PUBLISHED: 10:04 AM on Wednesday, February 15, 2006
Legislative Roundup
Lawmakers predict special session

Just more than a month into the session some Alaska lawmakers are saying that two big items will keep them here for an extended session.

House Speaker John Harris, R-Valdez, said Monday. Feb. 6, it would take three to four weeks to scrutinize an oil taxation re-form bill if it is introduced soon.

"Then you go back to the bargaining table with the producers," Harris said.

In a "very-good-case scenario," a contract to build a natural gas pipeline with three oil producers would follow within a week after the oil tax rewrite is passed, Harris said. The public would then have 60 days to review the contract and legislators would begin debating it in the middle of May.

"Mathematically, you're already into a special session," Harris said. The session is scheduled to adjourn May 9.

Passing the budget is the other priority this year. Gov. Frank Murkowski said he wants to see a net-profits tax bill introduced, but it is still unclear who will sponsor the bill and when it will be introduced.

So far this session, the governor's leading consultant on oil and gas issues, Pedro van Meurs, gave two presentations on a new tax system that would increase the amount collected from producers by between $1.1 billion and $2.6 billion, depending on the price of oil.

The net-profit tax is based on oil companies' gross production revenue from their wellheads, minus their capital and operating expenses, royalties and property taxes. The model is based on systems in other countries. If the price of oil increases, the tax goes up as well.

Currently, the state plan known as the Economic Limit Factor, or ELF, collects tax on oil production and gives breaks to small and weak fields.

Van Meurs said last month that the proposed oil tax rewrite must be approved before the administration reaches a deal on the pipeline.

Meanwhile, two other bills sponsored by Democrats to change tax structures related to oil and gas passed out of the House Ways and Means Committee last week.

But with a new focus on the net profits tax, legislators say those bills may take a back seat.

Sen. Hollis French and Rep. Les Gara, both Anchorage Democrats, propose a change to the ELF that would increase taxes when oil prices rise above $35.

"I think there's still a good possibility our bill will become the vehicle for oil tax reform," French said. No bill on the net profits has been presented yet, and there is a sizable faction of lawmakers eager to distance themselves from an unpopular governor, he added.

Anchorage House Democrats Eric Croft and Harry Crawford are sponsoring a bill and a ballot initiative to tax producers on the known gas reserves on their leases until they build a pipeline.

Governor: dredge Gastineau, Dry Strait

Like other shallow waterways linked to Southeast Alaska's estuaries, the upper reaches of Juneau's Gastineau Channel are more for the birds than the boats.

Gov. Murkowski has asked the Legislature to approve spending $7 million to dredge out navigable channels in upper Gastineau Channel and in Dry Strait, between Petersburg and Wrangell.

The shallow areas of Gastineau Channel were dredged in 1959 and 1960 as part of a multiyear federal project. The channel was dredged again to build Juneau's main thoroughfare, Egan Drive, residents say.

As envisioned, the project could forge a pathway for commercial fishing vessels. The Gastineau bottleneck now sees infrequent small boat traffic through a narrow course of markers that can challenge the inexperienced.

The governor's $7 million request would not pay the total costs of dredging both water bodies. It would likely pay the cost of dredging upper Gastineau Channel and possibly the cost of studying dredging in Dry Strait, Menzies explained.

Though the state has compiled plenty of information about Gastineau Channel over the years, it would need to gather a lot of technical data about Dry Strait before it could dredge there, he said.

Menzies said the dredging would likely happen between Salmon Creek and Fish Creek. The project could be done within the existing channel, without disturbing nearby grass flats, he said.

"The best thing the governor could possibly do is reprogram this request - give the city of Petersburg $4 million to rebuild their harbor. Give $3 million to enhance the Juneau harbors or commercial fisheries projects in Auke Bay," said Juneau attorney Joe Geldhof, a past president of the Mendenhall Wetlands Citizens Advisory Board.

Rep. Peggy Wilson, R-Wrangell, said she doesn't think dredging Dry Strait would work at all. "It's like throwing your money down the drain. Nature takes its course in that (Stikine) River," she said.

JCharles Schneider of Juneau said he helped run the dredging project for the initial Corps of Engineers project in Gastineau Channel.

"It was a really interesting job and it could be done again ... just like the big harbors down south," the retired contractor said Friday.

Schneider said Juneau sailboats, seiners, trollers, barges and other boats sailed through the channel for the next few years.

Creating a navigable upper channel saved Juneau vessels three to four hours of run-time, he said.

They didn't need to travel around Douglas Island to get from one side of Juneau to the other anymore, Schneider said.

Nature had something different in mind than the boat access, however.

Schneider recalls how the channel - influenced by the Mendenhall River, numerous streams and the tides - filled in gradually with silt until the boat traffic came to a standstill.

Juneau seine fisherman Scott McAllister had not heard of this proposal to dredge Gastineau Channel but said it would be a boon for commercial fishermen and other boaters.

"It would make life as a fisherman in Juneau a whole lot easier," McAllister said. "I'm all for it," he said.

Reported by the Juneau Empire