Business interests got help from Legislature

Posted: Sunday, May 25, 2003

It was a banner year for business in the Legislature.

Lawmakers approved tax credits for oil and gas exploration, passed bills to block lawsuits and streamline regulations, and got rid of a requirement that the minimum wage go up with inflation.

But critics say some of that legislation could hurt the environment, consumers, workers and individual business sectors.

And leaders across the business community say the Legislature's failure to come up with a long-term plan for balancing the state's budget continues to make companies jittery about investing in Alaska.

"From our perspective, the two big issues were permit streamlining and the fiscal plan," said Tadd Owens, executive director of the Resource Development Council. "We feel like a lot of headway was made on permit streamlining, and there's still a lot of work to be done on the fiscal plan."

The state faces a gap between spending and revenues that has been filled in recent years by dipping into a reserve fund that is likely to run out in about three years.

While they did not close the fiscal gap, legislators approved dozens of bills aimed at helping the oil, mining, timber and fishing industries.

That included Gov. Frank Murkowski's plan to provide tax credits of up to 40 percent for new oil exploration.

Legislators also went along with Murkowski's plan to shift decisions on habitat permits from the Department of Fish and Game to the Department of Natural Resources, which is seen as more friendly to development.

And they revamped the Alaska Coastal Management Program to make it easier for businesses to get projects approved.

Lawmakers also passed a bill that halts an environmental group's lawsuit over a Cook Inlet oil project and prevents similar suits in the future.

"We really have put truth behind the old slogan, 'We're open for business,"' Senate President Gene Therriault, a North Pole Republican, said after the session ended.

House Minority Leader Ethan Berkowitz, an Anchorage Democrat, said some of the proposals were very good, but others could have troubling consequences over time. And some bills were pushed through too quickly to be sure the state's interests are protected, he said.

"It is not resource development to just give away the state's resources," Berkowitz said. "We believe in doing it right, and that's not always the case with the administration and the majority."

For some industries, the session was a mixed bag.

Tourism advocates were pleased with a bill to make it harder for people to win damages if they're hurt in commercial recreation activities. But they say other legislative actions hurt the industry.

Ron Peck, president of the Alaska Travel Industry Association, said the Legislature's rejection of a broad-based tax leaves $4 million budgeted for tourism marketing vulnerable to a Murkowski veto.

The lack of a broad-based tax also left one sector - rental car companies - picking up more of the tab for state government, Peck said.

The Legislature passed a tax on rentals of cars and recreational vehicles.

"We've already heard some rumblings from some of the folks that sell RV packages internationally that they're considering not operating out of Anchorage," Peck said. "So instead of boosting business here, we're talking about potentially harming business operators in the state."

Legislators approved half a dozen bills to help Alaska's ailing salmon industry, including a tax credit for processors for investments in new equipment.

However, some fishermen and environmentalists say other action, such as moving the habitat division from Fish and Game, could hurt the industry in the long run by jeopardizing habitat needed for healthy wild salmon runs.

Sue Aspelund, vice president of United Fishermen of Alaska, said UFA did not oppose the shift of the habitat division. The group intends to work with the administration to make sure habitat is protected, while providing the streamlining other industries need, Aspelund said.

But she shares the concern of other business leaders about lack of a long-term fiscal plan. The Fish and Game department's commercial fishing division could lose $3.7 million by the time Murkowski is done with his vetoes.

"I very much wish that could have been resolved, so we wouldn't be facing the cuts," Aspelund said.

Less money could mean fewer biologists gathering information, which could force managers to be more conservative about how much fishing they allow, she said. That could hurt fishermen, processors, communities and the state budget through lower fish taxes, Aspelund said.

The Legislature passed several bills designed to make it more difficult or expensive for people to win lawsuits, a move pro-development advocates say could provide more certainty for businesses wanting to invest in Alaska.

But Steve Conn of Alaska Public Interest Research Group was disturbed by the trend.

"What this is is sort of an anti-civil rights movement, the way I look at it," Conn said.

Matt Davidson of Alaska Conservation Voters said much of the pro-business legislation is coming at the expense of the environment.

"We've seen ... the habitat division dismantling, the coastal zone project review dismantling, local voices cut out there," Davidson said. "This is really a wholesale gutting of our coastal protections and our habitat protections."

But Murkowski said that's not what is happening. Making the regulatory process more streamlined is critical to attracting new investment, he said.

"This does not have to be done at the expense of the environment," Murkowski said. "We're committed to responsible environmental oversight."



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