Gas pipeline project advances, education and pension plans

Wednesday, May 28, 2014 - 23:00
Legislative session roundup

Alaska’s Legislature took bold steps this session to advance an LNG natural gas pipeline project, pay down state pension obligations, support good schools, and build critical infrastructure – while reducing normal operating expenses.

I am proud to have been able to serve you and your neighbors in District 12. I look forward to seeing you at home this summer and hearing your thoughts on this session, and what our priorities should be going forward.

Gas Pipeline Project Advances in SB 138: As co-chair of the House Resources Committee, my top accomplishment this session was to help guide the consideration and passage of Senate Bill 138, the governor’s bill to advance a liquefied natural gas (LNG) project that could bring steady income and reliable energy to Alaskans for decades.

Passage of SB 138 authorizes the state to negotiate with the three major North Slope oil and gas companies and the Canadian pipeline company TransCanada to design, build and operate a large-scale LNG export project.

The bill offers a way for the state to free itself from the unsuccessful Alaska Gasline Inducement Act (AGIA) effort to build a pipeline through Canada, in favor of a new Alaska LNG Project to deliver LNG to Asian markets -- and gas to Alaskans.

The estimated $45 billion to $65 billion project envisions a gas treatment plant at Deadhorse, an 800-mile high-pressure gas pipeline, and liquefaction facilities at a marine dock in Nikiski. A key element would be 25 percent state ownership, with ConocoPhillips, ExxonMobil and BP owning the rest in proportion to their share of North Slope gas.

By taking a stake in the project, collecting taxes and royalties in gas instead of cash, and selling its gas, the state could earn up to $4 billion annually over a 25-year initial contract, and encourage new oil and gas development critical to the state’s economic future. The bill authorizes the state and producers to keep negotiating, and requires them to show key agreements to the public and Legislature for approval before advancing to the next phase -- and writing the next check.

The bill does not guarantee a pipeline will be built. But it allows for a realistic way forward for the state, producers and TransCanada to make the hard-nosed calculations necessary to justify investing the additional time, effort and money needed to continue toward a final investment decision.

The stage-gated process ahead will allow ample opportunity for the Legislature and public to make course corrections, apply brakes or -- if necessary -- take an off-ramp. Plus, the state continues pursuing a smaller “bullet line” to deliver gas to Alaskans as a backup. SB 138 represents a reasonable path forward toward our goal of using Alaska’s gas to benefit Alaskans.

House Bill 318, adopted: This bill requires public schools to keep track of students from military families—their numbers, attendance and performance - and to make non-personalized information available online. The provisions will help military families find the most appropriate schools for their children, show districts where they should improve, and attract more targeted federal funds to help military students succeed. 

House Joint Resolution 26, passed: This resolution calls on Congress to give Alaska and other states the same 37.5 share of offshore oil and gas royalties that states along the Gulf of Mexico receive. Such revenue would encourage offshore development, by helping Alaska bear the indirect costs of such activity. HJR 26 has been a useful tool for legislators recently lobbying in Congress on Alaska energy issues.

House Bill 361, passed: This bill allows Alaskans with the national Board-Certified Behavior Analyst (BCBA) certificates to receive state licenses. It will improve the level of behavioral therapy for Alaskans with autism, raise insurance reimbursement rates for behavioral therapists, and save money for the state and families by avoiding the need for costly institutional care.

House Bill 357, passed: This bill makes it easier for active-duty military personnel — and their spouses — to visit patriotic clubs like Veterans of Foreign Wars halls or American Legion posts as guests, without such visits being limited only to “special occasions.” HB 357 acknowledges the value of these clubs in supporting both veterans and active-duty personnel, and helps maintain them as vital centers of social activity for the military community.

House Joint Resolution 32, time ran out: This resolution condemns the systematic attacks on Christians and Christian churches taking place in the ongoing civil war in Syrian and urges the U.S. government to use diplomacy to broker an end to the conflict. It passed the House and most Senate committees but was among the bills left unscheduled for final action on the Senate.

House Bill 278: Major elements include, increased funding, support for charter schools, testing reform, education credits and education reform.

It will be important for all of us who care about education to work together in the coming years to identify ways to maintain quality schools that are sustainable, affordable, and accountable to Alaska families.

House Bill 385: One of the largest parts of the operating budget is public pensions. After stock market declines in recent years left the state’s pension funds with lower-than-desirable balances, the Legislature took action this year to address the situation by passing House Bill 385. We used the bill to authorize transfer of $3 billion in savings from the Constitutional Budget Reserve to the two main pension accounts. The Public Employee Retirement System trust fund received $1 billion, while the Teachers Retirement System trust fund received $2 billion. These deposits allow us to stabilize annual pension payments at $500 million, significantly improve the funds’ assets-to-liabilities ratios, and help fulfill the state’s constitutional obligation to provide promised pensions to public officials and educators.

House Bill 266: The Legislature succeeded in reducing the day-to-day costs of government by 2.2 percent, after several years of more than 7 percent growth. As passed in House Bill 266, the Fiscal Year 2015 operating budget (covering July 1, 2015 to June 30, 2016) of $9.1 billion includes about two-thirds state funds, and one-third federal funds.

House Bill 306: While state law offers tax credits for many activities, including donations to schools or charities, hiring veterans, or spending by in-state movie-makers, there is no required regular review. Passage of House Bill 306 sets a schedule to review tax credits, fee forgiveness and other indirect benefits, to make sure they are still performing as expected and benefiting Alaskans.

House Bill 316: Private businesses in Alaska face the nation’s highest worker’s compensation insurance rates, mostly due to high health care costs. Passage of House Bill 316 will lower costs by basing medical reimbursement not on the highest in-state charges, but on rates set by the Worker’s Compensation Board, indexed to actual medical costs and adjusted for geographic differentials.

Senate Bill 119: Senate Bill 119 is the Fiscal Year 2015 capital budget bill, totaling $2.18 billion -- half from state and half from federal sources -- and $64.3 million less capital spending than last year. I am proud to have helped secure these needed capital projects for our district, including:

• Road pavement rehabilitation in District 11 and 12 (Senate District F), $1.5 million

• Birchwood ABC Elementary School classroom computers, $66,150

• Birchwood Community Patrol, $14,500

• Boys and Girls Eagle River Clubhouse, Teen Center energy and safety upgrades, $45,000

• Chugach State Park and trail access rehabilitation at Mt. Baldy, $78,000

• Chugiak-Eagle River road/drainage rehabilitation, $1.4 million

• Chugiak-Eagle River Library materials and technology, $40,000

• Chugiak High School weight room equipment, $43,455

• Eagle Academy Charter School touch technology/science books/report card software, $58,410

• Fire Lake Elementary School technology upgrades, $21,000

• Mirror Lake Middle School cafeteria tables, $50,000

• Ursa Major Elementary School touch technology/library books/sports equipment, $35,850


The capital budget also includes funds for the Knik Arm Bridge, which will reduce residential home-building pressure on Chugiak-Eagle River by opening new land for settlement; divert traffic away from the Glenn Highway; and lower freight costs for the North Slope and Interior.

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