings — one finance committee hearing, plus two floor sessions that took up a total of 23 minutes.
But conservative senators have already stated their firm opposition to Walker's tax proposals. And their chamber has bottled up Walker's proposed income tax and tax increases in the resources and labor committees instead of advancing them to the finance committee — typically the last stop before a floor vote.
Asked why lawmakers weren't holding hearings on the tax bills Wednesday, Senate President Kevin Meyer, R-Anchorage, responded simply: "They never made it out of committee."
Eagle River Republican Sen. Anna MacKinnon, co-chair of the Senate Finance Committee, said all the other Senate committees are "shut down."
The Senate, she added, is "ready to act" when the House solves the oil tax problem. But her chamber doesn't plan to bring Walker's tax bills forward, she added.
Walker "has a right to call us back into special session if he wants to," MacKinnon said.
"That will be a special session about taxing Alaskans," she said.