PUBLISHED: 11:24 AM on Wednesday, May 17, 2006
Legislative Roundup
Governor says ballot initiative is a deal-breaker

Gov. Frank Murkowski said he hasn't made a decision on when the Alaska Legislature should revisit the bill that rewrites the state's oil-tax structure.

Murkowski also used a Thursday, May 11, news conference to blast a November ballot initiative that would tax the oil industry until companies build a natural gas pipeline.

Calling the plan "highly regressive," the governor said the tax would make a project to build a $20 billion to $25 billion pipeline no longer economical for oil producers.

"It in itself is a deal-breaker," Murkowski said.

The so-called "reserves tax" is proposed by Rep. Eric Croft, D-Anchorage, who gathered some 45,000 signatures to get it on the ballot.

Croft, who is running for governor, was furious after the governor's news conference.

"The governor has it dead wrong. He's trying to get a gas line by giving away our oil taxes, by giving away our children's and our grandchildren's future," Croft said.

If the producers - ConocoPhillips, Exxon Mobil and BP - take diligent action to build the pipeline, the tax would go away and the producers would be given a reduction in their severance tax, according to Croft.

The tax would earn about $800 million to $1 billion each year for the state treasury until the gas flows, which could be eight to nine years away, the governor said.

Some lawmakers say that even if producers sign a contract, it still may not be built. That's why Croft says his initiative is necessary.

"If Exxon puts this off by another two or 10 years, it will cost them," Croft said.

The governor said the contract contained a provision that would nullify the reserves tax, and he urged legislators to approve it.

He also challenged Croft to a debate on the issue.

"If the governor wants to debate this gas line, I'll debate him anytime, anywhere," Croft said.

The governor added that a pipeline will never materialize without the Legislature passing the net-profits tax bill. Oil companies are insisting it be included in the contract so they can predict if they will have the financial means to pursue the project.

For now, Murkowski said he wants lawmakers to pay attention to the 10-day overview of the pipeline contract that began Wednesday, and to the amendments needed to change the Stranded Gas Act that are soon to follow.

"That's fine too, because what you find out when you look through this stranded gas contract are some pretty disturbing things," Croft said.

Murkowski called the next few days a "cooling-off period" for the Senate, which was split 10-10 on passing the net-profits tax bill in the final hour of the regular session Tuesday night.

Tacking the bill onto the agenda of this session is possibility, as is making it a part of a second special session, he added.

The Legislature can override the governor and expand the session's scope to include the tax debate with a two-thirds vote from each body, according to House Minority Leader Ethan Berkowitz, D-Anchorage, also a gubernatorial candidate.

"I don't think there's a rush right now," said Senate Majority Leader Gary Stevens, R-Kodiak.

House approves $3.6 billion capital budget

Bleary-eyed legislators approved a $3.6 billion capital spending bill shortly after 4 a.m. Tuesday, May 9.

The spending bill will pay for construction of schools, roads, docks and other projects in Alaska communities. "It's got something in there for everybody," said House Finance Co-Chairman Kevin Meyer, R-Anchorage.

The final vote on the bill, which was taken up for brief reconsideration at 4:10 a.m., was 35-4.

The capital spending bill is the largest in state history. House Minority Leader Ethan Berkowitz, D-Anchorage, wagged his finger at Republicans on the House floor Tuesday morning, saying they'd better not claim to be fiscal conservatives in the upcoming November elections.

Rep. Norm Rokeberg, R-Anchorage, rose to agree with Berkowitz.

A few legislators also stood up to complain about a few controversial line items in the budget, particularly the $45 million in state general funding for the Juneau access road and $90 million allocation of federal dollars for the Knik Arm bridge.

Rep. Bill Thomas, R-Haines, said 60 percent of the Juneau access project - a 50-mile road linked to a Katzehin River ferry terminal - is in his district. "I did not get a letter, (phone call) or e-mail in favor of the road," he said.

The $45 million isn't as big a problem as the likely scenario that the state will end up dipping into a federal pot of money typically used to replace or repair ferries to pay for the rest of the project, Thomas said.

Rep. Les Gara, D-Anchorage, was one of the four who voted against the bill.

Rep. Beth Kerttula, D-Juneau, first voted against the capital budget but changed her vote on reconsideration.

Gara said Tuesday afternoon that his major objection was the $90 million spending item for the Knik Arm bridge. The bridge project is still in too much flux - with costs possibly reaching over $1 billion, Gara said.

Gara argues that the state shouldn't be funneling millions to the project until the full cost is known. Otherwise, the bridge could end up "a bridge to somewhere, perhaps halfway across Knik Arm," Gara said on the House floor.

Legislators approved one slight increase to the budget on the House floor Tuesday morning, bumping up the funding available to Vietnam War veterans to exhibit a piece of the Moving Wall memorial around the sate.

The line item for the veterans increased from $5,000 to $10,000, in an amendment offered by Kerttula.

Other than that, the House rejected further amendments to the capital budget.

In addition to Gara, Reps. Nancy Dahlstrom, R-Eagle River, Berta Gardner, D-Anchorage, and David Guttenberg, D-Fairbanks, also voted against the capital budget.

The bill, Senate Bill 231, was scheduled for a concurrence vote by the Senate before midnight on Tuesday.