That’s a wrap

JUNEAU — State lawmakers moved to toughen crime laws, pay off unpaid oil incentive tax credits and give final approval to state budgets as the 2018 legislative session moved toward closure this weekend.

House-passed bills were moving through the Senate and Senate-passed bills through the House in an orderly process in the final days. Things were much different than last year, when rancor marked closure of the 2017 session and special sessions were called to deal with unfinished work.

Earlier in the week the Legislature approved what was likely the most important bill of the year, a plan to use Permanent Fund earnings to help fund the state budget and to do it in a structured manner, not ad hoc withdrawals.

There were no big surprises in the budget bills, the state operating and capital budgets, mainly because state revenues are still constrained. The operating budget approved by the House and Senate totals about $4.5 billion for Fiscal Year 2019, the state financial year beginning July 1.

The state capital budget, mostly for construction and major maintenance, is expected to total about $250 million in state funds.

Much of that will be for the required state “match” for federal highway and airport programs.

In one surprising development, the Senate moved to breathe new life into the Knik Arm crossing project, which would open up a new transportation route from Anchorage into the Matanuska-Susitna Borough, with a $4.5 million addition to the state capital budget.

The money basically replaces previously-appropriated funds taken from the project by Gov. Bill Walker following the collapse of state oil revenues in 2015. Keeping the project alive through a token of continued state support basically buys time for the project to qualify under a major federal infrastructure program championed by President Donald Trump.

The state House did not object to the money for the crossing project, but Walker could always veto the appropriation.

The crime package developed very late in the session. It was assembled in the Senate mainly by Sen. Kevin Meyer, R-Anch., who used his position as Senate Rules Committee chairman to attach a series of public safety amendments to a House-passed bill that added protection for health care workers in the workplace.

Among the changes, judges will be able to consider when setting bail a defendant’s full history, including crimes committed outside the state. Judges are also given more discretion in releasing, or keeping in jail, offenders charged with low-level offenses.

Sen. Mia Costello, R-Anch. moved amend the House-passed bill, HB 312, on the Senate floor with the provision tightening standards for release of low-level offenders. “When a judge believes a defendant is dangerous, the judge should be able to take steps to keep that defendant away from the public. Now they have a way to do that,” Costello said.

Another provision in the bill allows the state Attorney General to bring dangerous new drugs under criminal laws without having to pass a bill through the Legislature, a time-consuming process.

The measures stopped short, however, of a wholesale repeal of Senate Bill 91, a controversial crime-reform bill passed by the Legislature in 2016, that Costello and other legislators including Rep. Lora Reinbold, R-Eagle River, had pushed for. Costello and Reinbold are critical of SB 91 because they believe some of its provisions, mainly in easing jail-time, are contributing to the wave of property crimes affecting Alaska.

In another move related to crime the Legislature moved to increase funding for public safety including $12 million to hire and retain state troopers; $4 million for new equipment for troopers and the Anchorage Police Department; $75,000 to help citizen “community watch” programs and another $100,000 for community patrols in Anchorage, and $2.5 million to process a backlog of sexual assault kits.

The oil exploration tax credit bill, HB 331, was approved by the Senate May 11 after passing the House earlier. It allows the state to pay off about $900 million in unpaid oil and gas exploration incentive tax credits held mainly by small explorers.

Under a longstanding state incentive program companies had invested in exploration and drilling and had made several new discoveries on the North Slope and in Cook Inlet.

When oil prices and state revenues collapsed in 2015, however, the state was unable to pay all of the credits due. Because of that companies had to stop work on several promising discoveries.

The state is committed to paying off the tax credits in any event but it would take several years. Under HB 331, however, the state will issue bonds to pay the money owed immediately, giving the companies money they need to resume work on their projects.

The state will pay interest under the bonding program but the expense would be offset by companies agreeing to a 10 percent discount on payment for what they are owed. The discount will pay the interest on the bonds, state revenue commissioner Sheldon Fisher told legislators in briefings.

“It’s a win-win for everyone,” Fisher told the House Finance Committee, because getting the money immediately instead of having to wait several years is worth a lot to the companies holding the tax credits. Major oil and gas producers are not eligible for the program.

The legislation provides an incentive for the companies to resume work with a provision to lower the discount to 5 percent if companies agree to invest the money they get in new work within two years. That was added through an amendment in the House Finance Committee by Rep. Dave Guttenberg, D-Fairbanks.

Identities of the tax credit holders is confidential under state law but three companies with discoveries who acknowledge they are affected include Caelus Energy, a small independent working on the North Slope, and two independent companies developing new Cook Inlet oil and gas finds, Furie Operating Alaska and BlueCrest Energy.