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Legislative Updates :: Capital Notes 03/21/07 Capital Notes 03/21/07 The Legislature has entered the halfway mark this past week. Two developments are at the forefront of folks attention in Juneau. The Governor finally introduced legislation to incite a gasline contract and the City of Juneau has been under attack by Mother Nature. We will start with the latter. While this extended attack has come as a pleasant surprise to those who enjoy winter recreation activities, the heavy snowfall on Juneau has had significant affects on state and local governments. Juneau City's winter maintenance budget has already burst, and flights in and out of the Capital City have at times been untimely or missed altogether due to the weather. The disruption in regular flight activity has forced many committees and sessions to be canceled altogether. Currently, the city is nearing 200 inches. There was 197.8 inches through Monday. The previous record of 194 point 3 inches during the winter of 1964 - 65 was eclipsed early last Wednesday morning. Yes that is over 16 feet of snow, and it seems most of it is still on the ground. The forecast for the next few days...more snow. The other exciting event occurred about two weeks ago when Governor Palin introduced the Gasline incentive bill appropriately nicknamed AGIA for the Alaska Gasline Inducement Act. The bill provides two incentives. Lock in tax rates for ten years, after the period-of-time called open season, where the pipeline would lock in contracts to ship natural gas. The second incentive is a $500 million buy-in by the state given to the company that successfully bids and provides the best proposal. The bill claims to fix many of the problems associated with the previous administration's contract. The bill aims to bid the project and collect all bids within 90 days whereas after awarding the contract the state will help expedite the permit process. Many questions remain and those may require amendments to the bill. First and importantly, if a pipeline company, separate of the oil producers with the North Slope gas leases, successfully bids on the project and proceeds with permitting and ultimately construction, how is Alaska guaranteed access to the gas? The respective House and Senate Resources Committees have already met on the bill and more hearings are planned in the future. Hopefully amendments will be made that answer some of the more important questions and help this project get off the ground and on to permitting. To look over the bill and the notes accompanying the Governor's proposal click on the link below: Alaska Gas Inducement Act (AGIA). Ethics Legislation The Ethics legislation - both House and Senate bills - will be considered next in House Judiciary committee. A final bill is expected to be out of the committee in coming weeks. New Mining Bill Triples Taxes on Industry HB 156 makes changes to the existing Mining License Tax, minerals and coal royalties, as well as the rentals for mining activity on state land. HB 156 increases the Mining License Tax, a tax paid by all mines in the State on their net income, by 2% per income bracket and exempts mines with a net income of under $40,000 from filing and paying the tax. It also adds a top additional bracket of 11%. It changes the current exemption from paying the tax for the first three and a half years to a tax deferral payable over ten years. HB 156 narrows the definition of allowable deductions and changes the way the royalty is calculated on State land from 3% of net income to 3% of Net Smelter Return (NSR). NSR is the value of the resource when it is refined. The bill makes many other changes as well. Coal royalties reflect a current regulation setting the minimum coal royalty at 5% of adjusted gross income. The bill also allows the State to provide coal as royalty in kind to the University of Alaska's coal fired electric plant in Fairbanks, similar to the way the State takes oil in kind for instate refineries, which would result in significant University savings. Mining industries would see their tax payments to the state triple while costs associated with development have in some cases doubled or tripled already. It is safe to say that most mining companies are against the bill. The bill remains in the first committee of referral House Resources. New Tracking Device May Be Required of All Commercial Fisherman The House Fisheries Committee heard an overview of Vessel Monitoring Systems, Automatic Identification Systems (AIS), and Ocean Monitoring Systems presented by the National Oceanic and Atmospheric Administration (NOAA), the Coast Guard, and the University Of Alaska School Of Marine Sciences respectively. Coast Guard personnel testified that commercial vessels over 65 feet in length have been exempted from carrying AIS on board unless they are operating on the east side of Prince William Sound. However, a federal rule is going forward that will require all commercial fishing vessels over 65 feet to carry AIS regardless of where they operate. The costs to each commercial operation would be upwards of $10,000 while the benefits to federal authorities would be minimal at best. Those interested in this federal rule change should keep a close watch of federal actions associated with NOAA. HB 148 may fill void of Longevity Bonus-Making it need based The House Health & Social Services Committee moved out of committee HB 148. The bill extends the Senior Care program that gives income eligible seniors a monthly cash benefit. Most legislators are uninterested in restarting the Longevity Bonus Program. By passing HB 148 legislators may find that, those seniors in need would adequately be taken care of without paying out state money to those with sizable incomes. The Governor's legislation creates three major changes to the existing program: 1) it ties eligibility to 135% of the federal poverty level, 2) eliminates the prescription drug benefit that qualified seniors currently receive and 3) disallows an individual from receiving both a senior care and a longevity bonus payment. Blue Sky Coal Project While the project is still in the conceptual stages, it has the makings of a promising public-private partnership. The partners envision sourcing coal from either the Usibelli coal mine in Healy or the Beluga coal field west of Anchorage for the Blue Sky Coal Gasification Project in Kenai. The coal would be moved via the Alaska Railroad and barge, to Agrium's fertilizer facility in Nikiski. Agrium would use the gasified coal to supplement its natural gas feed stock. Permanent Fund Corporation Maintains Steady Growth Amid Recent Market Turmoil Last week, the Senate Finance Committee hosted a presentation by the Alaska Permanent Fund Board of Directors. Even after the large market correction two weeks back, there was good news to report. The fund is valued at just under $37 billion and returned 9.6% for the first half of FY07. State Operating Budget Last week, the House Finance Committee took public testimony on the operating budget. Subcommittees have finished all of their work and a final budget product is expected out of the House early this week. In earnest, the Senate Finance Committee started its work on the Governors FY08 Operating Budget already. As soon as the House passes the budget we will let you know how the number match up to previous year's budgets. Issues likely to be addressed in the respective Finance Committee are liability for PERS/TRS, and the community dividend. When each committee gains a clearer picture on the final budget document both House and Senate Finance Committees are expected to find solution to the two issues. Bill looks to Curtail Mining Development in Bristol Bay Watershed HB 134 putting restrictions on the use of fresh water within the Bristol Bay watershed has been heard multiple times in the House Fisheries Committee. The bill aims to preclude mining activity by limiting activities that may affect the watersheds in Bristol Bay. Recent planning and findings for Pebble Mine, have created a stir in the region as advocates for the mine look towards gaining the necessary permits for development. Testimony from the Department of Natural Resources pointed out that HB 134 would prohibit DNR from issuing any water rights or water use permits in the area. This would include any commercial lodges that do not have perfected water rights. According to DNR, passage of HB 134 as is could put the agency in violation of section 8.13 (water rights) of the Alaska State Constitution. Gas to Liquids technology could keep TAPS going In the next fifteen years, Alaska is expected to run out of sweet crude oil. Unless new oil exploration turns up new sources of oil, the Trans Alaska Pipeline will eventually have to be shut down. An overview of Gas to Liquids (GTL) technology was held in the House Resources committee. Presenters discussed the technological challenges of sending a GTL product (synthetic oil made from natural gas) down the Trans Alaska Pipeline. The president of the London based Sasol Chevron spoke to the committee on their highly successful production and marketing of GTL products worldwide. Given the steady decline in crude oil flowing through the Trans Alaska Pipeline, GTL could provide additional input for the pipeline in conjunction with gas being sent down a gas-line. Without the addition of new oil development, the state could be faced with large amounts of heavy oil effectively stranded on the North Slope while the cheaper gas is sent to market. GTL product put into TAPS could provide for the additional input necessary to supplement the oil pipeline and keep it operational without the sweet crude currently being shipped through it. State Chamber of Commerce While there are a number of issues the State Chamber is working, if there is an issue that is important to you and your business, please let us know of your concerns. The Alaska State Chamber has been meeting regularly with members of the Legislature. As bills move through the legislature we will continue represent the interests of Alaska's businesses. We do this by testifying in committee, meeting with lawmakers and members of the administration, working with legislative committees, organizing particular business interests for specific bills and providing written material utilized in the legislative process. Back to top Following Legislation? Any person can follow the legislative process and access new bills, committee substitutes or figure which legislator is on a particular committee in the Legislature's 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 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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