PUBLISHED: 11:39 AM on Wednesday, March 15, 2006
Legislative Roundup
Reducing the ferry subsidy

Alaska's state-run ferries need a heftier chunk of state dollars than their counterparts in Washington state and British Columbia, but that margin could decline in the future, the state's ferry chief told legislators Tuesday, March 7.

State transportation officials said Tuesday they will likely get back 37 cents on every dollar it takes to run the ferries under the governor's budget proposal for 2007.

In Washington, the return for state-run ferries is more like 79 cents, said Capt. John Falvey, the general manager of the Alaska Marine Highway System.

Falvey offered the comparative figures in response to questioning by legislators convened for a joint House-Senate Transportation Committee hearing.

Some of the legislators, such as Sen. Hollis French, D-Anchorage, seemed baffled by the ferries' costs.

French said his family paid $400 to ride between Whittier and Valdez last year. As it turns out, those ferry tickets contributed only about a third of the cost of their trip.

But ferry officials noted to legislators that Alaska serves a much larger area - with fewer road connections and more port stops per vessel trip - than the boats that serve Washington state.

"(Washington) doesn't have more than a couple ferries that go to more than one place," said Robin Taylor, the state ferry system chief.

House Transportation Committee Co-Chairman Carl Gatto, a Palmer Republican, said he feels like the ferry system is in "Chapter 11" bankruptcy status. He asked Taylor how he was going to improve the system's financial performance over the next 10 years.

Taylor said he believes the state could possibly reduce its future state subsidy, funded by the Legislature, down to 20 to 30 cents on the dollar. Already, the ferry system is improving its profits, he said. This winter, for example, the ferry system increased its gross revenues by 18 percent, even though it was offering a 30 percent ticket discount and letting drivers ride free.

But to make big improvements, the state needs to build more roads and shuttle ferries, Taylor said. The state will need to run more ferries than it has now, he said.

The state intends to pay for Juneau access shuttle ferry service with federal Shakwak dollars, from a pot of money that is anticipated to provide $180 million toward the project's overall cost.

New oil tax system?

Gov. Frank Murkowski said Wednesday, March 8, the Alaska Legislature should approve a new oil tax system before getting a peek at the natural gas pipeline contract, which he claims is nearly finished.

In his first news conference since he introduced his proposal for the new taxation, the governor said he prefers legislators pass his proposal now and make changes later to the oil tax laws when lawmakers review the gas pipeline contract.

"Whatever they do on PPT (petroleum production tax), they're going to have another chance to look at it when they see the gas line (contract) because it's rolled in. They can make an amendment at that time," Murkowski said.

Murkowski's plan would take 20 percent from producers' net profits and give them a 20 percent tax credit on expenditures for exploration and long-term development.

Legislation would be needed to amend the 1998 Stranded Gas Development Act to include the oil tax policy in the pipeline contract. The act states that the contract can refer to gas but not oil.

House Minority Leader Ethan Berkowitz, D-Anchorage, said it makes little sense to pass a bill that would change later.

"It should be easier if we have everything in front of us and do it all at once," he said.

At stake is an additional several hundred millions of dollars for the state each year, which the new tax system would bring in while oil prices remain high.

Some lawmakers want to see a signed version or parts of the contract before they make changes to the governor's proposal so they know how it will affect the producers' decision on whether they will sign the contract.

Federal food safety law

Alaska officials said this week they are worried that a U.S. House of Representatives-approved bill could undermine the state's ability to regulate food safety.

The House passed the National Uniformity for Food Act in a 283-139 vote Wednesday night, with Rep. Don Young, R-Alaska voting in favor. The bill was heavily supported by the U.S. food industry.

The bill prohibits states from adopting or enforcing their own food safety guidelines - such as warning notices or food safety labels for pesticides, heavy metals or food additives - unless they are identical to federal food safety regulations.

The bill, H.R. 4167, must now get approval from the Senate.

Reported by the Juneau Empire