Permanent Fund legislation stalls in House as Walker asks for support

JUNEAU — Gov. Bill Walker's legislation to restructure the Permanent Fund stalled Wednesday in the House, as he and Republican leaders worked to secure the six votes needed to pass the bill out of the finance committee and the 21 to turn it into law.

The finance committee delayed its 9 a.m. hearing on the legislation most of the day, then finally canceled it. Walker, meanwhile, held a news conference to ask for lawmakers' support.

"It doesn't take a rocket scientist to figure out they haven't come to an agreement," said Rep. Lynn Gattis, R-Wasilla, a finance committee member whose firm stance against the Permanent Fund legislation has left her watching from the sidelines.

Getting the bill out of the finance committee, Gattis said, remains a "hurdle," and passing it on the House floor is an even "bigger hurdle."

In his news conference Wednesday afternoon, Walker reiterated his argument that approving his legislation, Senate Bill 128, is the only way to preserve the state's dividend program.

The legislation, which passed the Senate last week, would set dividends at $1,000 next year, down from last year's $2,078. But it would also halve the state's budget deficit.

Walker says that would stave off the need to spend Permanent Fund money to cover the gap in the future, putting future dividend payments at risk.

"If nothing changes, we continue the path we're on, the dividend program will go away by 2020," Walker said at his news conference. He thanked the Senate for passing his legislation, and added: "Now we need the House to sort of bring it across the finish line."

[As PFD reductions loom, little public backlash so far]

Walker also indicated he'd likely call lawmakers back for another special session if they don't pass the bill. The Legislature is nearing the end of a one-month special session Walker convened last month, after a four-month regular session that failed to produce the financial reforms he wanted.

House Republican leaders plan to unveil a new, rewritten version of SB 128 in a Thursday morning finance committee meeting, with provisions negotiated with minority Democrats "that hopefully are acceptable," said Rep. Steve Thompson, R-Fairbanks, and a co-chair of the committee.

"We're trying to get something that can work with people," he said late Wednesday, after emerging from a meeting with Walker administration officials. "We've been talking all day long, all last night."

Thompson wouldn't reveal the legislation's new provisions.

But he said he was trying to make the new bill acceptable to enough members to pass the House without losing support in the Senate, where the Republican-led majority could balk at any concessions made to House Democrats.

The new legislation will also have to satisfy Walker, who could veto a bill that doesn't do enough to reduce the deficit.

House Democrats have expressed hostility toward the Permanent Fund legislation so far, saying the Legislature hasn't asked enough of oil companies to ask residents to give up part of their dividend checks.

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They've also objected to a provision in SB 128 that replaces revenue from the Permanent Fund with oil taxes and royalties when oil prices rise, rather than allowing the increased oil money to boost the state budget.

"Everything's in play," said Rep. David Guttenberg, D-Fairbanks. "It's a comprehensive package of issues that needs to come together."

Any compromise to pass the legislation is likely to come without support from the faction of the House Republican-led majority that includes Gattis and other Mat-Su representatives, who say government spending hasn't been cut far enough to justify dividend reductions.

The House's Republican leaders, and Walker administration officials, aren't negotiating with Gattis, she said.

"Because I'm pretty darn stubborn," she said. "I think pigheaded is what some might call me."