By Brian Smith
Gov. Sean Parnell called for a slowing of government spending in the face of declining state oil production and a stalemate on tax reform during a Wednesday speech to the Kenai and Soldotna chambers of commerce.
"I believe that government should not be spending as much as we are, that we need to slow that growth," he said to the crowd gathered at the Soldotna Sports Center. "Why? Because it promotes individual liberty, but also because we can't sustain it from an economic perspective."
Parnell, along with House Speaker Rep. Mike Chenault, R-Nikiski, Rep. Kurt Olson, R-Soldotna, and Sen. Tom Wagoner, R-Kenai, spoke about the results of the most recent legislative sessions. The four focused on failed legislation for oil tax reform, an in-state natural gas pipeline, the performance of the Alaska Senate, and the state's financial direction.
The governor said stemming the decline of oil production in the state, but more specifically from the North Slope, is the state's highest priority in hopes of stabilizing its economic future. He said production is declining at 6 to 9 percent per year, which he attributed in part to the state's lack of "competitiveness" with other oil-producing states such as Texas and North Dakota.
"We are maintaining ourselves in this status quo decline mode," he said. "So I was disappointed we weren't able to get an oil tax change. ... I hear this word out there that, 'Oh, it's just a giveaway.' Let me put it in just a little different context. Can the state of Alaska afford to live on $8.5 billion a year instead of $10 billion? Can we? I think we can. Especially if that means more jobs, more economic growth and more opportunity for the future here as Alaskans."
Parnell criticized the Senate's oil tax plan for not addressing immediate production, which he tried to address in the short-lived special session using the Senate's methodology, he said.
"(I said) I'll take the same methodology they use for new fields because if they think it will increase production ... it ought to work for existing fields too," he said. "So that's what I did -- I gave them a comprehensive bill with their own methodology."
Despite his attempts falling short, Parnell praised the central Peninsula legislative delegation for their work on oil tax reform.
After his speech, Parnell signed HB314 into law, which increases the terms for railroad land leases from 55 years to 95 years and provides more financial stability for the Alaska Railroad Corp. The bill was one of Olson's.
Wagoner said the last legislative session was the most difficult he's experienced. He said it was very difficult to work in the bi-partisan majority group.
"That's why the Senate's own bill on oil and gas taxes didn't get to the floor for a vote," he said. "Eleven people would not sign off on it. Think about that."
Wagoner said he didn't think the work was meaningful and he later called for an overhaul of the bipartisan group.
"A 10 to 10 split among ideological lines is not workable and it is not a workable situation," he said. "You are just not going to get any agreement. That needs to be changed statewide and I very much look forward to working on those changes."
Chenault talked about the "ugly, bad and the good." He said the ugly this last legislative session "was just pure simple politics."
"You had a dysfunctional group and they called themselves the bipartisan coalition and I hate to say this, but ... they have also been called the bipolar," Chenault said.
That Senate group could tackle easy bills, but on any tougher items, "they just couldn't function," he said. He echoed Parnell's thoughts on the Senate's oil tax bill only fixing a part of the puzzle.
"If that wasn't bad enough, what they had actually done was they had spent in the neighborhood of $750,000 on consultants because they didn't have enough information to make a good decision," he said. "... That's the best they could come up with? That they could actually pass? And that hadn't even been vetted through the consultants we paid three-quarters of a million dollars for?"
The "bad" Chenault said was that the Senate "once again failed to address Alaska's long term energy needs by failing to even have a meaningful hearing on House Bill 9."
He said he supported a 48-inch gas line regardless of its terminal location. He said the state can't afford to wait on the results of experimental oil and gas development in Cook Inlet before building the line.
"But we'll not ever know what'll happen until we get to an open season," he said. "An open season is where it's determined if you have sellers and buyers that can come to a 30-year contract on buying gas and selling gas. Until we get to that point we are never going to build a pipeline."
In his comments, Olson said he had high hopes for Chenault's HB9, but those were dashed in the Senate.
"By giving it a committee in (Senate Community and) Regional Affairs for the first committee it was a stake through the heart of the bill," he said. "We knew at that point it would be pretty much dead on arrival."
Said Parnell, "I'm happy to address questions on the gas line because we have made huge progress there, not withstanding my deep disappointment ... on HB9 and that instate gas line.
"But we have turned the corner on a project in this state with producers aligned with an independent pipeline company and we finally have some hope we are going to get that."
Chenault also spoke about funding alternative energy projects across the state, including wind and hydro.
"While I believe in alternative energy, it comes at a cost," he said. "We have to be aware that the state and federal money is what is driving the cost of that electricity down to where we can afford it."
Olson thanked the governor for not exercising his veto authority this year on Peninsula capital projects and said all four speaking believed in local infrastructure and the capital budget as a benefit for the economy.
"We appreciate the fact that the governor agreed with what we have in the capital budget," he said. "That's been extremely helpful and it's been a good year for most of the people that I have talked to from the construction industry. We are seeing the money start and the jobs are being bid and it is definitely having an impact on the local economy."