90-day session hastens Legislature's work rate

Posted: Tuesday, February 23, 2010

Alaska's 2010 legislative session is one-third of the way toward the April 19 adjournment, and the pace of meetings and hallway lobbying in the Capitol has picked up as the limitations of what can be accomplished in a 90-day session sinks in with lawmakers and constituent groups.

Last week, the Capitol hallways were crowded with contractors and oil service companies; the week before teachers and school administrators were in town; the week prior was labor's turn, with union executives collaring legislators going to and from their offices or the House and Senate chambers.

Writing the fiscal year 2011 state budget, which begins in July, is the Legislature's main piece of business this spring, and is only responsibility required by the Constitution.

There is a host of other legislation waiting in the wings, however, many of them piled up in the Senate and House finance committees, usually the last committee giving a formal review, before action on the House or Senate floor.

These days, legislators and lobbyists are being very polite to Sens. Bert Stedman, R-Sitka, and Lyman Hoffman, D-Bethel, who co-chair the Senate Finance Committee, as well as to Reps. Mike Hawker, R-Anchorage, and Bill Stoltze, R-Eagle River, their counterparts on the House Finance Committee.

These people decide which bills out of the logjam have a chance of passage before April 19. Most bills introduced die in committee, many in finance.

Budget work and a lengthy review of the state's oil and gas taxes will dominate legislators' time in the last two weeks of February. Subcommittees of the finance committees, one for each agency in both the House and Senate, are on a fast pace to complete their work by the end of February, after which the budget proposals will be before the full finance committees with action on the floor of the House and Senate expected by mid-March.

The state capital budget, which pays for construction, is always held until the end, as legislators negotiate with each other on which projects are included, and with the governor as to which projects may survive a veto.

Details of the capital budget won't be known until lawmakers adjourn in April, and which projects survive Gov. Sean Parnell's vetoes won't be known until mid-summer.

Parnell's proposal for a fast-track $100 million appropriation for deferred maintenance on public buildings around the state is widely supported in the Legislature and will likely be approved ahead of other appropriations, possibly in March, so state agencies can get contracts awarded by late spring.

Prospects for two other big-ticket items in the capital budget, a $90 million new crime laboratory for Anchorage and a $108 million new biological sciences building at the University of Alaska Fairbanks, are less clear. The governor supports financing both with certificates of participation, a form of lease agreement with state agencies, rather than outright cash appropriations.

Also in the works is a new state office building in Juneau that would be built and owned by the Alaska Mental Health Trust Authority, an independent state authority that invests in properties to generate income for mental health programs. State agencies would lease the building.

There also are prospects for new schools Western Alaska rural villages to replace obsolete, overcrowded facilities. The governor did not include these in this proposed capital budget, but indicated he is open to discussions with legislators.

The schools are a priority for Sens. Hoffman and Donny Olson, R-Nome, whose districts they would be built in, and their prospects took a big turn after the governor, the two senators and Rep. Bob Herron, D-Bethel, visited three villages where they would be built.

Legislators are also looking at a sum of capital appropriations for local community projects, perhaps several hundred million dollars, which would go to local schools, nonprofits and municipal projects in lawmakers' districts.

"Wish lists" supplied by the local communities are now being compiled in the various legislative offices. The key decision to be made by the finance committees and the governor is just how much will be spent on these.

Energy and oil and gas taxation are also at the top of legislators' concerns. Hearings were underway in both the House Resources Committee and the Senate Finance Committee the week of Feb. 15.

The house committee is reviewing House Bill 308, Anchorage Republican Rep. Craig Johnson's bill that would roll the top tax rate in the state oil and gas production tax back to a level similar to what former Gov. Sarah Palin proposed in 2007.

Palin's tax proposal was altered and increased by the Legislature that year.

Johnson has added a new twist to his proposal, a jobs tax-credit scheme that would reduce oil producers' tax rates if they increase the percentage of resident Alaskans working for the companies and their contractors.

In a presentation to the Resources Committee the Department of Revenue pointed out administrative issues with this approach, and later in the week Dan Dickinson, a former state tax director and now a consultant to the Legislature, suggested ways to remedy the problems the revenue department cited.

Meanwhile, Rep. Mike Kelly, R-Fairbanks, has suggested a new approach to the oil tax question. In a weekly briefing by House leaders Feb. 15 Kelly suggested waiving state production taxes for 10 years on new oil discovered and produced, but leaving the existing tax on oil fields now producing and on new oil produced after the end of the 10-year tax holiday.

Kelly was still working out of the details of the proposal at the time of the briefing, and said he planned to introduce his bill soon.

Oil producers and contractors are complaining that the state's high tax rate on petroleum, at more than 80 percent of net profits in some cases, inhibits new industry investment and leads to layoffs. The revenue department, in defending the tax, argues the claims are overstated.

Changing the tax seems to have more support in the state House than in the Senate, but that body's finance committee has also started a series of extended hearings on details of the tax and its performance. The hearings are expected to extend into the week of Feb. 22.

Work is also underway in the Senate Resources Committee and House Energy Committee on comprehensive energy legislation, mainly a bundling of several proposals made last year, such as to encourage emerging energy technologies, into one bill.

Sens. Lesil McGuire, R-Anchorage, and Bill Wielechowski, D-Anchorage, are taking the lead on these proposals in the senate. In the House, the work is being led by Reps. Clarisse Millet, R-Anchorage, and Bryce Edgmon, R-Dillingham.

A package of amendments are expected to be made on the bills in both committees.

A variety of other energy-related proposals include a bill sponsored by Rep. Mark Neuman, R-Big Lake, to clarify state law that a preferential tax rate on natural gas for gas sold to utilities in the state would also apply to the manufacturing of products using gas, and an industrial tax-incentive proposed by McGuire and Wielechowski for development of new gas-based industries, such as gas-to-liquids plants, if a North Slope natural gas pipeline is built.

Wielechowski has also proposed a bill that would have the state encourage new exploration for gas in Southcentral Alaska by offering to purchase gas, in some circumstances, if an explorer makes a discovery but can't immediately sell the gas in the local market, mainly the gas and electric utilities.

Find more legislative coverage at www.alaskalegislature.com.

Tim Bradner can be reached at tim.bradner@alaskajournal.com.

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