Senate passes motor fuel tax, most significant new revenue of session. AKLEG Day 42 recap

Sen. Click Bishop during a Senate Finance Committee meeting on Feb. 13, 2019. (Photo by Alaska Senate Majority press)

It’s Super Tuesday! Four years ago, Alaska Republicans were heading to the polls to nominate Ted Cruz in what was already a last-ditch, lost attempt to nominate anyone other than Donald Trump for president. This year, the party isn’t holding a primary at all.

Anyways! The Legislature continues to plug away as the House gets ready to begin work on the operating budget after a drafting hitch on Monday.

Senate passes new revenue

The Senate approved Senate Bill 115 Sen. Click Bishop, R-Fairbanks, on a 12-5 vote Monday. The legislation raises the taxes on highway motor fuels to 16 cents per gallon and marine fuels to 10 cents per gallon, taking Alaska’s motor fuel tax rates from the lowest in the nation to the near-lowest in the nation.

It’s expected to generate about $35 million annually and is intended to help take care of road maintenance, an issue Bishop has regularly raised in recent years.

“We’re no longer able to keep up with our needs. Our potholes are turning into ruts and our ruts are turning into bigger and bigger liabilities for Alaskans,” he said. “It’s much-needed. It’s putting the Department of Transportation in a hard spot. The travelling public should all get the same amount of attention whether you live in a community that has 300,000 people or on the Richardson Highway with a few hundred people.”

No one spoke in opposition to the bill during the short, 22-minute floor session. Sen. Donny Olson, D-Golovin, asked what kind of benefit people in rural Alaska without DOT maintenance would get out of this. Bishop said that people could apply for a partial refund of 6 cents per gallon.

Here’s the final vote:

Yeas:  Begich, Bishop, Coghill, Giessel, Gray-Jackson, Hoffman, Kiehl, Micciche, Olson, Revak, Stevens, von Imhof

Nays:  Hughes, Reinbold, Shower, Wielechowski, Wilson

Excused: Costello, Kawasaki, Stedman

Senate Bill 115 now heads to the House. It is the largest piece of new revenue that has traction this session. The House has put some attention into a proposal by Rep. Steve Thompson, R-Fairbanks, that would institute a state lottery with more moderate—and likely accurate—revenue compared to Gov. Mike Dunleavy’s $100 million lottery proposal. Thompson’s House Bill 239 would raise between about $5 million and $10 million annually.

The revenue might no amount to much, especially when the state is staring down huge multimillion-dollar deficits, but something is better than nothing. This is also the second Bishop-sponsored form of new revenue that’s likely to pass.

Last year, the Legislature approved his education PFD raffle proposal, which raised nearly $1 million in its first year.

Covid-19

The news of the day, though, was the administration’s update on the 49th state’s preparations for what health officials say is the inevitable arrival of coronavirus. Three Alaskans have already been tested, said State Chief Medical Officer Dr. Anne Zink, and two have come back negative with one still pending.

Gov. Mike Dunleavy pledged to hold regular updates with legislators—who’ve been growing somewhat nervous in the last week—and announced plans to request an additional $13 million for the state’s response to the effort.

The request is for $4 million to be added to the supplemental budget, which has already passed the House, in order to match an additional $9 million from the federal government. The money would go to additional public health nursing positions as well as positions in the state’s testing lab.

Meanwhile, Rep. David Eastman has been leading the charge on concern about coronavirus. Last week, he offered a special order raising concerns about how the Legislature would handle its business if a quarantine or social distancing order was put into effect. He called on the Legislature to come up with a formal plan.

He was later seen stocking up on bottled water and toilet paper.

“Our resilience as a state will soon be tested in ways that will be difficult to anticipate. The November 30th earthquake came as a sudden shock to all of us, and our resilience in the face of it was on display for the entire country to see. Alaskans did well,” Eastman wrote in a Feb. 27 blog post about the availability of masks. “While some Alaskan families were hit especially hard by the earthquake, the coming public health crisis will be a far greater disruption for the majority of Alaskans. It will test the resilience of our families and our communities.”

House passes Permanent Fund Protection resolution

The Legislature doesn’t have much of an interest in finally tackling the formula driving the permanent fund dividend formula but the House did pass a non-binding resolution on Monday that, according to the House Majority’s statement on its passage, “reaffirms the commitment to reject any form of spending that threatens to reduce the value of the fund.”

House Concurrent Resolution 13 saw a full day of amendments on Friday and reached a vote on Monday, clearing the chamber 24-15.

The measure was staunchly opposed by the minority Republicans, who renewed the fight for the full dividend, while majority members said the most important goal is to preserve the permanent fund itself.

Though the resolution is non-binding, it does set out a clear expectation that the House will stay within the rules set out for how the Alaska Permanent Fund can be spent as the House gets underway with the operating budget. Gov. Dunleavy’s proposal for a flatline budget and a large PFD requires the Legislature to break those rules.

The Alaska Permanent Fund Corporation also sent out an update on Monday that showed last week’s coronavirus-induced panic in the stock market wiped out $2 billion of the funds’ value.

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