The budget Conference Committee wrapped up work early Thursday afternoon and sent the compromise version of HB 57 to the House and Senate for consideration. There were no huge cuts in spending overall although some institutions, like the University of Alaska, will be significantly affected. The Alaska House of Representatives passed the budget by a vote of 31-8. The Alaska Senate passed the bill by a vote of 16-1. The bill will now be sent to the governor for approval.

(Note: We will do a deeper analysis in our private Legislative Digest reports)

In the end, not much was cut in many parts of the budget. The compromise budget totals $4.1 billion in Unrestricted General Fund (UGF) spending and sets this year’s Permanent Fund Dividend at $1,100. The K-12 Base Student Allocation (BSA) will be fully funded at $1.2 billion, the same level of funding as the current year.

This reverses the $69 million cut to education advanced by the Alaska Senate. Budget conferees did agree on an $8 million cut to the University’s $325 million UGF funding, bringing the university to $317 million. The $6 million cut to Pioneer Homes put forward by the Senate Majority was also reversed. In total, the compromise budget cuts $128.7 million from FY 2018 agency and statewide operations compared to the FY 2017 budget, according to figures provided by the House Majority.

Governor Bill Walker also added oil tax credits to the Legislature’s special session agenda. The governor amended the special session call with the oil and gas tax credit reform bill, HB 111. Legislators indicated in the conference committee their intent to and oil and gas tax credit payments this year, as is provided for in HB 111.

“That’s why I am amending the call so legislators can complete work on House Bill 111. We must immediately address the subsidies we can no longer afford. It is the next critical component of a much needed compromise fiscal plan, and it must be addressed this year. “When we have reduced PFDs for Alaskans, we cannot continue to give out millions of dollars in subsidies to oil companies,” the governor said.

The conference committee capped oil and gas tax credit payments at $57 million, which is lower than the amount allowed by statute (in the $70 million range) and expressed legislative intent that no tax credit sales to third party buyers be allowed after the end of this calendar year, with the same applying to purchases by the state of tax credits from explorers. The cessation of purchases and transfers were sought in HB 111, the oil and gas tax bill that was hung up as the regular session adjourned. The Senate had also pushed for a far larger paydown of tax credit liability but the conference committee opted for a lower payment amount.

The state has a current liability of about $700 million on oil tax credits and it is expected to grow to about $1 billion over the next year due to work underway in 2016 and 2017.