Unknown: Alaska lawmakers are in session in person in the capital city.

A lot of careful planning and work has gone into keeping lawmakers and Juneau residents safe from COVID, but there is still risk.

"Somebody in the building will test positive.

That will be an issue, and it will have to be handled well.

And we, and we'll just have to figure out what to do when that happens."

Will frequent testing and other safety measures be enough?

We'll discuss the work that needs to be done by Alaska's legislators during the pandemic tonight on Alaska Insight.

There are more than 130 legislators and staff in Juneau for the legislative session, the legislature is taking steps to limit the spread of COVID-19.

For instance, the Capitol building is closed to the public and the Legislature has a $1.5 million contract with a company to test and screen everyone who is allowed in the building.

But there is still a risk to having so many people working out of the same building in downtown Juneau.

KTOO's Rashah McChesney has this story.

The Legislature has been in session for nearly two weeks in Juneau, but legislators and staff are still getting the hang of the new COVID-19 protocols.

The House and Senate chambers are lined with plexiglass windows, masks or face coverings are required in public spaces.

"It looks like we have all the representatives back and congratulations you are now representatives, not representative-elect.

It's a good, good feeling."

Media access is restricted inside the Capitol and all legislators and staff are supposed to get tested every five days.

Last weekend Juneau Senator Jesse Kiehl sat down for his COVID-19 test in a building just across the street from the state capitol.

He says it's necessary to keep the legislature functioning, "You can't bubble the legislature, right?

So the responsible way to put legislators together so we can talk face to face and legislate in the same room is to just test constantly."

But even with all of that preparation in place, it's not likely that they'll be able to keep COVID-19 completely out of the Capitol building, or the community.

City and Borough of Juneau Manager Rorie Watt says it's likely inevitable that someone will test positive.

"We have restaurants and bars open at reduced capacity, which again, you know, important for the economy, but it also creates some risk.

And I think the Legislature is like that as well."

Alaska based company Beacon is responsible for the testing and screening "Somebody in the building will test positive there'll be an issue, and it will have to be handled well.

And we, and we'll just have to figure out what to do when that happens."

Further complicating the issue is that there are supposed to be penalties for things like refusing to wear a mask in the building.

But it's not exactly clear who is responsible for enforcing those rules among legislators.

That's especially true in the house, which hasn't organized yet.

on the Senate side, lawmakers have organized that means the new senate president Soldotna republican Peter Micciche takes some responsibility for making sure senators follow the COVID-19 policies.

He says he understands that the policies were put in place to protect legislators and staff, but he thinks they go too far, "They took a very conservative view of how we can get through this session without a disruption because of widespread you know, COVID transmission in the building, and I respect that.

However, we are not any more important than anyone else in this state, and and I know of no other private or public sector organization, including hospitals and first responders that have as strict a policiy as we do."

Micciche says some of the safety rules have made it difficult to hold floor sessions.

So on the Senate side, they've devised a system where senators hold up bright green cards when they want to speak.

"You know, the place is lined in plexiglass, and as the presiding officer, I can tell you I can't see people raise their hand in the back of the room."

But while senators have a clear hierarchy, there isn't anyone currently leading the State House.

That means that representatives who choose to violate the mask or testing policies don't necessarily have to answer for it right now.

The current COVID-19 policies will likely remain in place until the house organizes and chooses its presiding officers.

Then Micciche says lawmakers can get together and decide on a set of rules that work for all of them.

In the meantime, if there is an outbreak, the Legislature is working on something that they've never done before.

A system that would allow lawmakers to vote remotely In Juneau, I'm Rashah McChesney.

I'm joined tonight by Alaska Public Media and KTOO State Government Reporter Andrew Kitchenman and Alaska's Energy Desk reporter Nat Herz is also with us.

Hello to both of you.

Thanks for being here.

Last night, Thursday, the Governor gave his State of the State address, It was over Facebook Live rather than in person in Juneau.

Andrew, remind us about why he wasn't in Juneau and what stood out to you in his remarks.

Well, he really cited, or his office cited, the COVID precautions and the need for for social distancing in explaining why he was there by video.

Practically speaking, it also would have been difficult because of what Rashah was just describing in her story, that the House has not organized.

The House and the Senate would normally invite the governor to come to the House chamber where there would be a joint session, and it just didn't happen.

And it couldn't have happened because the House was not organized, but doesn't sound like it would have happened regardless because of the COVID issue.

Mm hmm.

You, the Governor spoke for about 25 minutes last evening.

You spoke to lawmakers after the Governor concluded.

Who did you speak to and what was the reaction particularly from Democrats?

Well, on the not quite democratic side, I spoke with independent former House Speaker Bryce Edgemon, who is from Dillingham and was nominated by the democrats but as an independent.

And he really expressed a concern that the Governor has not put forward a, what's termed a fiscal plan, basically a long term plan that would bring the state budget into balance, so that including the Permanent Fund Dividend so that all state spending would be covered by ongoing state revenue.

And he says that's the issue that's dividing legislators and and really suggested maybe it's what's keeping the house from forming.

That is the fact that there is this lack of balance.

And it will be difficult to have a plan to to fix that without the governor actively working on that.

The Governor does say that what he's proposing is a plan.

But it does not really bring everything into balance.

It really just establishes more of a framework.

Thank you for that.

Nat, I want to turn to you.

Now you and I both spoke last evening after the governor wrapped up with Senator Tom Begich.

He said he wants to see other revenue ideas before he considers this $3 billion extra draw from Permanent Fund Earnings reserve for big dividends.

He's proposed a bill that would increase oil infrastructure taxes.

What did he say about this bill in particular, and what else he wants to see for revenue generation before he'll consider that larger draw?

Yeah, I mean, I think it's nothing we haven't heard about oil taxation for the past five or six or seven years that we've been in this sort of budget problem era.

You know, basically, I think you've heard this from a lot of Democrats that, you know, we're not prepared to reduce the size of the PFD.

Some of them have said, you know, we're not even really interested in lobbying, any kind of other broad based taxes on Alaskans until we see higher taxes on oil companies, particularly given the relatively, or very low production taxes that oil companies have been paying over the past several years since SB 21.

That, you know, the oil companies still pay significant amounts of royalty payments to the state, but the amount of production tax they're paying is quite small right now, largely because of the price of oil being low and the way that the oil tax framework works.

So you know, Senator Begich's proposal again, it would be increasing the existing level of tax on infrastructure related to petroleum extraction.

And, you know, I think what what Senator Begich said that he likes about this proposal is that it you know, it's stable, it doesn't fluctuate or go up and down with the price of oil, it just sort of is a is a relatively constant assessment on the value of oil infrastructure that's in place, like on the North Slope and elsewhere in the state.

You know, we've heard this over and over from Democrats, I think, you know, that Democratic voters, the folks that elect them are, you know, really adamant that oil taxes are too low.

And so I think they're the democratic legislature, legislators are really adamant that they are not willing to, you know, increase costs on Alaskans, of supporting their government or creating any costs, since we don't pay taxes right now, before they're willing to increase taxes on oil companies.

You know, I think the what I, what I, what really resonated with me about Senator Begich's comments last night was I think he said that the tax increase would generate something like $185 million, which is while you know, that would be nice in your or my bank account is nowhere near what's needed to balance the budget.

So you know, in some ways, it's a little, it feels like a little bit of a fig leaf so that, you know, they can say that they hit the oil companies before they went to Alaskans pocketbooks or, you know, through some other form of taxation.

But, you know, it's a meaningful amount of revenue, but it's not nearly enough to close the major depths that that we have.

He also said that he encouraged the Governor, he wanted to encourage the governor to work with the congressional delegation to try to get this big federal relief package passed, because he said that would be $1,400.

Did you get a sense that he was maybe saying, 'get that $1,400 and then maybe we could take a smaller draw and still provide a little larger permanent fund dividend, but not the $5,000'?

Yeah, I think that's right.

I mean, I think it's pretty reasonable argument that, you know, if we can get more direct federal aid, that theoretically, that should reduce the amount of money that we need to allocate directly to Alaskans from the Permanent Fund, which has already been, you know, stressed by our budget demands.

I you know, and I think I've also heard discussion about, you know, could we do a means tested form of pandemic relief to Alaskans, where, you know, Alaskans who are actually in need, maybe below a specific income threshold would be receiving, you know, extra pandemic relief, rather than just saying, 'Let's write a check to everyone'.

Because, you know, as I said, last night, when we were talking with Senator Micciche, you know, I'd probably blow it on a snow machine, which isn't, isn't actually needed, for, you know, for me to get through these next few months.

We, speaking of Senate President Peter Micciche when we did talk to him, remind us of what he had to say related to where he agrees and perhaps doesn't so much agree with what the Governor has laid out for session priorities?

Yeah, I think Senate President Peter Micciche of Soldotna, the Republican I mean, he was, he was pretty cagey.

I thought, you know, I mean, I think he definitely did not give a full throated endorsement by any means of the Governor's you know, $5,000 pandemic relief checks and the $5 billion withdrawal from the Permanent Fund that Dunleavy is calling "the path forward for Alaska", he gave that moniker to it last night, you know, my sense of what Senator Micciche said was that, you know, there's there's willingness to, you know, entertain direct cash relief to Alaskans, and an overdraw the Permanent Fund, if it's part of the larger fiscal plan.

You know, he definitely was pretty qualified in his in his statements about how much consideration they would give to those proposals.

I mean, he was very adamant in saying, we will hear those proposals and we will discuss them, but he really did not go much further than that in in describing any level of support in his caucus.

I mean, we definitely know that at the kind of right word fringe of his caucus, the delegation from the Mat-Su will definitely support for that, quote/unquote full PFD impact payments, but I think among the more moderate members or centrist members of Micciche's caucus there, there is going to be, you know, significant concern or outright opposition to making a withdrawal that size from from the Permanent Fund, certainly.

Andrew, I want to go back to now, what's happening with the House organization?

Are you hearing that they're closer to figuring out their plan for leadership?

Or where are they at in the process?

Well, it appears like they're deadlocked and they have been deadlocked since the election, or shortly after the election when Kodiak Republican Representative Louise Stutes announced that she was going to remain with the outgoing, the former House Majority, which is other than her currently comprised entirely of Democrats and independents.

And I asked Representative Steve Thompson, who maybe as much as any representative is the one who's most likely to wind up in the majority in that he's currently caucusing with the Republicans.

He's a republican from Fairbanks.

But he, he spent the last two years in that majority with Stutes and and a lot of Democrats.

And I asked him last night if if they would consider sharing power with the other caucus, that is the Republicans, and he said that he was not interested in that.

So things really do seem to be stuck.

Representative Bart LeBon, who like Thompson, is one of the two members of the former majority who have now gone over to the Republicans.

He's also a republican from Fairbanks.

LeBon said he wants to be in a majority with 25 people.

And he and he really doesn't care what party those 25 are.

So a lot of things are still up in the air.

And we shall see if there's any progress next week on that.

And what does that mean for what they can and can't do?

Can they get any work done with this stalemate in place right now?

Currently, no work at all.

The answer your question is no.

Two years ago, when the house was also stuck, they picked a temporary chair and they were able to do just a minimum amount of work, not real committee work, but accept messages over from the governor and from the Senate, do things like invite invite the governor to the State of the State address.

They can't do that now because they can't agree on a temporary speaker.

So nothing is happening in the House.

The Senate is progressing with committee meetings.

So a little bit different over there.

So right now, they're still stuck.

Andrew, the there's been some bills that were pre-filed, Democrats in the House have filed a couple of state income tax bills, one a flat tax of 2.5% by Adam Wool of Fairbanks and a progressive tax by Sara Hannan of Juneau that would start at 2.5%t and top out at 7% for individuals making more than $250,000.

Do you think these proposals have any chance of getting traction this year?

Well, one challenge is right after they were filed, Governor Dunleavy was pretty critical of the income tax proposals.

Hannan's bill is similar to one that the House passed four years ago that died in the Senate.

And not sure if there's gonna be more interest this time around.

There's an issue, there's a long-standing issue with broad based taxes in Alaska, which is that most of the people who want a broad based tax on an income tax, and most of those seem to want to progressive tax like Hannan.

But in each step of what I just described, you lose people, you lose people and even getting to a broad based tax, and then you lose some people when you turn to an income tax.

Potentially they could turn to a sales tax.

Problem with that is every industry is going to lobby to be exempt from the sales tax, and that would greatly reduce the point of having one.

So it is going to be challenging for the Legislature to spend the political capital on taxes, which people are not usually enthusiastic about.

Nat, what are your thoughts here?

What do you think it'll take to establish a new tax in Alaska?

And what are the chances for either income tax or sales tax?

Which one do you think might have more chance of making it?

I'm glad that we stayed on the subject because I was close to interrupting because I have so many thoughts on this matter.

I mean, I you know, I, I wholeheartedly agree with Andrew's skepticism, and I think I just go a little further in saying, you know, I think never, never has a tax been more necessary in the past, you know, decade to balance our budget, and never has it felt, to me at least, probably more unlikely to happen than this year.

I mean, the problem this year is on top of, you know, at least an organization in the Senate that appears to be you know, I mean, it's a Republican organization with Senator Micciche as the president.

I just, you know, I think the likelihood of those guys voting for any kind of attacks in a normal year is pretty low.

And then you the Legislature has, you know, the greatest excuse ever, not to vote for a tax this year, which is we're in a pandemic, and we're in a recession, and we, you know, God forbid, we make the situation worse for Alaskans.

Which I think is true, but it really sort of alive the past, you know, five or six years in which the legislature, you know, had a really great opportunity to balance the budget.

You know, I mean, oil prices had gone down.

We were not in a great place, but certainly, there were a lot of people warning us five years ago, that you know, we needed to put in place a tax now before we spent down are savings accounts and ended up in a situation where we had very little budgetary flexibility and needed a tax, but couldn't put one in because we didn't have time or because the economy wasn't in the right place to do it.

So, you know, I think what's, what should scare Alaskans right now is, you know, if we don't get one this year, do they really think we're going to get one next year when we're in an election year?

And then beyond that, you know, it's just where's the money going to come from?

It just, it's a sort of scary predicament.

I mean, I think I think Alaskans still, the sort of direness of our budget situation and and some of the really tough decisions that we're gonna end up having to make collectively over the next few years, I think the the situation, the dynamics in Juneau on taxes are not going to change, I think, until public opinion starts changing a little bit more about taxes.

And I think that, you know, for better or worse, it's going to take some some pretty unpleasant wake up calls to Alaskans and seeing, you know, more services lost or, you know, other other things that are really it may be more of an education campaign on behalf of the Governor or the Legislature about sort of the necessity of doing this.

Because we don't, we don't have any more room to deficit spend.

So I don't know, I'm not, I'm not bullish on the likelihood of tax revenue.

So the constitutional amendment idea that the governor has put forward probably won't advance with this idea of putting taxation in front of the people for a vote.

What about -- he also spoken sort of, you know, looking at other revenue ideas, he's spoken in optimistic terms about the Gas Line Project.

Is there anything on the horizon that could be potential?

I mean, the gas line is, even if it were approved tomorrow, it's a long ways off.

Anything that you're seeing or hearing that could generate some new revenue ideas for the future?

You know, I mean, I think the other thing we heard last night was like, the Governor was also talking about like a gaming or a lottery, and that could be a new source of revenue.

I mean, I think I went back and looked last night, because I was curious, you know, the Governor Dunleavy's predecessor, Bill Walker, they did a lot of legwork on trying to understand what Alaska's revenue options are, and they put together a white paper.

And I was I was, I was curious sort of how much they suggest that a lottery or, or a sort of gambling, state licensed gambling operation, how much would that raise?

It was something like $8 million, or maybe $18 million.

But, you know, again, we're talking about a deficit in the realm of $1 billion dollars.

I mean, you know, you can look at it from both ways, like, yeah, it would be really nice to imagine a gas line in 10 years.

And yeah, that would definitely solve a lot of our economic problems.

But, you know, the rubber meets the road with our deficit, you know, this year we're going to start making unsustainable draws from the Permanent Fund, running down the Permanent Fund's earnings reserve.

There's there there is nothing, you know, it's I know, it's easy for us to have this conversation, because we're, we don't have to run for reelection, but I mean, it's, you know, the truth that, you know, there are no, there aren't any easy or good options, aside from raising taxes, and cutting the budget.

And, you know, there's not been that much willingness, even with a Republican governor, and a largely Republican legislature to cut the budget.

So, you know, it's really, it's gonna be tough medicine, but I don't really, you know, mathematically, there aren't that many other options.

I mean, we definitely can also reduce the PFD.

That's the only thing that's left, but again, you know, where's the political will for that?

I'm not sure.

I'm sure Andrew has thoughts about this.

Andrew, I do you want to go to you.

The fourth option is-- Yes, please.

Please weigh in there.

And then quickly, I have another question for you before we run out of time here.

The fourth option is the worst option, which is to spend the roughly $7 billion that's spendable from the Permanent Fund's earnings reserve.

Each billion will cost the state about $50 million every year forever in future growth.

And so potentially hundreds of millions in future growth could disappear if the Legislature and the Governor were to spend that down.

In about -- And we can only do that as long as the, as long as the markets allow us to do it.

You know, if we, experience -- We got to wrap up here, Nat.

In about 30 seconds, Andrew, is the Legislature considering COVID relief of any kind?

Are you hearing any conversation about that?

The Governor's put two major proposals through.

One is that $2,000 payback and dividends from last year.

The other is a bond package.

Both are receiving really critical scrutiny in the Senate Finance Committee.

It's not clear what their chances are in the Legislature.

All right.

Thank you, Andrew and Nat for being with me this evening.

The Governor's address to Alaskans on Thursday evening struck an optimistic note and laid out some big priorities for the future of the Permanent Fund Dividend amounts and taxation.

He's asking lawmakers to support his push to put these issues to a vote of all Alaskans through constitutional amendments.

How lawmakers will deal with these and other pressing economic public safety, education and pandemic related measures remains to be seen.

We'll bring those deliberations and stories to you in future programs as they emerge.

That's it for this edition of Alaska Insight.

Be sure to tune in daily to your local public radio station for Alaska Morning News and Alaska News Nightly every weeknight.

Be part of important conversations happening on Talk of Alaska every Tuesday morning and visit our website alaskapublic.org for breaking news and reports from across the state.

We'll be back next Friday.

Thanks for joining us this evening.

I'm Lori Townsend, good night.