PUBLISHED: 5:47 PM on Wednesday, April 26, 2006
Legislative Roundup
Natural gas contracts

Legislators voiced a mix of outrage and support Wednesday, April 19, for fast-track legislation that would prevent Alaskans from filing suit over a multibillion-dollar gas pipeline contract on anything other than constitutional grounds.

The House and Senate bills would make the Legislature the final arbiter of whether the gas contract is in the state's best interest.

The state revenue commissioner's findings on whether the gas contract is in the state's best interest would not be subject to "review, stay or injunction by any court," according to the bills now under review by the House and Senate Judiciary committees.

The committees held hearings on the controversial legislation Wednesday but held the bills over for further discussion. The legislation, Senate Bill 316 and House Bill 502, are supported by the Murkowski administration and sponsored by the Judiciary committees.

Some Democrats charged Wednesday, April 19, that the legislation would cut off the public's ability to gain access to critical information about gas line negotiations that they may only be able to obtain through legal discovery.

But proponents, including House Judiciary Chairwoman Lesil McGuire, R-Anchorage, say it is merely "cleanup legislation" that will prevent bureaucratic problems from a court intervening in the gas line contract before the final decision is made.

Some ideas came up in committee to attempt to preserve a broader judicial role after final approval of the gas line contract, but no amendments were offered Wednesday, April 19.

In its current form, the bills would head off judicial review of such central questions as whether the gas on the North Slope is really stranded, said Sen. Hollis French, D-Anchorage.

Some gas consultants for the Legislature have questioned whether the gas is stranded, or in other words, if it is currently economically unfeasible to get to market.

The state's designation of the North Slope gas as stranded has allowed for secret negotiations between the Murkowski administration and oil companies who are negotiating to develop the gas pipeline.

Rep. Les Gara, D-Anchorage, said the legislation also could prevent judicial review on the major question of "whether the state gave away the farm" in approving the gas contract.

State officials said in their testimony on the bill that the Legislature is authorized to speak on the public's behalf on whether the contract is in the state's best interest.

It's premature to have a court take up a challenge on the state revenue commissioner's findings before a final decision on the contract is made, said Larry Ostrovsky, an assistant attorney general for the Alaska Department of Law.

If a court intervened in the middle of the process, it could delay a final decision on the contract for as much as a year. "One ought to look at the total record," Ostrovsky said.

At least one Republican had some qualms about how the bills reflected on the Legislature's role in the process.

Sen. Gene Therriault, R-North Pole, suggested that if the Legislature is going to be considered a final arbiter, the state shouldn't discount potential constitutional questions about the Legislature's role in the pipeline contract.

The Alaska Stranded Gas Development Act allows the Legislature to hold hearings on the gas line contract in a 30-day public comment period, but the Legislature can only vote up or down on the contract.

Increased revenue takes a hit in 2007

About $6 million of increased revenues in fiscal year 2007 will be wiped out by the rising costs of fuel, education and employee retirement benefits, the city's budget analyst reported Wednesday, April 19.

The biggest culprit is the public employees' retirement system, or PERS, and the teachers' retirement system, Bonnie Chaney said. The retirement plans are made up of contributions from employers and employees, based on annual evaluations of how much is needed to fund benefits.

"The city contributes about 21 percent of individual wages," Bonnie Chaney said. "At some point in the future the current system may become like a standard 401(k) plan."

The unfunded liability in PERS and TRS is largely attributed to a poor run on the stock market for the program's funds and skyrocketing costs for the medical benefits. The city now pays more than 21 percent into the PERS system. That means for every $100 an employee earns, the employer must pay about $21 toward that employee's retirement.

That rate will cost the city more than $2 million in fiscal year 2007, which runs from July 2006 through June 2007.

"We estimate it may peak at about 28 percent in 2007 or 2008," Assembly member Randy Wanamaker said. "It is the main reason why the number of city employees is not changing, but the budget is growing."

The city actually owes $70 million to the PERS fund, but has not planned on how it will be paid yet, Wanamaker said.

"These investments were doing well and then the market took a hit a few years ago so the city has to pay more of the contribution," Chaney said. "The challenge is keeping a balanced level of public service while balancing community needs."

This year the city anticipates an average increase in property value of approximately 12.6 percent and an increase in sales tax revenues. Property tax collections totaled $39 million this year, up from fiscal year 2006's total of $34.8 million, Chaney said. Voter-approved bond debt also increased $300,000 to $4.2 million, she said.

"Revenues should be increasing for some time," City Manager Rod Swope said. "But we also have some skyrocketing costs."

There was an average increase in property values of about 12.6 percent, increasing sales tax revenues and a higher interest rate on investments, Swope said.

The amount of increased revenues in fiscal year 2007 will be offset by a 34 percent increase in health insurance costs and mandatory contributions to PERS; a 30 percent increase in workers compensation insurance; and both a 66 percent increase in heating oil and 60 percent increase in gas and diesel fuel.

The city's residential properties have gone up by as much as 25 percent. Swope proposes a 0.33-mill decrease for the 2007 fiscal year budget. The total current mill rate is 11.17. That amounts to $1,117 of tax per $100,000 of assessed value.

Swope said the construction of the Kensington Mine and Home Depot and other big box-store expansion will result in future property and sales tax revenue boosts. Numerous housing developments and subdivisions are planned or currently under construction, including at Lena Point, he said.

SE gillnetters mull over proposed tax

The Panhandle's gillnetters will decide May 1 whether to tax themselves to fund regional projects that could increase the selling price of their fish.

The concept has a lot of support in the southern Panhandle, especially in Wrangell and Ketchikan, where new marketing projects initiated by gillnetters are already lifting prices for Stikine River salmon, proponents say.

But the tax proposal is getting some static from northern Panhandle gillnetters.

Though they've received their ballots in the mail, some Juneau and Haines gillnetters say they haven't been educated on the tax proposal yet and they aren't sure if they want to pay out the proposed .05 to 2 percent of their gillnetting income.

"I'm not convinced we are going to see benefits," said Charlie Polk, a Juneau gillnetter.

"We are wondering what we will get for the 1 percent," added Mike Saunders, president of the Lynn Canal Gillnetters Association, based in Haines.

The potential self-levied tax on the region's 470 gillnetters - which could net $50,000 annually - would be collected by Southeast Alaska Rainforest Wild, one of a number of regional seafood development associations (RSDAs) set up by the Legislature in 2004 as a vehicle for fishermen-led marketing projects.

At least 30 percent of the gillnet fleet must vote on the proposed tax for it to go forward this year. A simple majority is required for the tax to pass. That means 15 percent of the fleet plus one fisherman could decide the issue, Polk said.

Polk was displeased Monday, April 17, to learn that such a small percentage could influence the outcome.

Other fishermen pointed out Monday that it's hard enough to get anybody to vote in any kind of election, where turnout is often far below 50 percent.

"I think that the way the fishery is now, the biggest problem of our fleet is basically price," said Bill Auger, a Ketchikan gillnetter who strongly supports the proposed tax.

But the tax/marketing plan has been confusing for fishermen because it is a new idea, and because there is no established plan on how to spend the money, Auger said.

After they join the marketing effort, the gillnetters themselves will have to decide how best to spend the money, according to RSDA guidelines.

Gig Decker, a Wrangell gillnetter who worked to organize the Rainforest Wild RSDA, envisions a plethora of projects.

Decker is already working on one project that could be picked up by the fleet, he said. It involves creating an incentive program with regional seafood processors to give a better price to fishermen who do extra work on the boat - like bleeding and freezing their fish promptly - to create a higher-quality product.

The gillnet fleet's upcoming vote is just the first push in Rainforest Wild's overall effort to gather in most or all of the fisheries in Southeast Alaska. But with 69 different gear groups in the region, that adds up to a long ballot petition process. Each gear group will need to vote on whether to assess the tax on themselves.