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Three things to watch for in the State Legislature

Posted: March 25, 2013 - 12:06am

JUNEAU — As the legislature enters its final three weeks, four major bills stand out amid a flurry of others vying for attention: the budgets, and bills dealing with oil taxes, a liquefied natural gas trucking plan and in-state gas pipeline.

Gov. Sean Parnell said those “will probably have the most positive impact on Alaskans, and are the most significant pieces of legislation that are out there.”

Parnell introduced bills this session to cut oil taxes and advance a plan to bring gas and propane to parts of Interior or rural Alaska, both of which have cleared the Senate and are now being considered in the House. He said he supports moving HB4, the in-state gas bill, forward but wants to see changes to address some concerns he has about accountability and oversight.

Here are three things to watch for this week:

Oil taxes

House Resources is starting to dig back into oil taxes, after SB21 narrowly passed the Senate last week. The committee had started hearings on the issue last month, before letting the Senate take the lead so the panel could work on other issues.

Supporters of the bill say it will make Alaska more competitive for additional investment and should lead to more production. Critics call it a giveaway to oil companies, with no guarantees.

Committee co-chair Eric Feige, R-Chickaloon, said House Resources will do the work necessary to judge for itself where it thinks Alaska should rank in terms of competitiveness. “Where should Alaska be, you know, in the end? Probably not at the bottom, probably not at the top. Probably somewhere in the vicinity of the middle is a fair position to put us, fair to the people of the state, fair to the industry,” he said.

The committee plans to hear from consultants and the industry this week, with some evening meetings scheduled.

Feige has said he expects the bill to advance from committee the first week of April. It would then have to go to House Finance. The regular session is scheduled to end April 14.

LNG trucking

House Finance is considering SB23, meant to help bring gas to parts of Interior Alaska. The bill would authorize the Alaska Industrial Development and Export Authority to provide up to $275 million in financing for the development, construction and maintenance of a liquefied natural gas, or LNG, plant and distribution system. Parnell has said these facilities will make it possible to truck LNG from the North Slope to the Interior and allow for wider distribution of gas and propane.

The financing package also includes $50 million for an equity position to reduce the cost of LNG and $30 million in natural gas storage credits, according to the authority.

The goal of the bill is to help provide more affordable energy to Fairbanks-area residents. It passed the Senate unanimously.

Based on the response to its request for letters of interest in developing the facility, the authority says it believes the proposal could provide gas rates that would “significantly lower” energy costs in the Interior. It says it could lead to a reduction in heating costs of 40 to 50 percent for those who convert from heating fuel to natural gas, with first gas possible by the end of 2015.

This is seen as a nearer-term fix, as the state continues pursuing a natural gas pipeline.

Budget

Senate Finance is scheduled to take up amendments to its version of the state operating budget. The committee last week unveiled a roughly $9.9 billion package, about $41 million more than what passed the House and about $63 million less than the governor proposed, according to the Legislative Finance Division.

Meanwhile, House Speaker Mike Chenault said he expects the Senate to send over a capital budget in early April. The House has taken the lead on the operating budget, the Senate, on the capital budget.

Parnell has asked for an overall spending limit. Chenault said Friday that one had not yet been set.

Alaska relies heavily on oil revenues to run, and legislative leaders have said they want to limit growth of state government amid concerns about declining oil production. There is recognition, too, that if the oil tax bill passes, it will mean less money for lawmakers to work with next fiscal year. Parnell has said the state will be able to use savings to absorb the near-term hit, with the expectation that production will increase as a result of the tax cut.

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