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Capitol Notes April 17, 2012


Regular Session Ends

Early Monday April 16, the Alaska Legislature adjourned the 27th Legislative Session of the Alaska State Legislature. The Alaska Chamber’s top priorities of oil tax reform, litigation reform as it relates to natural resources and the high cost of energy were all discussed by the Legislature this year, but were unfortunately not resolved.

Reform Oil Tax Policy to Encourage New Oil Production

The issue of oil tax reform once again rightly dominated session. As Alaska’s economic engine, oil production and the revenue it produces are key to Alaska’s future. The Senate failed to reach agreement on its own oil tax bill even after rejecting outright the bill the House passed last year (HB 110) and working on its own bill throughout this session (SB 192). During the inevitable end games that are played during the final hours of a legislative session, the Senate attempted to wrap a portion of SB 192 into a House bill which enjoyed broad support in the House. Ultimately, without having any opportunity to vet that portion of SB 192 the House rejected it.

The Alaska Chamber supports meaningful tax reform making Alaska highly competitive nationally and globally. As business owners, Alaska Chamber members know there are no guarantees when it comes to business investments. Business goes where the market is most attractive and where the risk is minimized.

It is critically important that we, as Alaskans, make our market as attractive as possible. We’ll know we’ve done our job correctly if new investment, like what we’re seeing in other jurisdictions, begins to happen in Alaska.

Litigation Reform Relating to Resource Development in Alaska

Litigation reform as it relates to natural resources advanced this year, but got slowed down and eventually died in the Senate. The main vehicle, HB 168, Injunction Security for Industrial Operations advanced to Senate Judiciary, and had a hearing the last week of session. This is unfortunate as HB 168 enjoyed strong bipartisan support in the House last year and should have received the same in the Senate.

Alaska is a resource rich state and a sound regulatory, permitting and judicial system are crucial to ensuring Alaska’s business climate welcomes new investments. The Alaska Chamber will continue to support measures like HB 168 that strengthen Alaska’s business environment.

Reduce the High Cost of Energy

The high cost of energy affects all Alaskans, from the largest businesses to individuals. Rural and Interior residents and businesses are feeling it the most this year. There were numerous measures considered during session this year in an attempt to reduce the high cost of energy in Alaska.

The Alaska Chamber encouraged the Legislature and the Governor to support initiatives that lower the high cost of energy in Alaska. To alleviate this situation, the Alaska Chamber general supported initiatives that lower energy costs by developing energy resources. The nature of such initiatives are long term rather than short term which is frustrating to individuals and businesses struggling to pay their energy costs.

The legislature did approve many measures designed to affect the cost of energy in Alaska – some short, medium and long term. Short term assistance available to individuals (not businesses) includes funding of the Power Cost Equalization Program ($38.2 million); funding for the Low-Income Energy Assistance Program (LIHEAP at ~ $48 million); and funding for home energy rebates ($20 million). Longer term, or longer lasting, assistance includes funding for home weatherization ($31.5 million).

Longer term solutions for all energy users included funding for the Renewable Energy Fund ($25.9 million) and expansion of the Alaska Industrial Development and Export Authority (AIDEA) to facilitate financing, or to finance energy infrastructure projects. Additionally, a bill to subsidize construction of above ground LNG storage tanks to assist business to truck cleaner, cheaper fuel to Fairbanks passed.

Clearly, there remains much work remains to reduce the cost of energy in Alaska. Economies of scale will continue to challenge the situation to find real economic lasting solutions.

Alaska Chamber Legislation

In addition to the three legislative priorities reviewed above, the Alaska Chamber tracked almost 90 pieces of legislation over the course of the 27th Alaska Legislature. Of those tracked, the Alaska Chamber supported 36 pro-business bills and opposed 9 anti-business bills.

In total, roughly 30 percent of the bills we supported passed, improving Alaska’s business climate. It is important to note that many bills we supported were duplicative in nature, some were even “companion bills” (same bills in both Houses). The excellent news is that 100 percent of the bills we opposed failed to pass! 

These statistics demonstrate the true value of your membership and participation in the Alaska Chamber! Alaska business owners working together to improve Alaska’s business climate is powerful.

Special Session

The Call

Governor Parnell called the Alaska Legislature into a special session early Monday, April 16 to consider the following three issues/bills:

• Oil and gas production taxes;
• HB 9 in state gasline development team duties;
• HB 359 sex crimes, testimony by video.

The special session will begin tomorrow, Wednesday, April 18 at 1pm in Juneau.

The 24 hour rule applies to special sessions, so it is best to check the Legislature’s website to verify hearing times and floor schedules (http://w3.legis.state.ak.us/).

Capitol Notes will be published on an “as needed” basis to keep Alaska Chamber members informed and active.

Role of the Alaska Chamber

Wednesday, the Governor will present a bill on oil and gas production taxes for the legislature to consider during special session. The Governor indicated that he will introduce a comprehensive bill which includes incentives for new oil exploration and development as well as competitive tax rates for legacy fields. He also indicated that the bill may use the structure the Senate used in its SB 192.

The Alaska Chamber will continue to proactively support meaningful oil tax reform which make Alaska’s oil and gas market nationally and globally competitive.

The Governor has specifically requested the Legislature suspend uniform rules to allow them to consider HB 9 and HB 359 without beginning the entire process from scratch (new bills). It is anticipated that HB 359 will quickly pass both Houses leaving HB 9 and oil tax reform as the primary special session issues.

One of the Alaska Chamber’s many adopted positions includes support of the Alaska Gasoline Development Corporation’s (AGDC) Alaska Stand Alone Pipeline process. During the regular legislative session, the Legislative Affairs Committee did not take a position on HB 9 which clearly relates to the adopted position. The Legislative Affairs Committee will meet tomorrow, Wednesday, April 18 at 10am and will discuss taking a position on HB 9 during special session. Please contact Rachael Petro at rpetro@alaskachamber.com for more information about the Legislative Affairs Meeting.

Alaska Business Roundtable Hosts Governor Parnell

Don’t miss the last Alaska Business Roundtable of the year! Join us to hear Governor Parnell on Thursday, April 19 in the Treadwell Room of the Baranof Hotel downtown Juneau. Doors open at 11:30am and the program begins at 12:00pm.

The Alaska Business Roundtable is a luncheon series during the legislative session jointly sponsored by the Juneau and Alaska Chambers of Commerce.

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