- Associated Press - Monday, June 12, 2017

JUNEAU, Alaska (AP) - With just days remaining in Alaska’s special session, the House was poised to begin debating its rewrite of the state’s capital budget but lawmakers had yet to reach agreement Monday on an operating budget and deficit-reduction plan.

Debate on the capital budget was expected Tuesday. The special session is scheduled to end Friday.

The capital budget proposal that advanced from the House Finance Committee on Sunday would put $40 million toward oil and gas tax credits.

That, combined with the $37 million approved in the House version of the operating budget, is intended to meet a minimum prescribed by state law for the tax credit fund. The Senate, in its version of the two budgets, proposed about $360 million for credits.

The committee also rejected a Senate proposal to redirect $50 million from a gas pipeline project supported by Gov. Bill Walker toward a public school fund, additional state troopers and prosecutors and road maintenance and plowing.

During Sunday’s committee hearing, Rep. Les Gara, an Anchorage Democrat, said there is money in the operating budget to hire troopers and prosecutors. He said the Senate proposal provides one-time funding and called it a “cruel trick” to hire someone if the state can’t maintain those positions long term.

But Rep. Mark Neuman, a Republican from Big Lake, said the choice was clear between funding for additional troopers or putting money toward a gas project, “which I think is in question.” He supported redirecting the funds.

The gas line project has been marred by fits and starts and changes in direction. It is seen by supporters as a way to provide additional revenues in an oil-reliant state. But it is in its early stages and there is no guarantee it will be built.

The House and Senate agree the state can no longer afford cash payments for future credits earned by smaller producers and explores but they disagree on other elements and on whether the state should raise taxes on the industry. That issue also remained unresolved in the session’s waning days.

Walker used his veto authority the last two years to limit funding for credits, citing concerns with cost and the lack of a plan to tackle the state’s multibillion-dollar deficit.

The state faces a credit obligation of about $1 billion between existing demand and the demand forecast for next year.

The Senate must agree to changes the House makes to the capital budget or the matter would go to a conference committee.

Senate Finance Committee Co-chair Anna MacKinnon said she was in communication with the House Finance co-chairs over the weekend and said the House had taken some steps with the capital budget that the Senate sees as favorable. The place where there is probably the most disagreement is on the size of proposed tax credit payments, she said.

MacKinnon, a Republican from Eagle River, said members of her caucus were reviewing the House bill.

A conference committee meeting scheduled for Monday on the operating budget, meanwhile, was cancelled. MacKinnon, who serves on that committee, said budget conversations are continuing, with Friday’s end-of-session date in mind.

State agencies have begun preparing for a government shutdown if a budget isn’t passed before the new fiscal year starts on July 1.

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