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Text of Gov. Parnell's address

Published on NewsOK Modified: January 22, 2014 at 11:05 pm •  Published: January 22, 2014

JUNEAU, Alaska (AP) — The prepared text of Gov. Sean Parnell's State of the State address, delivered in Juneau on Wednesday evening:

Mr. President, Mr. Speaker, Lt. Governor, legislators, fellow Alaskans:

Thank you for welcoming my family and me here tonight. I brought three strong women with me: my wife, First Lady Sandy Parnell; my mom, Thelma Parnell; and my beloved aunt, Jeannie Zimmerman.

Legislators, you and I have the privilege of serving the greatest people, of a mighty state, in an exceptional nation. Our job is profound: to secure liberty and create opportunity for all Alaskans.

In so doing, we honor the legacy of Alaskans past, we act boldly for Alaskans today, and we will leave a bright future, a stronger Alaska. Thank you legislators, and to your staff, for entering the arena of public service, and for dedicating so much of your lives to better our fellow Alaskans and our state.

I also thank members of my cabinet for their service. These men and women undertake an awesome responsibility to faithfully administer the laws you pass. I salute them.

As I have said many times, Alaska's greatest strength is her people: their courage and their compassion. As governor, I witness these qualities every day.

The courage of our public safety community, three of whom we lost last year:

— VPSO Tom Madole

—Trooper Tage Toll

— Pilot Mel Nading

We also witnessed the courage of Coast Guard Petty Officer Third Class Travis Obendorf, who we lost following a search and rescue mission.

We saw that courage last July when a small plane crash-landed outside Talkeetna and stranded two people. The Alaska Air National Guard, which rescued the two victims, set a milestone: The incident represented the 2,000th life saved by the Alaska Air National Guard in nearly 20 years.

We honor the service and courage of our National Guard, just as we honor the service and courage of our military members and first responders.

They are Alaska strong.

Our strength as a state lies not only in Alaskans' courage, but in Alaskans' compassion.

I witnessed this courage and compassion last April. Nikki Toll had just lost her husband, Trooper Tage Toll. Burdened with her own grief, she went to the memorial service for Mel Nading, the Public Safety Helo-1 pilot who was lost alongside her husband.

Nikki stood with her arm around Denise Nading during Mel's service, to show her love and support. The very next day, Denise and her family attended Trooper Toll's memorial in support of his family.

Pain so raw embraced by compassion so great.

We saw compassion at Palmer's Pioneer Home, where a senior suffering from Alzheimer's stood confused and crying in the hallway. One of the Pioneer Home maintenance staff set his work aside, hugged the woman, told her she was loved, and that she was home.

Courageous and compassionate Alaskans make Alaska strong.

Last year, I said the choices we would make in 2013 would determine Alaska's future strength. I asked you to choose wisely and well to keep Alaska strong. You did.

As a result, tonight I can report the state of our state is strong, stronger than even just one year ago, and getting stronger by the day.

We tackled important policies last year. We made serious choices. And we must do so again this year.

We must find new ways to use Alaska's resources to drive down the cost of energy - gas for Alaskans first, and then for the world. That is why last year we created the Interior Energy Project to get lower-cost natural gas to Alaskans. That natural gas trucking solution should deliver first gas to Fairbanks in winter 2016.

Recently, we made historic progress on Alaskans' gasline.

For the first time, all the necessary parties have aligned to make an Alaska gasline project go: three producers, a pre-eminent pipeline builder, the Alaska Gasline Development Corporation (AGDC), and the State agencies responsible for the people's royalties and taxes.

Because a liquefied natural gas (LNG) project is complex, we hired some of the world's most qualified experts to examine Alaska's cost, tax, and royalty structures.

We asked them to look for ways we could be competitive in the world market. Alaska can best control her own destiny if we own a stake or participate in the Alaska LNG Project.

Here's why: Ownership or participation in the Alaska LNG Project means the State shares in the profits of the project, rather than paying them all to someone else.

Ownership also means we will better understand, and can more effectively negotiate, and ensure the lowest possible costs.

With Alaska owning a stake, Alaskans stand to gain more.

Next, our proposed phased legislative approval process will be more open and transparent to the public than either the Stranded Gas Act or the Alaska Gasline Inducement Act (AGIA).

When the Stranded Gas Act and AGIA were passed, everyone assumed that in order to get a gasline, we had to negotiate all the fiscal terms at the outset. That meant the State carried all the risk up front - for decisions worth billions of dollars - without having the benefit of the information, time, and analysis to get it right.

We have learned the lessons of history. For the Alaska LNG Project, we will insist on terms that any partner would enjoy in a traditional commercial agreement, one where parties make commensurate, proportionate commitments; they go forward in phases; and they seek approval from their boards of directors before committing to the next phase of the project. The State will return to its board of directors, the people, by seeking review and approval, at all key decision points, from legislators.

This session, I ask that you work with me to review and decide Alaska's course on this initial phase of the Alaska LNG Project.

To keep Alaska strong, I am asking legislators to review the guidance documents our team has negotiated, and take up legislation that would allow us to move through the Pre-FEED phase of the Alaska LNG Project.

The Pre-Front End Engineering and Design phase of the project - that's a half-billion dollar step in gasline development - refines the cost and engineering challenges the project faces. These challenges that must be addressed before the parties commit any additional funds to complete the project.

Costs of this 18-month phase known as Pre-FEED will be shared among the parties, so the State's portion will be between $70 and $90 million.

After that Pre-Front End Engineering and Design Phase, the Administration will come back to the Legislature, report progress, and ask for your commitment and approval before proceeding to the next stage.

In the past, we have seen efforts to develop a large gas project stall out for various reasons. That's why we will maintain our backup plan to get Alaska's gas to Alaskans. The Legislature wisely addressed this in creating AGDC.

AGDC is uniquely positioned to be our ace in the hole. If work falters on the Alaska LNG Project, we can still get gas to Alaskans first with AGDC's smaller-volume project. AGDC is on track for an open season in early 2015.

The gasline legislation I ask you to consider is important to create a competitive investment environment for any project that gets Alaska's gas to Alaskan homes and businesses. The legislation is important to both AGDC's smaller-volume gasline project and the larger-volume Alaska LNG Project.

This has been a dream of Alaskans since 1968, when Prudhoe Bay was first discovered. Our way forward will be on Alaska's terms and in Alaskans' interests.

Alaska's financial foundation is already very healthy.

The books are balanced because we have been disciplined with the people's checkbook. We have built significant budget reserves and preserved our triple-A bond rating. In my budget this year, I follow four guiding principles: to live within our means, meet our constitutional priorities, fix what we have, and finish what we have started.

To keep Alaska strong, I ask you to preserve these principles in the final budget bills. This is especially true now, where we face less revenue due to lower oil prices.

We must do what the president and Congress have been unable to do: reform spending, so we can live within our means during this generation and the next.

Washington has not made Social Security sustainable, but in Alaska we can reform our pension system so it is fully funded.

Fellow Alaskans, the time is now to tackle our $12 billion pension deficit. Alaska's escalating annual pension payments squeeze dollars from every other program and State service - education, public safety, natural resources - and that vise will soon tighten. Without action, our $630 million annual payment will balloon to more than $1 billion.

To keep Alaska strong, I propose we transfer $3 billion of our $16 billion in budget reserves into the Retirement Trust Fund.

Next year, this shift will allow us to reduce our annual payment to $500 million, instead of more than $750 million - that's a savings of more than 50 percent in the first year. Our plan will dramatically drop future operating budgets and put us on a more sustainable financial path.

Our current economic policies navigated us safely through the Great Recession. With these policies in hand, the "Great Alaska Comeback" is underway.

Last year, we passed the More Alaska Production Act, and now, new oil investment dollars, new jobs, and better opportunities are flowing into the state.

Alaskans are better off under the new tax regime. The people's treasury takes in more revenue at lower oil prices than under the old tax regime.

Last year, we also cut payroll taxes for individual Alaskans. As a result, this year Alaskans and Alaska businesses will have $55 million more in their pockets.

Our commitment to a more fiscally responsible government has not gone unnoticed:

— Business and professional licenses were up three percent in 2013;

— The Kaufmann Foundation ranks Alaska as one of the top four states for entrepreneurship;

— Alaska's summer visitor volume increased last year for the third consecutive year; and

— George Mason University's Mercatus Center reported last week that Alaska's fiscal situation is the strongest in the nation.

The Great Alaska Comeback is beginning, and we will make sure it continues for us and for future generations.

The brightness of Alaska's future depends on the strength of our children. That strength will hinge on whether we provide them with a high-quality education.

Three years ago, I set a goal that we would increase our high school graduation rate from the mid-sixties to 90 percent by 2020.

I am proud to report our graduation rate improved in 2013 for the third year in a row. At 72 percent, we are better off than we were a year ago, but we still have a long way to go.

The good news is more graduating seniors, on a percentage basis, have earned Alaska Performance Scholarships. Those hard-working students were also much less likely to need remedial courses at the University of Alaska.

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