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High oil prices open funding doors for Alaska Legislature

Sean CockerhamMcClatchy-Tribune News Service

Alaska lawmakers are going into the 2010 legislative session planning to spend more money on hometown projects, possibly cover the tuition of Alaska college students, and talk about whether to do anything about the high cost of energy in the state.

The 90-day session begins Tuesday in Juneau as the state's looking at a projected surplus because of a forecast of continued high oil prices, which bring money into the treasury from royalties and taxes on the oil companies. Gov. Sean Parnell is proposing a nearly 9 percent increase in state general fund spending next year. That additional spending appears mostly fine with leading lawmakers, so long as they can add projects for their own districts into the mix.

Senate President Gary Stevens said he's worried that Parnell's budget takes all the money.

"We legislators like to go back home and say 'look at what I've done for you this year,' " the Kodiak Republican said. "Last year we had virtually no capital projects in our home communities. The promise was, in the next year, there should be a little bit more money to do some projects for you at home. That's going to be a contentious issue. I'm just not sure how much room the governor's left for us."

Legislators, in an election year, will also decide whether to approve Parnell's ambitious new scholarship program, the Governor's Performance Scholarship. He's proposing the state give scholarships equal to at least half the University of Alaska tuition for high school students who have a "C-plus" average or better and take four years of math, science and language arts. Students with an "A" average could get their entire tuition paid for. If they don't want to go to the University of Alaska, students could put the money toward any in-state college or trade school.

He's proposing to pay for it by creating an endowment with $400 million in state savings, but House Finance Co-Chairman Mike Hawker said he has reservations about using such a big chunk of savings when oil production is declining.

Senate President Stevens likes the idea of creating such a scholarship, but questioned if Parnell is on the right track by just making it based on student performance, as opposed to assessing whether a student really needs state assistance.

"It does leave out students with needs and we know that's one of the biggest problems we have in this country, we have failed to help those students with needs," he said.

Energy will also be a big topic in the upcoming legislative session. There are bills offering tax credits to companies building natural gas storage to save Cook Inlet gas at low demand times in the summer and have it available in the winter. There are also committees working on statewide energy plans, although what they'll accomplish that residents can see on their bills remains to be seen.

"Whether that's gas or hydro or wind or geothermal -- and I'm going to throw in nuclear just because I like it -- there's many generation sources out there. And we've got to look across the state and see what works in each region and try to determine a plan to move Alaska forward," said House Speaker Mike Chenault, a Republican from Nikiski. "But one thing we can't forget, any one of these plans is going to cost money and it's going to cost a lot of money. So how do we pay for it?"

The governor is pushing for the Legislature to suspend the eight-cents a gallon state gasoline tax, but some lawmakers argue that being a state with no gas tax could weaken Alaska's case in Congress for sending federal road money to the state. Democrats in the state House argue that their "price gouging" bills to cap the refineries' margins at 10 percent higher than what is charged in Washington state would do more for consumers than getting rid of the tax.

"The state gas tax is eight cents and we're 70, 80, 90 cents a gallon higher than most other states," said Anchorage Democratic Rep. Pete Petersen, one of the sponsors.

But Republican legislators have blanched at the state regulating the gasoline marketplace, arguing that it could do more harm than good. Lawmakers this session will also talk about whether to ban driving while talking on a cell phone, and if the death penalty should be reinstated. There will be arguments over oil taxes and if the state is taking the right approach in pursuing a natural gas pipeline to the Lower 48.

There will also be plenty of politics at the Capitol, with a governor's race that includes Parnell and Anchorage Democratic Sen. Hollis French. Anchorage Democratic Rep. Harry Crawford is running for Congress.

House Minority Leader Beth Kerttula, a Juneau Democrat, said she's hoping for a better year than last year, which she said was a stressful, difficult time in which Sarah Palin "hype" dominated state politics.

"The state kind of changed. The governor went national, then she quit. And in a lot of ways it feels to me like this is a year we have a chance to regroup and kind of just get back to what really matters in Alaska," she said.

Find Sean Cockerham online at or call him at 257-4344.

At a glance

The Alaska legislative session begins Tuesday and runs to April 18. The state has a budget surplus and lawmakers are looking to spend serious money on hometown projects. There are legislators running for governor and Congress, and a governor who for the first time is asking voters to let him keep the office. Oil taxes will be a political battleground, with many legislators maintaining that lawmakers jacked them up too high under Sarah Palin and candidates who are staking out opposing positions.

Among the issues in play:

• Gov. Sean Parnell wants to keep the oil tax rate the same, but is asking the Legislature to give more tax credits as incentives when companies drill in Alaska. It’s an idea that could cost the treasury hundreds of millions of dollars.

• Parnell is also pushing for the Legislature to scrap the state’s eight-cents-a-gallon gasoline tax.

• Democrats in the state House and Senate argue a better way to lower gas costs are with their “price gouging” bills to cap the refineries’ margins at 10 percent higher than what is charged in Washington state.

• The fight is sure to continue over what the state should do to encourage an in-state natural gas pipeline to bring North Slope gas down to the Railbelt. It’s seen as a backup if the line to the Lower 48 doesn’t happen.

• The governor wants the Legislature to approve a new scholarship program under which the state would pay half to all in-state college or job training tuition costs depending on high school grades and courses.

• Cook Inlet energy issues will be a big topic. There are bills offering tax credits to companies building natural gas storage to save gas at low demand times in the summer so it’s available in the winter.

• A pair of Democrats in the Legislature, one running for governor and the other running for Congress, are pushing for a constitutional amendment to enshrine the Permanent Fund dividend in the state Constitution.

• There’s a bill to ban teens from driving and talking on a cell phone, and a bill to forbid all drivers from doing it.

• A bill filed last year to reinstate the death penalty in Alaska is still alive in the state House.

• One lawmaker, Wasilla Republican Rep. Wes Keller, wants to require random drug and alcohol testing of people on public assistance.