Governor challenges opponents to come up with better idea

Murkowski issues his permafund challenge at end of pipeline address

Posted: Thursday, February 05, 2004

Gov. Frank Murkowski on Wednesday challenged opponents of tapping the Alaska Permanent Fund to fill the state's fiscal gap to come up with a better solution.

Murkowski made the remarks at the end of an address to the Legislature about applications to build a gas line.

"Those who oppose using a portion of the permanent fund income to pay for essential public services have a responsibility to step forward with an alternative solution that Alaskans will accept," he said.

Last month during his State of the State address, Murkowski called for a conference of 55 Alaskans to meet later this month in Fairbanks and make recommendations on whether to tap the permanent fund for state government, among other questions.

Murkowski has supported the Percent of Market Value plan, but has not said whether the money should be used for state government. POMV would allow the state to use 5 percent of the fund's income, but does not specify how it could be used. POMV also would inflation-proof the fund by combining the principal and earnings in the same account.

House Minority Leader Ethan Berkowitz, an Anchorage Democrat, said Wednesday that POMV is an accounting method, not a plan to solve the fiscal gap.

"Emperor Frank has no clothes," Berkowitz said.

He said the Democrats will discuss some of their ideas for solving the gap during a news conference today.

Anchorage Democratic Rep. Eric Croft said it was "disingenuous" to tie the POMV proposal to the gas line development.

"It's just an excuse for what he was already going to do," Croft said, noting the governor had announced his plans for the Fairbanks conference well before he announced the state's receipt of applications to build the pipeline.

The state has accepted two applications, one from ConocoPhillips, Exxon and BP, and the other from Cook Inlet Region Inc., a consortium of Alaska Native groups, and MidAmerican Energy Holdings Co. The state will negotiate draft contracts with the groups and submit them to the Legislature for approval under the Stranded Gas Act.

Murkowski said four previous attempts to bring Alaska gas to market between 1974 and 1982 failed because of problems, including low gas prices and large volumes of natural gas coming in from Canada and Pacific Rim countries. He said current conditions, including rising gas prices and increased demand, are favorable for project success.

Murkowski said the state negotiation team will focus, among other things, on making the pipeline open access so that future gas explorers will be able to use it. He said the state wants to make some of the gas available for in-state use, and to be sure developers hire Alaskans and do business with Alaskans. Murkowski encouraged Alaskans to invest in the pipeline.

"In retrospect, Alaska may have been wise to have invested in the oil pipeline 30 years ago because it would have given Alaska a seat at the table with the producers and avoided costly litigation," he said.

Senate President Gene Therriault, a North Pole Republican, said the majority was pleased with the state's negotiation priorities.

"We want to see Alaskans put to work to the greatest amount possible and certainly in the jobs that would be available afterwards," Therriault said.

• Masha Herbst can be reached at

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