Lawmakers eye gas line, weigh surplus

With oil windfall in the tank, there's little talk about fiscal gap

Posted: Tuesday, January 11, 2005

Construction of a natural gas pipeline and how to spend the state's projected oil surplus was on the minds of lawmakers Monday for the first day of the 24th Alaska Legislature.

But without the immediate threat of a fiscal gap this year, talk of a long-range plan to prevent future budget shortfalls may be scarce.

Senate President Ben Stevens, R-Anchorage, sponsored a bill that would send Alaska Permanent Fund earnings to the state's savings account, the Constitutional Budget Reserve, after dividends are paid and the fund is protected against inflation. But Stevens was skeptical about the prospects of the Legislature passing a fiscal fix this year.

"The sense of urgency that has been here in Januarys past is not here this January," Stevens said at a press conference Monday after representatives and senators were sworn into office by Lt. Gov. Loren Leman. "Whether that changes as we move through the legislative process, I can't answer that. It all depends on the volatility of the market."

A revenue measure filed by Sen. Kim Elton, D-Juneau, would restructure the state's oil-production tax with the intent of sending some of the revenue to municipalities. Alaska cities lost regular funding from the state in 2003 when Gov. Frank Murkowski vetoed $22 million from the Municipal Revenue Sharing and Safe Cities programs.

Reps. Harry Crawford and Eric Croft, both Anchorage Democrats, plan to introduce a "Pipeline Incentive Act" that would tax oil and gas producers if they fail to sell gas for the pipeline project. Murkowski was sent a gas pipeline proposal last year by oil and gas producers BP, ConocoPhillips and ExxonMobil, but it is uncertain when or if the proposal will be made official and sent to the Legislature for consideration.

"I think what Alaskans have to understand is this isn't just going to happen on its own," Croft said. "And if we do the same old business as usual, it may not happen at all."

The proposal that the major producers sent Gov. Murkowski last year is not a firm promise to build a pipeline, Crawford said.

"What we need is a firm start date," he said. "Thirty years we've been waiting for a pipeline."

Democrats also called for a plan to reverse a law passed in 2003 that diverted to the state general fund half of the oil royalty money paid into the permanent fund annually. The bill was projected in 2003 to raise about $43 million annually for the state.

"My personal inclination is with House Bill 11 they took money out of the permanent fund; we've got to repay the permanent fund," said House Minority Leader Ethan Berkowitz, D-Anchorage. "You've got to repay your debts before you go on a spending spree."

House Majority Leader John Coghill, R-North Pole, said special committees created Monday such as the House Ways and Means committee would help advance a fiscal plan. Other representatives questioned whether Murkowski's projected $653 million oil windfall will materialize.

Anchorage Republican Rep. Norm Rokeberg said windfall projections in the past have not panned out and lawmakers should spend the next session advancing a fiscal fix.

"This is my 11th year down here," Rokeberg said. "Without question, the issue of a long-range fiscal plan and the stability of the state of Alaska has been one of the No. 1 priorities over the course of the last decade or more. We do have an opportunity here because of this temporary surplus, if you will, to give us some breathing space. We shouldn't lose this opportunity to work during the next two years to put together a plan that we can present to the public on the next election ballot ... to help move forward on this issue."

• Timothy Inklebarger can be reached at

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