Palin proposes $1,200 energy relief rebates

Governor's plan to help Alaskans cope with rising costs scaled back, for now

Posted: Sunday, June 22, 2008

Gov. Sarah Palin on Friday proposed paying each Alaskan $1,200 as well as suspending the state road fuel tax - already the lowest in the nation - to help Alaskans cope with high energy costs.

Palin said she will ask the Legislature to quickly approve a special one-time payment and suspend the 8 cents per gallon fuel tax for one year.

"We're deriving tremendous revenue from development of our natural resources," she said. "The owners of those resources, Alaskans, I believe can spend surplus dollars better than government can."

Payments would be tied to recipients of Alaska Permanent Fund dividends, but other residents who have lived here for 180 days also will be eligible, said Sharon Leighow, Palin's spokeswoman.

In Juneau on Saturday, U.S. Sen. Ted Stevens, R-Alaska, praised Palin's proposal.

"What the governor has done is a grand first step," he said.

It will show the rest of the nation that Alaska is willing to use its oil windfall to help out residents suffering because of high gas and other fuel prices, he said.

But it has not yet been decided when the Legislature will consider Palin's proposal.

"The governor is hoping to meet with legislative leaders next week to work with them to find the best possible timing for introduction of the bill," Leighow said.

"It is the governor's hope that will be next month," she said.

The Legislature is meeting in special session to consider Palin's nomination of TransCanada for a license under the Alaska Gasline Inducement Act.

"The timing of it with AGIA is a difficult thing," said Rep. Beth Kerttula, D-Juneau. "It's obviously going to be more difficult putting this into the mix, but I don't see how we're going to avoid it."

Palin has had sometimes rocky relations with the Legislature, and her Friday announcement said the proposal was "intended to be a starting point for a discussion with the Legislature about how to provide relief from high energy costs."

Two energy relief bills failed in the last legislative session. One, by Rep. Bill Thomas, R-Haines, made it to the House Finance Committee, where it stalled despite Thomas sitting on that committee. The other, by Sen. Tom Wagoner, R-Kenai, failed to get a hearing.

Palin said she expects her current effort will have some difficulty as well.

"We anticipate some criticism of the plan," she said.

The governor said she was willing to make changes, however.

"Lawmakers will be expected to provide better remedies, better solutions," she said.

Palin's plan is estimated to cost the state $769 million, down from a $1.2 billion proposal she had suggested earlier.

Her earlier plan was structured much differently. It was made up of $100 debit cards for a year to PFD recipients for fuel and grants to electric utilities to be passed on to customers in lower bills.

Palin said Friday that the debit card plan had been abandoned due to the cost of administering the program and the inability to use the debit cards in many rural Alaska communities.

"It was just too doggone expensive to administer," she said.

Kerttula also said the debit card plan was "pretty resoundingly opposed" in the Legislature.

The smaller part of Palin's proposal would suspend the state motor fuel tax for one year. The state's fuel tax is currently 8 cents per gallon, along with a federal gas tax of 18.4 cents per gallon and diesel tax of 24.4 cents per gallon.

Palin said suspending the fuel tax would cost the state about $40 million in lost revenue.

"The state doesn't need that money right now, and every little bit helps," she said.

Rep. Andrea Doll, D-Juneau, said that sounded like a good idea - for now.

"It's a good thing, but it's a short-term solution," she said.

Kerttula agreed, saying Alaskans needed permanent solutions, such as conservation and alternative energy, in addition to immediate cash.

"We can't have a one-time monetary fix; that isn't going to do the trick," she said.

Members of Alaska's delegation in Congress have faced criticism that Alaska already gets a disproportionate share of federal highway dollars and does little to spend its own wealth on its roads.

Leighow said state gas taxes go into the general fund, not a road fund, so suspending the fuel tax shouldn't be a problem.

"We've been told there will be no impact on getting federal highway dollars to Alaska," she said.

Stevens agreed and said those in the nation's capital will approve of Alaska helping its own residents.

"I think she'll get applause from Washington," he said.

Palin had earlier proposed providing grants to utilities to help lower electric rates. That was not in Friday's proposal, but Palin said it is still under consideration. A bill to do that may be introduced for consideration next month.

Kerttula said there have been concerns raised about whether such grants would be taxable income for recipients, and that issue needs further review.

Palin also said low-interest loans would be offered to fishermen to help them buy more fuel-efficient engines.

• Contact reporter Pat Forgey at 523-2250 or

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