Senate drains savings account to cover oil subsidies

Plan would transfer $288 million more than the minimum required by law

Alaska’s Senate voted Thursday to drain one of the state’s remaining savings accounts to make a big down payment on a pile of promised drilling subsidy payments.


The 13-7 vote on an amendment covering those subsidies came as part of the Senate’s overall debate and vote on Alaska’s $1.4 billion capital construction budget. That budget later passed by a 13-5 vote with two members absent.

“This capital budget is fair. It is austere. It uses limited amounts of state dollars to support and leverage federal dollars,” said Sen. Anna MacKinnon, R-Anchorage and co-chairwoman of the Senate Finance Committee.

The capital budget is distinct from the state’s operating budget, which is already in negotiations between the House and Senate, and the proposals lawmakers have suggested to balance Alaska’s $2.7 billion annual deficit. It is nevertheless expected to figure as a side dish in the overall negotiations about the budget and deficit in the days to come.

While 12 Republicans and one Democrat voted in favor of Senate Bill 23 on Thursday, five Democrats voted ‘no’ and two Republicans were excused absent.

“I don’t believe it’s the best product for the state of Alaska,” said Sen. Tom Begich, D-Anchorage.

Begich and other minority Democrats offered 10 amendments to restore funding for various programs, including Alaska’s Pioneer Home program.

While an amendment restoring Pioneer Home funding was defeated, Senate Majority Leader Peter Micciche, R-Soldotna, promised that the homes will be protected when budget negotiations begin in earnest between the House and Senate.

The biggest disagreement, however, was the Senate Majority’s plan to spend more on subsidy payments.

Sen. Bill Wielechowski, D-Anchorage, proposed an amendment that would have canceled the majority’s plan to direct $288 million from one of the state’s savings accounts to pay drilling subsidies.

“In what world is that OK?” Wielechowski said about the transfer. “Explain to the people of Alaska. I hope they’re watching. I hope the people of Alaska are watching this vote right now. … I hope this is talked about on talk radio, on social media because people are going to judge this body.”

After Wielechowski rhetorically asked, “Do you stand for the people of Alaska?” he was interrupted by a break called by discomfited senators.

“If that’s uncomfortable for people, it should be,” Wielechowski said after the break.

For the past two years, the amount of unpaid subsidies has risen. The Legislature has failed to fully end the state’s practice of offering cash subsidies to drillers (legislation last year ended most), and Gov. Bill Walker has twice vetoed legislative attempts to pay more than the minimum required by law.

Lawmakers this year are required to make only $74 million in subsidy payments, and the Senate’s version of the state operating budget already contains that amount. The $288 million approved Thursday would be above and beyond the minimum.

Members of the Senate Majority have repeatedly said they believe the health of the oil industry — which pays 11 percent of the state’s total wages and still provides much of Alaska’s state revenue, according to the Alaska Department of Labor’s February “Alaska Trends” report — should be of paramount concern.

The Senate came close to passing an amendment that would have required the state to pay a supplementary Permanent Fund Dividend equivalent to the amount vetoed by Walker last year. That proposal, from Sen. Mike Dunleavy, R-Wasilla, failed 9-11.

While the Senate’s Republicans and Democrats disagreed on oil and gas subsidies, they agreed on an amendment stripping $50 million from the effort to build a trans-Alaska natural gas pipeline and redirecting that money to various efforts.

Both Republicans and Democrats said they do not believe the amendment will harm the effort to build a pipeline.

Asked by email, the Alaska Gasline Development Corporation did not directly answer the question, but in an emailed statement, corporation president Keith Meyer said, “Now is the time to send a strong message that Alaska is united on this project that will generate thousands of much needed jobs for Alaskans and boost our struggling economy.”

Under the terms of the amendment, $5 million would pay for additional prosecutors, $10 million for additional state troopers, $10 million for road maintenance, and $25 million would go to the public school trust fund.

Senate Bill 23 now advances to the House, where the House Finance Committee has scheduled hearings Saturday and Monday.

The capital budget, like the state’s operating budget, is likely bound for a conference committee, where House and Senate negotiators will iron out the final details as part of an overall agreement.

• Contact reporter James Brooks at or call 419-7732.



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