Just ten days remain until the constitutional session limit. Developments this week indicate they will definitely be going all the way until the end, and may extend or come back later for a special session. Billed in January as an “energy” and “education” session, both are, somehow, worse off now than when session started. And there is no consensus on either as session nears its end. Meanwhile, the budget is moving along on schedule based on the agreement between House and Senate leadership. Ballots for the Anchorage mayoral run-off between Mayor Dave Bronson and Suzanne LaFrance went out in the mail this week. The election concludes on May 14.

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Budget Update

After hearing minority amendments to the operating budget (none passed), the Senate passed its version of the operating budget on Wednesday (5/1/2024). Because no floor amendments were adopted, it’s the same version that passed out of the Senate Finance Committee. On Friday (5/3/2024), the House voted 36-0 to not concur with the Senate’s changes. The bill now goes back to the Senate to give them a chance to recede from their amendments, which they won’t.

Then, Senate President Gary Stevens (R – Kodiak) will appoint the three Senate Finance co-chairs to a budget conference committee. (Because the Senate minority is so small, they have no finance members and therefore will not have anyone on the conference committee). Then, House Speaker Cathy Tilton (R – Wasilla) will need to appoint three conferees. One will be Representative DeLena Johnson (R – Palmer), the operating budget co-chair, and one will be a minority member. The third will be tricky.

Representative Neal Foster (D – Nome), one of the co-chairs, does not want to be on it. He is a full dividend guy. Representative Bryce Edgmon (I – Dillingham), not a full dividend guy, is probably not someone the majority wants on the conference committee.

Whoever they decide as the third conferee will create problems. With the money the House added to the capital budget, plus other fiscal notes, the House’s large dividend will need to get closer to the Senate’s number of around $1,500. For some context:

• The House included $1.1 billion for the Permanent Fund Dividend and the Senate included $914 million. The House also included supplemental appropriations, bringing their estimated PFD payment to $2,250 per person. The Senate PFD is estimated at $1,570.
• The Senate version of the budget includes a surplus provision directing 50% of UGF revenue received in excess of $6.5 billion to go towards an energy relief payment with the FY26 PFD, capped at $322.5 million. This is similar to the provision included in the FY24 budget.

If the dividend goes down too much, the House majority will have a hard time getting to 21 with all their large dividend members. The likely outcome is they will have to grease the wheels of the minority to get the votes to pass the budget. The question is what will the minority’s price be?

The House Finance Committee passed their committee substitute of the capital budget out of committee on Thursday (5/2/2024). They added $103 million in projects to the Senate’s version. The bill will now go to the House floor, where additional amendments will be heard. Once it passes the House, the Senate should concur with the House additions, per their agreement. The House should send the capital budget back to the Senate on Wednesday or Thursday.

Energy and Education  

With just ten days left in session, things are really about to heat up. Judge Zeman stayed his decision on invalidating the allotments used for the correspondence program, but only until June 30. The House and Senate, and Governor Mike Dunleavy (R – Alaska), all have different ideas on what should be done to ensure that the correspondence program and homeschooling in Alaska stay intact. It’s unlikely anything will happen by the end of session.

The more likely outcome is, depending on how and when the Alaska Supreme Court weights in, a special session will be called if needed. If, however, the Supreme Court overturns all or part of Zeman’s decision, or provides for a longer stay, the matter may not be addresses until next year.

Energy is a whole different matter. On Friday, the Senate Resources Committee heard House Bill 50. This is a Dunleavy bill for carbon sequestration. The House passed it on April 17. During the Friday hearing, Senator Bill Wielechowski (D – Anchorage) got an amendment passed that would effectively tax one person – Hilcorp founder and owner Jeff Hildebrand.

Wielechowski, and others, have long been irked that Alaska’s tax laws do not tax s-corps. Companies like Conoco and Exxon, that are c-corps, pay a corporate income tax to the state. When Hilcorp bought BP’s Alaska assets, that was the law. Some have since tried to change it. Hilcorp’s investments and operations have increased North Slope production in the areas they operate. And they have been a reliable producer of Cook Inlet gas since for over a decade.

Wielechowski’s amendment passed 4-3. Senator Cathy Giessel (R – Anchorage), the co-chair of the committee, voted yes. Giessel has basically moved 180 degrees on every core issue since first being elected in 2010. She went from being anti-labor to introducing a pension bill and getting a standing ovation at an AFL-CIO reception. She went from chastising Wielechowski on oil issues years ago when she chaired the resources committee to being his biggest ally. She went from being ardently pro-life to saying the Alaska Constitution protects a woman’s right to choose. If she can change, anybody can!

Senator Matt Claman (D – Anchorage), voted no, saying he did not think it was a good idea to tax just one person. My belief is because we have no state income tax, all s-corps should be taxed at a lower rate. Basically, lower the rate and broaden the base.

Other things were added to HB 50, like reserve based lending. This is targeted at Bluecrest, who operates in Cook Inlet and is sitting on oil and gas reserves. But they don’t have money to further explore and produce. It’s so dire they recently had to get a forbearance on their AIDEA loan. I call this one the “Bluecrest Bailout.” Not to be confused with the “Hendrix Handout,” another proposal floating around to lower his royalty rates in Cook Inlet.

Hilcorp, the one reliable Cook Inlet producer who is not broke and not owned by a hustler, is being targeted while the hustlers are being rewarded. Strange times indeed. I hope it doesn’t get cold again in Southcentral next year!

HB 50 is now in the Senate Finance Committee. It’s not clear what is going to happen or if they have the four votes needed to pass the bill with Wielechowski’s amendments. Watch to see what Senator Kelly Merrick (R – Eagle River) does. Sources report that the plan is to juice up HB 50 with every one of Dunleavy’s energy priorities. This would put him in the position of either allowing the tax to go through, or vetoing a bill with all of his energy wants.

But even if HB 50 with all the additions ends up being passed by the Senate, the House would still need 21 votes to concur with the changes. That could end up being close. The biggest risk is everything blows up and no meaningful energy bills are passed. It’s going to be a wild week in Juneau.

Also, the House Finance Committee worked until nearly midnight on Thursday. One of the bills they heard was House Bill 223, a bill by Representative George Rauscher (R – Sutton) for Cook Inlet royalty relief. That bill was also juiced up by the committee with a lot of weird energy stuff. House majority members were all over the place. At one point Representative Will Stapp (R – Fairbanks) asked all the Southcentral members why they had no alignment on energy priorities. He also asked Representative Andy Josephson (D – Anchorage) why he was trying to screw his constituents with one of his amendments related to oil production in Cook Inlet. That bill probably isn’t going anywhere. But what transpired in the committee showed what a mess energy is right now.

This Week’s Loose Unit 

There were A LOT of Loose Unit candidates this week, especially in Juneau. But one stood out. This week’s Loose Unit is Permanent Fund Trustee Ellie Rubenstein.

Last week I published a story showing that she had setup meetings with Permanent Fund staff and her billionaire father David Rubenstein (co-chairman and co-founder of the Carlyle Group). She also setup meetings with Permanent Fund staff and money managers that also happen to be investors in her own private equity fund. That alone is super loose. But that was not what earned her Loose Unit status.

Yesterday, Rubenstein’s father’s personal media guy, Chris Ullman, sent me a statement from Ellie Rubenstein on the matter. Ullman is definitely legit. According to his bio, homie “led communications at the White House Budget Office, ran the public affairs office at the U.S. Securities and Exchange Commission, and was spokesman for the U.S House Budget Committee.” He also served as Director of Global Communications at The Carlyle Group. He’s definitely a big gun.

Here is the statement. It feels like a product of several lawyers and professional communications people. They seem to be circling the wagons! Imagine being in hot water but having the resources of billionaire daddy to assist.

What is really loose is in her statement is that she is more concerned with the leak of the emails to me rather than what they showed. Word is she is trying to get a special board meeting scheduled to authorize an investigation into the source of the leak. I’ll say one thing, under no circumstance will I ever reveal my source. Rubenstein is exhibiting classic Loose Unit behavior. This recent ADN editorial says it all.

If you have a nomination for this week’s Loose Unit, or if you have any political news, stories or gossip (or any old pics of politicians or public officials) please email me at jeff@alaskalandmine.com.