State lawmakers representing the Kenai Peninsula say they’ll be eying closely spending proposed by Gov. Frank Murkowski in his State of the State address delivered Tuesday.
“We still have to look at the sustainability of government in general,” Rep. Mike Chenault, R-Nikiski, said Wednesday. “The governor is proposing spending a lot of money. We are rolling up our sleeves and talking to the departments. We’ll be looking of justification of any increases.”
Murkowski proposed several moves he said would improve the state’s long-range prospects.
He called for continued support and expansion of his transportation plan to connect Alaska to the rest of North America by rail, which he said would not only reduce transportation costs generally, but cut the cost of gas line construction by $1 billion, as well. He requested that funds be appropriated for the second phase of a rail extension feasibility study.
He asked legislative support for the “overly maligned” Alaska Knik and Gravina bridges that he said would produce “well-documented community development benefits.”
He also asked for funding to build other transportation arteries and ease traffic congestion in Anchorage, Fairbanks, the Matanuska-Susitna Borough, Kenai and other areas of the state.
Chenault said he and his House colleagues have expressed concern that funding the bridges could require cutting funding for a myriad of other transportation projects that have been on the State Transportation Improvement Program (STIP) list.
“Every one of us has concerns,” he said. “But when you look at taking money away from other districts to do two big projects, there’s a concern.”
The House Finance Committee, which he co-chairs, was expected to meet Wednesday to discuss the bridges and the STIP.
Sen. Tom Wagoner, R-Kenai, said he didn’t believe the two bridges were needed, but knows there is pressure on lawmakers and the administration to try and support the efforts of the congressional delegation that got federal highway dollars appropriated. Speaking about the Knik bridge project in particular, however, Wagoner said proposed financing ideas don’t appear to pencil out.
“I will guarantee you that a toll bridge won’t pay for itself or pay the interest on the bonds,” he said.
The governor also called for a $90 million increase in funding for kindergarten through 12th-grade schools. He said he would hold students, teachers and schools accountable for performance. He also said Education Commissioner Roger Sampson was set to unveil a new performance-incentive program meant to improve student achievement scores.
He also told lawmakers he would sign Rep. John Coghill’s House Bill 16, which would provide state funds for room and board costs at boarding schools in Galena, Bethel and Nanana, and that he would ease eligibility requirements for state-aided tuition to the University of Alaska.
At issue is how to pay for those increased expenditures, Wagoner said.
“We have all that (oil revenue) money in surplus now, but we have to look ahead that won’t show up every year,” he said. “Instead of flat throwing another $90 million at the funding formula, I would like to see us look at putting 20 students in first-, second-, and third-grade classrooms. Let’s reward districts that want to do that.”
Wagoner has filed a bill to phase in a class-size limitation program over three years that would require schools with classes with more than 20 students to hire part-time or full-time teaching assistants. No funding mechanism has been defined yet.
The governor proposed eliminating the Economic Limitation Factor, a formula used to tax oil production, in favor of a tax on net profits, which he said was the industry standard. He wants that to be part of future gas pipeline construction contract he is currently attempting to negotiate with oil producers. The antiquated oil tax system has prevented Alaska from getting a reasonable share of oil revenue, he said. A new tax system would ensure Alaska got its fair share.
Wagoner said he agreed in part with the governor’s position. Oil companies now are reaping huge profits from Alaska at this point, but putting little back into the state, he said. State tax policy should work to promote exploration, he added.
However, Wagoner said he has serious doubts about the legality of fixing a net-profits tax into a gas line contract. Such a provision would conflict with the Alaska Constitution that prevents one Legislature from tying the hands of another.
“It’s not a small legal issue,” he said. “It’s a big issue.”
Chenault declined to comment on the net profits tax proposal until he has more information. But he did say it was time for Alaska to revisit its taxation system to see if current tax policies still apply.
“If they do, I say continue them. If they don’t, maybe they need to be redone,” he said. “I think it is good for business and the state to look at the taxing policy on occasion and see if it is still working as originally planned.”
Attempts to reach Rep. Kurt Olson, R-Kenai, for comment were not successful.
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