Stevens’ Interim Report: Legislature ends costly oil/gas tax credits program

Lean capital budget leverages over $1 billion in federal funds

By Senator Gary Stevens, R-Kodiak

For The Cordova Times

Hello again. The 30th Alaska Legislature has entered the interim after a regular 90-day regulation session, followed by a 30-day extended session and multiple special sessions needed to pass the fiscal year 2018 operating budget bill, the capital budget bill, and legislation to end the well-intentioned but costly oil and gas tax credits program, a move which will save the state as much as $200 million a year.


FY ’18 Operating Budget

The $8.8 billion FY ’18 operating budget includes $4.1 billion in general fund spending, a cut of $179 million over the current fiscal year, including $75 million trimmed in state agency budgets. $2.4 billion from the Constitutional Budget Reserve was appropriated to bridge the budget gap. The budget bill sets this year’s Permanent Fund Dividend at $1,100.

Although it came late, fortunately, the operating budget was passed in time to avert a potential government shutdown on July 1st. I know the budget process was frustrating for the public to follow, and I hope we will be able to avoid a similar situation next year.


FY ’18 Capital Budget

Approved on Thursday, July 27th in a one-day session, the very lean capital budget leverages over $1 billion in federal funds with a state investment of $121 million in unrestricted general funds from the Statutory Budget Reserve fund.


Senate District P projects in the capital budget are:

  • $8.5 million in Exxon Valdez Oil Spill Trustee Council (EVOS) funds for the purchase of land in the Portage Lake area of Afognak Island;
  • $7 million in EVOS funds for the purchase of land in the Thorsheim Drainage area of Afognak Island;
  • $2 million in EVOS funds for parks and habitat restoration protection on the Kenai Peninsula;
  • $1.5 million in EVOS funds for a land purchase in Kachemak Bay;
  • $1 million for reparation and refurbishment of the Department of Fish and Game research vessel R/V Resolution.


Other items of note in the capital budget are: 

  • $20 million to pay down the state’s oil and gas tax credit liability, in addition to a $57 million appropriation for this purpose in the operating budget;
  • $38 million in community revenue sharing, which is of great benefit to our district’s communities and boroughs. This funding is $8 million more than FY ’17’s total;
  • $7 million toward construction of the Kivalina K-12 replacement school, on top of the $43 million investment made by the Legislature in Fiscal Year 2016;
  • $7 million in re-appropriation funds for the Arctic Strategic Transportation and Resources (ASTAR) project.


Although the state’s financial situation has kept us from funding more infrastructure projects this year, I am grateful to District P’s municipal leaders for their assistance in this process.

Thanks also to our district’s House members, Rep. Louise Stutes of Kodiak and Rep. Paul Seaton of Homer, for their collaborative efforts on the capital budget and numerous other matters throughout the session.


 Up Next for the Legislature

Although a date has not been formally announced, the governor has indicated he will call the Legislature into another special session later this year to consider a tax proposal to help lower Alaska’s budget deficit. It is not yet known what type of tax will be offered nor how much revenue it is expected to provide to the state.

With Alaskans’ opinions greatly divided on new taxes, use of Permanent Fund earnings, and more budget cuts, I expect much deliberation on the governor’s proposal when it is released. As always, I appreciate hearing from you on the many matters coming before the legislature.


Interim Offices and Staff

My Kodiak and Capitol offices are open throughout the interim. Please give us a call if we can be of assistance to you with issues involving the State of Alaska.

You can contact the Kodiak office at (907) 486-4925.

You can reach the Capitol office in Juneau at (907) 465-4925 or toll free at 1-800-821-4925.

E-mail me anytime at


My interim address is:

Senator Gary Stevens

305 Center Ave, STE 1

Kodiak, AK 99615


Thank you for reading this edition of the Interim Report. Please keep in touch.