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Legislative Updates :: Capital Notes 01/28/08 Capital Notes 01/28/08 Legislature and Governor begin shortened (90 day) session in earnest The legislature just entered into its 14th day today with many committees operational in the first week of the second session of the 25th Alaska legislature. Finance subcommittees are already scheduling meetings hoping to complete early budget work for later deliberations. Realistically, there are only a few issues that are considered must pass for this year's legislature. Importantly, the legislature must pass an operating budget as directed by the constitution. The legislature should pass a capital budget, which helps correct and fund deferred maintenance backlogs and important transportation projects. Other issues worth noting that will likely consume much of this legislature are: PERS/TRS retirements, Constitutional Language allowing for long-term contracts between the state and a private entity, stockpiling budget surpluses in varying accounts, funding education on a two year cycle, and funding a municipal dividend. State of the State Governor Palin highlighted the state operating budget as her top priority in dealing with expected surpluses. The Governor believes $7 billion should be saved in the Constitutional Budget Reserve, in the corpus of the Permanent Fund, or by forward funding education and relieving debt for PERS/TRS. Likely, the legislature will have some input, as they are the only folks under the constitution allowed to make appropriations. The Governor will likely be forced to veto or negotiate heavily before any final budget crosses her desk. Gasline Currently, the state of Alaska has entered into negotiations with TransCanada, the only application acceptable under the AGIA (Alaska Gasline Inducement Act) process. As you recall, AGIA took up considerable time and energy during last year's legislative session. ConocoPhillips has also submitted an application for a natural gas pipeline project that falls outside of the AGIA guidelines. Here is where things get tricky. TransCanada's application is conditional on gaining access to Alaska's vast supplies of north-slope gas. ConocoPhillips, for argument's sake, has 1/3 of the gas, with BP and Exxon holding the remaining 2/3. As many in the legislature spelled out during the AGIA process, how do you get the folks who hold the gas to the gasline builder, and how does one private company pull their share of gas out of the ground when all of the gas is pooled together? All three companies suggest that a fixed taxable rate needs to be set before gas can be sold in the domestic markets. While the ConocoPhillips proposal includes a fixed taxable rate, the state constitution may need some tweaking to allow the proposal to move forward. Even with changes to existing law, ConocoPhillips is still sitting on the sidelines according to the AGIA process, and TransCanada has yet to prove that there is access to the gas. So where are we with two different administrations and roughly six years into the process? It appears there is no clear resolution in sight. HJR 27-Constitutional authority to enter into long-term natural gas contracts On the bright side, Rep Ralph Samuels and Rep. Jay Ramras have introduced HJR 27, a bill that would create a constitutional amendment to allow for the state and a private entity to enter into a long-term contract with regards to natural gas. When the previous administration had gone down this road, many folks cited the unconstitutionality of entering into a long-term contract and thus removing the legislature's constitutional authority to tax. As you may already know, contracts for delivery of natural gas are generally sold on a long-term basis, 10-20 years into the future on average. This is the standard practice on the domestic and world natural gas markets. HJR 27 attempts to bring the state and the north-slope producers together to bring Alaska's gas to market. The bill is expected to be heard in the coming days in the House Judiciary Committee where timelines and specifics will be hotly debated. State Chamber Priorities Having adopted our top priorities this past fall, we are actively attempting to flesh them out during the legislative process. On the very top of the list, is the need for the state to adopt a fiscal plan. We still believe this is of the utmost importance for the future of the state. We have endorsed and reported on extensively last year, Rep. Mike Hawker's bill, HB 125. Amending Alaska Statutes regarding the Executive Budget Act, HB 125 assigns a long-term fiscal plan requirement to the Governor's duties of providing yearly budgets, with the plan looking out 10 years into the future. Fiscal Plan Last year, HB 125 was delayed in Senate Finance. After a few cordial meetings with Senator Stedman (co-chair of Senate Finance) and staff, we were told that the bill would be a priority next year. This year as promised, committee hearings on HB 125 began the first week. We expect more meetings in the future as details and concerns from other members are worked out. Sen. Fred Dyson and Sen. Gary Wilken also carry similar bills. A few of their ideas may have to be rolled into the final product. We look forward to the continued dialogue and are optimistic the legislature will put something into statute this year. With the Governor having to update and submit a long-term fiscal plan each year, we will finally have a moving target for the legislature and the public to use in order to achieve long-term fiscal stability. Other Issues There are many other issues we are working on including limited budget growth by using the FY06 budget as a starting point and allowing for 3% growth only for consecutive years. Below please find a list of a few of the bills that we are researching, working with staff and legislators on, writing letters on and providing public testimony for. There are many issues facing Alaska's business community, far too many to list, but we are doing our best to stay out in front and represent business in Alaska. Back to top
Back to top Upcoming Elections As is the norm in any second session of the Alaska Legislature, individuals begin vying for various seats while others look to new challenges. So is the latter case for Representative Mary Nelson of Bethel (District 38) and Sen. Gary Wilken of Fairbanks (District E), have both have publicly announced that they will not seek reelection this upcoming fall. We appreciate their willingness to serve the state of Alaska and we look forward to this last legislative session with them as members. Public service often garners little reward, but collects a great deal of criticism. The Alaska State Chamber of Commerce thanks them both for their public service these many years. State Chamber of Commerce While there are a number of issues the State Chamber is working on, if there is an issue that is important to you and your business, please let the folks at the Alaska State Chamber of Commerce know of your concerns. Following Legislation? Any person can follow the legislative process and access new bills, committee substitutes or determine which legislator is on a particular committee in the Legislative Bill Action and Status Inquiry System (BASIS). You can see what committee a bill is in, when it will be heard, how committee members voted, and much more. You can also view all bills relating to your specific areas of interest by selecting "Subject Summary" from the menu on the right. Just click on the link below and bookmark it for later use. http://www.legis.state.ak.us/basis/start.asp Back to top Juneau Headquarters: 217 Second Street, Suite 201, Juneau, AK 99801 Phone: 907.586.2323, Fax: 907.463.5515, Email: info@alaskachamber.com Anchorage Office: 601 W. 5th Avenue, Suite 700, Anchorage, AK 99501 Phone: 907.278.2722, Fax: 907.278.6643 Copyright © 2003 - Present, The Alaska State Chamber of Commerce, all rights reserved. Designed by WebWeavers Technology Group LLC™ |
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