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Eye on the Capitol: Week 4 analysis and review

By Rhonda McBride 6:01 AM February 17, 2014

House majority leaders have already vowed to cut spending beyond what the governor has proposed for the operating and capital budgets.

ANCHORAGE – Alaska lawmakers are now a third of the way through the 2014 legislative session, expending a lot of energy on social issues like education while Gov. Sean Parnell’s gas line legislation has been quietly percolating through various committees.

In the midst of all of this, the Democrats — while they have no power to thwart the Republican majority, at least as far as numbers go — continue to act like the mouse that roared.

Tuesday, the Senate majority held a news conference in what appeared to be a preemptive move to insulate Senate Bill 21 from criticism over the Department of Revenue’s latest oil production forecast, which shows oil production declining by more than 40 percent over the next decade.

Thus far this year, the Republican majority has kept a tight lid on debate about SB 21, the oil tax reform measure that took effect this January.

Democrats called out the governor last week. They claim he deliberately misled the public on SB 21 by promising it would lead to more oil production.

The Parnell administration said the lower forecast has nothing to do with SB 21 but is the result of a switch to a more conservative way of forecasting production.

In the past, an oil company’s plans for more development were included in the forecast. If the project was delayed or shelved it threw the forecast off, so the department said it will now no longer include such plans until the fields under development are closer to producing oil.

Mike Pawlowski, deputy commissioner of revenue, said with growing activity on the North Slope the production forecast should improve in the near term. But the state has, for now, stopped the practice of counting chickens before they hatch.

Democrats call this a cover-up for the failure of SB 21 and blasted Parnell for a promise to put one million barrels of oil in the pipeline, a promise his staff said was based on offshore development from Shell that is now on hold.

Republicans defended SB 21 as the state’s best hope for increased production and argued that it’s too early to tell if it’s working. They dismissed rumblings from the Democrats as election-year rhetoric.

Another message oft repeated since the start of session: A future natural gas line is dependent on a healthy oil industry.

The Parnell administration has been laying its cards on the table a few at a time, presumably to give lawmakers time to focus on the importance of each card and how it figures in the state’s strategy for ownership in a liquified natural gas (LNG) project.

Critics complain the governor is keeping too much too close to the vest; that lawmakers need to see the entire hand in order to make the best decision for the state, one that will affect Alaskans for generations.

This year’s $2 billion revenue shortfall has already heightened the debate over education funding.

Last Monday, an annual event known as the Legislative Fly-In brought school boards, superintendents and students from all over the state to Juneau to lobby for education. There was a repeated cry for increased funding, one that won’t let up.

Sunni Hilts, president of the Alaska Association of School Boards, called on lawmakers to dream big and warned that the state is “inching its way into mediocrity.”

Speaking of big dreams, Alaska lost one of its earliest big dreamers Friday morning — Mike Stepovich, Alaska’s last territorial governor. He died a few weeks shy of turning 95, one of the last living connections to the story of early statehood.

Sen. John Coghill said it was a good feeling to be able to talk with some of state’s founding fathers, and that Alaska was lucky that Stepovich was blessed with the longevity to share what he knew. Coghill called Stepovich a “big picture thinker, a little bit of a dreamer,” whose dreams helped build Alaska.

Statehood was one of the big chapters in Alaska history, followed by one on oil of which the final pages are still being written. The next chapter — if it ever happens — will be gas.

The statehood and oil chapters are filled with regrets about the deals that Alaskans settled on, with feelings of what might have been had we fought harder for our fair share.

In statehood, we could have used a lot more land. With oil, people wonder if we would have been better off investing in the Trans-Alaska Pipeline. Of course, back then Alaska didn’t have billions of dollars in savings. With gas, we wonder if the deal before us now is the right deal, one that we won’t regret fifty years from now.

In the coming weeks, there will be serious discussions. But will these issues get the focus they deserve? Will lawmakers fully grasp the implications?

There are already a lot of distractions. Legislators on both sides of the political aisle still have a lot of questions about whether the TransCanada Corporation should be a partner in an LNG project unless it goes through a bidding process.

The Parnell administration has called its deal with TransCanada a win-win, allowing the state to extricate itself cleanly from the financial obligations of the Alaska Gasline Inducement Act (AGIA). The administration has worked a deal with TransCanada in which the pipeline company would put up the cash for some of the state’s investment in an LNG project, giving the state the opportunity to buy it back at a later time.

So far, these kind of choices facing the state have not really gotten the spotlight necessary to determine if they truly put the state on a different playing field, where Alaska will be positioned to be on the winning side of the revenue stream.

One of the candidates for governor, Democrat Byron Mallott, has said there should be statewide forums on the LNG project options so the state as a whole can understand what’s at stake.

In the meantime, Alaskans should prepare for sacrifices.

Declining oil production equals declining state revenues. That’s the bottom line.

Lawmakers will be faced with some tough decisions, as well as criticism for not walking their talk.

An Alaska Public Radio Network report looked at the travel budget for lawmakers. In 2013, they racked up a million-dollar travel bill, a nearly 50 percent increase from last year.

The increase in travel costs would have paid one year of a three-year pilot project on suicide prevention that the Legislature funded. A delegation from two Yukon River villages traveled to Juneau last week to thank lawmakers for funding the Qungasvik program, which has drastically reduced suicide rates in Alakanuk and Emmonak. The group would like to see the program expand to other communities.

The Key Coalition had a bigger presence than the Qungasvik delegation. About a hundred people rallied on the Capitol steps Thursday to push for more state support for the developmentally and intellectually disabled. One of the group’s top priorities is to reduce the waiting list for services.

And it’s not just social causes that are less likely to be funded.

Rep. Doug Isaacson of North Pole is pushing to extend the railroad from Fairbanks to Deadhorse. Isaacson wants University of Alaska Fairbanks researchers to explore this project, which could drastically reduce shipping costs to the North Slope and help lower the costs of producing oil. But the proposal for a study was shot down by fellow Republicans as too expensive, especially in a time of declining dollars.

Earlier in the session, the Association of Village Council Presidents — an organization that represents tribal groups in Southwest Alaska — went before the Senate Finance Committee to talk about building a road between the Kuskokwim and Yukon Rivers at Kalskag. It would help villages on the Upper Kuskokwim, where fuel is $9 a gallon and higher. Fuel could be shipped down the Yukon at a much lower cost to those communities. Goods that arrive in Bethel, a large port on the Kuskokwim, could be shipped to the Yukon, also helping communities save money.

So many causes, but so few dollars to go around.

House majority leaders have already vowed to cut spending beyond what the governor has proposed for the operating and capital budgets. In the coming days, Alaskans will learn more what that means and find out whether the Senate has the same appetite.

But the political pressure is mounting to both cut and spend. One of the ironies is that those who say they want to cut spending also want to spend more on certain programs.

As the saying goes, “Round and round she goes, and where she stops, nobody knows.”

Well, we may know at the end of the session’s 90 days. But then again, we may not.

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