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Alaska Legislature brings gas line, spending talk

Published on NewsOK Modified: January 19, 2014 at 1:49 pm •  Published: January 19, 2014

JUNEAU, Alaska (AP) — State spending, education funding and plans for advancing a major gas line project are among the big issues facing lawmakers when they return to Juneau for the new session.

When the Legislature reconvenes Tuesday, it will be the first time in several years that oil taxes aren't on the docket. The issue, however, figures to loom large in discussions about state spending and the gas line project.

Voters in August will be asked to decide whether to repeal the oil tax cut passed last year. Critics fear the crash in unrestricted general fund revenue forecast for this year and next is the tip of the iceberg if the new tax stands. Supporters argue the state is better protected at current prices under the tax change, which they also say is helping to spur investment.

The Department of Revenue has cited several factors for the revenue decline, including lower-than-expected oil prices, declining production, residual effects of the outgoing tax system, such as a closeout of credits, and higher-than-expected deductible lease expenditures. Provisions of the new tax kicked in Jan. 1.

House Majority Leader Lance Pruitt, R-Anchorage, said he doesn't believe the state will get a gas line if it reverts to the old tax system, which would happen if the referendum were successful. Oil and gas companies pursuing the liquefied natural gas pipeline project — BP, ConocoPhillips and ExxonMobil Corp. — all lobbied for the tax change. Pruitt said he wants people to recognize "we don't get gas unless we have oil."

For the companies, the money is in oil, and without a "positive" oil tax structure, the likelihood for them making significant investments in gas is limited, he said. Pruitt said he considers the Legislature taking up tax and royalty terms related to the gas line project something they must do this session.

An agreement between the state, companies, TransCanada Corp., and the Alaska Gasline Development Corp., setting out a roadmap for moving ahead on the project, is contingent upon enabling legislation passing. Republican Gov. Sean Parnell plans to propose such legislation.

House Speaker Mike Chenault, R-Nikiski, said he believes the project is heading in the right direction. But he said he wants to see Parnell's specific proposal and how that might fit with ideas some legislators have been working on. He didn't elaborate on those.

Senate Minority Leader Hollis French, D-Anchorage, said the time to negotiate with the industry on a gas line project was when oil taxes were still on the table. French opposed the tax cut.

"I think industry senses they won on oil taxes and now they can win again with a very oil industry-friendly administration," he said. The Legislature needs to understand exactly what is in the agreement, he said.

Rep. Chris Tuck, D-Anchorage, worries the issue might get rushed so people can say they voted for a gas pipeline. Many legislators are up for re-election this year.

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