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House passes 'frugal' $8.1 billion budget

Democrats fail to restore $6.5 million for natural gas pipeline

Posted: Friday, March 12, 2010

The House of Representatives on Thursday adopted a state budget that legislators described as "frugal."

The $8.1 billion budget now goes to the Senate, where Gov. Sean Parnell has encouraged senators to restore gas pipeline funding cut by the Republican-led House Majority.

House Democrats led by Rep. Beth Kerttula, D-Juneau, tried and failed Thursday to restore $6.5 million they said would jeopardize a natural gas pipeline.

While the cuts were proposed by opponents of the Alaska Gasline Inducement Act, Rep. Harry Crawford, D-Anchorage, said he was "hesitant to call it a Trojan horse; it's more of a stumbling block."

If the state doesn't have the money to carry out its obligations under AGIA, it could cost the ability to do field work this season and delay the pipeline a year, Crawford said.

"It could possibly have the effect of jeopardizing our gas pipeline," he said.

Rep. Mike Hawker, R-Anchorage, author of the Finance Committee amendment, said Democrats were exaggerating the cuts' impact.

"It sounds like it might be the end of the Western world as we know it," he said.

Hawker denied there had even been a cut.

"Every penny the (Parnell) administration asked for is in this budget," he said.

The new restrictions withhold 70 percent of the money until after a successful open season, during which precedent - or unconditional - bids to ship gas are submitted. Legislative testimony from multiple sources has suggested that is extremely unlikely to happen initially.

"We've introduced an element of judiciousness," Hawker said.

The money in question doesn't even go toward developing the gas pipeline, which will be done by the private sector, Hawker said. Instead, it's given to the Departments of Natural Resources, Law and Revenue to complete their parts of the pipeline plan.

"This is not money that's going into the project," he said.

Rep. David Guttenberg, D-Anchorage, said the AGIA plan obligated the state to do its part, along with licensee TransCanada Corp.

Alaska needs the $6.5 million so that it can live up to its contract obligations and be a good business partner, he said.

"The public wants to know that we are doing everything we can do to get gas to our citizens," he said.

The vote to reject the pipeline funds was 27-13 - largely along caucus lines - with Kerttula voting in favor and Rep. Cathy Muñoz, R-Juneau, opposed. Other Southeast representatives all voted along party lines.

The final operating budget passed 34-6, with several Democrats casting protest votes.

Other than the AGIA funds, representatives said the House budget process was unusually cordial and collaborative.

Rep. Les Gara, D-Anchorage, supported Hawker's contention that the operating budget was frugal, saying it was an increase of about 3 percent from last year.

The Senate Finance Committee is scheduled to discuss the operating budget Tuesday.

Work in the House now proceeds on the capital budget.



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