Daily Sitka Sentinel

Lots Yet To Be Done In Session, Stedman Says

By SHANNON HAUGLAND

Sentinel Staff Writer

The Legislature passed its 90-day mark on Sunday, but the end isn’t in sight for most of the biggest issues on the table, said Sen. Bert Stedman.

“I would expect us to continue this session,” Stedman said Friday. “We still have a couple of weeks’ worth of work or more.”

Legislators kept working through 3 a.m. today, and were back at it this morning.

Stedman, who represents Sitka, Ketchikan and other Southeast communities, said the Legislature still needs to look at revising the oil credit structure, Permanent Fund legislation and “dealing with the fiscal matter, which is daunting, to say the least.”

To start closing the current $4 billion gap, Gov. Bill Walker has proposed legislation to reform Alaska’s oil tax credit subsidy program, restructure the Permanent Fund and implement a personal income tax.

But Stedman said he believes the oil tax structure should be dealt with first.

“I think it’s difficult to ask people to give up their Permanent Fund or ask people to restructure the Permanent Fund to redirect to the general fund, with the deal with the oil tax structure unchanged,” he said. “It needs to be dealt with. We’re in a position of negative severance tax. ... We’re paying a severance tax instead of collecting it through the reimbursement of credit, and that doesn’t work.”
He said the expectations of the benefits of Senate Bill 21 – more production, more jobs and a 35 percent tax rate – have not come to pass, and it’s costing the state. Stedman was one of the most vocal opponents of Senate Bill 21 when it was passed by the Legislature.

Stedman said some important bills are working their way through Senate Finance and House Rules committees and have not yet come to the floor.

“With all that being said, there are other things we’re continuing to move forward,” he said.

Stedman said he’s looking forward to the ground-breaking on the new Mt. Edgecumbe pool, which may be as early as the end of next month.

The pool financing was part of a statewide bond package passed by the voters several years ago.

Stedman said he’s also watching for progress on the reconstruction of the road at Starrigavan, and the road to Katlian Bay.

Sitka and the other larger communities should expect around a 30 percent cut in their allocation for revenue sharing, which may be converted into a “community assistance” program, Stedman said.

“We’re trying to save the program, so everyone’s going to get a little bit of a haircut, but not shaved completely,” he said.

With the state budget in such dire straits, Sitka and other communities should not expect to see much in the way of capital projects – with the exception of pass-through federal funds. 

“We’re trying to get the pass-through money for the cruise ship (passenger excise) tax,” he said. Because of the current litigation by the industry against Juneau for using excise tax money for an art project, Stedman added, “All of the communities are going to have to tighten their regulations.”

Stedman said he’s keeping a close eye on proposals related to the Permanent Fund.

“I don’t want to drain it for future generations in 15 years, with an empty oil field and no Permanent Fund in place,” he said. “Protection of the Permanent Fund is paramount. I’m in favor of a budgetary solution that leaves intact a dividend stream that’s protected for the people. ... There’s no easy answer.”

He also isn’t in favor of solutions that provide no inflation-proofing of the fund.

Stedman said today that the session is going beyond the 90-day target date, and toward the 120 days constitutional length. Some of the legislators are putting their cars on the ferry today, assuming the rest of the session will be moved to Anchorage – in line with what the Railbelt legislators prefer.

“They want to go home,” he said.

But Stedman said he is more preoccupied with the end product, than the end date of the session.

“I’m more concerned with the quality of the work product than when we get done,” he said.

Stedman compared the current budget crisis at the state level with the crisis Sitka faced with the Alaska Pulp Corp. mill closure in 1993.

“Though we’re going to get squeezed, it should be nothing new to people living in Sitka in the 1990s,” he said. “You adjust to economic changes and life goes on.”

Stedman said the situation is serious, and didn’t finish the interview on an optimistic note.

“The state is in a position where it’s financially crippled as far as the eye can see,” he said. “We will be lowering expenditures in the operating budget. You won’t see capital expenditures for at least a half a decade to a decade. We’re being bled out of cash. It makes it very difficult. The state won’t be in a position to help with Blue Lake or anything.” 

He expects Sitka will have a lot to talk about over the next couple of months, as it grapples with balancing its own budget, and a possible property tax increase on the ballot in October.

“This will be an interesting topic over the summer,” he said.

Stedman said Southeast should come out of the financial crisis “pretty well,” while Anchorage may be hit harder.