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Legislators must weigh gas pipeline incentives against Alaskans' needs

Posted: Tuesday, May 07, 2002

Here it is, the very end of a legislative session, a time when legislators can often be seen hurriedly trying to push through their favored measures before adjournment. That's certainly not news; it's the way the system works.

But in a year when legislators would probably find it difficult to agree on the color of a clear sky, a measure to provide major tax incentives for a gas pipeline has been barreling since it first surfaced about two weeks ago.

House Finance Committee Co-chair Rep. Eldon Mulder, a Republican from Anchorage, has been pushing through the measure that would exempt all state and local property taxes for a natural gas pipeline during its construction and two years following. That would equate to about $760 million, with about $50 million of that coming out of the Fairbanks North Star Borough during the estimated eight years of the exemption.

The basic idea is that such an exemption would be the incentive needed to get oil companies serious about building a natural gas pipeline. However, it is not clear just what incentives might be necessary to make the pipeline a reality, although several of the big players have said the idea of such tax break incentives interest them.

Meanwhile, Fairbanks Republican Rep. Jim Whitaker stepped up with an amendment that would have at least left the door open for the tax breaks to be repaid at a later date. But after much finagling, the amendment was defeated, and the bill that will go to the House floor will be a straight tax exemption with no hope for possible future repayment if the gas line is profitable.

It is not clear if this $760 million figure is enough, or even more than is needed, to get the project going. It may well turn out that something less would have been more than enough to get a pipeline built. At this point, we just don't know. So what's the hurry in giving away the farm, so to speak?

Shouldn't the public at least have a chance to weigh in on a measure that proposes to hand away such a large amount ...? Before closing the door on future repayment options, the state should investigate just what it would really take to get the gas line project started.

Certainly, it is in the state's best interest that construction of a gas pipeline start sooner rather than later. With oil revenues steadily declining, this could be an important fiscal boost to the state's bottom line. But giving away all of the state's bargaining chips before negotiations even begin is not the way to start this process. Our elected officials should be held to the standard of ensuring whatever deal is worked out, it balances the incentives needed to get the project online with the needs of Alaskans.

-- Fairbanks Daily News-Miner

May 2



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