Legislative week in review, March 16, 2009

By Bradners' Alaska Legislative Digest

Activity picks up in capitol as Legislature enters final weeks of session

The state House finished its work on the Fiscal Year 2010 operating budget on Friday - it was Friday the 13th - and as expected no significant spending reductions were made. House members failed to agree on an authorization for a draw from the Constitutional Budget Reserve to fund the budget, but that will be resolved later after the Senate deals with the budget. The spending plan now goes to the Senate, which will write its own version of the plan. Again, no significant changes in spending are anticipated, although there will be some differences in agency appropriation levels.

Meanwhile, the Senate has started work on the capital budget. Traditionally the House takes the lead on the operating budget and the Senate leads on the capital budget. In the next few weeks the Senate will send the House its capital budget, and the House will change the bill with its own priorities. Differences in the House and Senate versions of the operating and capital budgets will be worked out in conference committees, and usually this work is one of the final actions of the Legislature before adjournment, which this year will be in mid-April.

The capital budget will be bare bones this year because of the state's revenue situation but the Legislature will appropriate the required state match for federal funds (transportation, rural sewer and water, etc.) and for urgent state needs. The lack of significant state funding in the FY 2010 capital budget will not really be noticed for two to three years, however, because the state's contractors and engineers are busy with a backlog of projects from very substantial state capital budgets approved for FY 2009, the current budget year, and even FY 2008.

There is a little over a month left in the regular 2009 legislative session, and few bills have passed the Legislature since the body convened in late January. This is not unusual, because typically the early part of the session sees few bills passing because much of the technical work is underway in committees. A lot of time in the House was taken up with passage of the budget and with two controversial bills up for hearings, parental consent on abortion and the death penalty. Activity levels on bills are picking up this week, however, and will continue until the Legislature's required adjournment in mid-April. The late-session rush of legislation is not the ideal way to do business, because when there is haste mistakes are often made. It isn't perfect, but it is the system we have.

Among bills to watch as the session progresses are proposed increases in the state minimum wage and bills to influence gasoline prices in the state by imposing penalties if they are too far above U.S. Northwest prices. The minimum wage bills are now in the Finance committees of both the House and Senate, an advanced position in terms of legislative passage. We would say prospects for passage of this legislation is good. The outlook for the gasoline price bills is more uncertain.

Adoption of the gasoline price penalty legislation would ordinarily be unlikely given Alaskans' traditional reluctance to support government intervention in the market, but consumers in the state are unhappy with the continued spread between Alaska and U.S. gasoline prices given that the fuel is refined in Alaska from crude oil produced here. If it is passed, however, it could have serious impacts on the Flint Hills refinery in Fairbanks, which is already economically challenged. If that refinery closes it would have serious consequences for the Alaska Railroad and Golden Valley Electric Association, the Interior electric co-op. GVEA uses a special fuel produced in the refinery in its turbines, and the refinery ships its products to Anchorage via the railroad and constitutes a good share of the railroad's freight business.

A variety of other bills are at various stages of legislative consideration including a revamp of the coastal zone management program that would give more influence to rural coastal communities, a bill appropriating funds for a low-income energy assistance program and another that would continue an increased level of support for Power Cost Equalization, which subsidizes residential electricity rates in small communities around the state.

The governor recently introduced three important bills, one establishing a utility-owned "railbelt" power generation entity, a second changing the enabling statute for the Alaska Natural Gas Development Authority to give the authority added flexibility, and a third changing the Alaska Pipeline Act, the law governing state regulation of pipelines, to add many regulatory elements of the Alaska Gasline Inducement Act. None of these bills will see passage this year - they are complex measures and came in too late - but will be the subject of interim work by lawmakers between the 2009 and 2010 sessions.

Mike and Tim Bradner publish the Alaska Legislative Digest and Alaska Economic Report. For information on the Digest or Economic Report, email timbradner@pobox.alaska.net.