Lawmakers dig into agency budgets; oil tax, education top issues
JUNEAU — State legislators were engaged mostly in overviews of state agency budgets and programs as they ended the second week of their 2012 session, but there was plenty of discussion in the background on key issues that are shaping up.
Education funding, coastal management and oil and gas taxes are likely to be the flash points for lawmakers in the weeks ahead.
But one controversial issue likely to take up a lot of time, at least near-term and in the House Judiciary Committee at first, is cell phone regulation, according to committee chairman Rep. Carl Gatto, R-Palmer.
The committee’s immediate focus is on a bill to make technical changes to legislation banning texting while driving which a Fairbanks judge said is unclear. Many legislators are pushing for a complete ban on cell phones in vehicles, and Gatto is concerned that the bill, which now involving only texting, could be amended to do that.
A complete ban isn’t a good idea, Gatto said, and previous proposals to do that have faced tough going in the Legislature. That’s because too many small businesses need to contact technicians en route to a job or sales representatives headed for meetings, and parents want to be able to take calls from children, Gatto said.
There are also legal ambiguities that arise with new digital technology. For example, technically texting occurs when a cell phone is used because the device must be turned on and off and otherwise manipulated. Lawmakers must be wary of these and craft language carefully, he said
However, there are serious concerns about cell phone use in vehicles, Gatto acknowledged.
“There’s too much looking down in a car or truck that may be travelled 88 feet per second,” he said.
On other matters, House Speaker Mike Chenault, R-Nikiski, and Mike Hawker, R-Anchorage, said they will introduce a bill making changes to the enabling statute for the Alaska Gasline Development Corp. that would allow the state corporation to become a partner in a larger gas project.
Rep. Dan Saddler, R-Eagle River, announced that he is working on a bill to allow establishment of business enterprise zones around military installations. The bill is being modeled on similar enterprise zones established in other states where installations are being downsized. They are created to offer special incentives for businesses locating in the zones to offset any loss of business or local employment due to the reduction in military forces, Saddler said in a weekly briefing by the Republican-led House Majority.
On the contentious issue of oil and gas taxes, the first hearings of the 2012 session were scheduled for Jan. 27 on Senate Bill 167, a bill “decouping” oil and gas production taxes. Senate Finance co-chair Sen. Bert Stedman pushed a similar bill through to the House floor two years ago where it failed at the last minute.
Stedman argues state taxes on natural gas and oil are linked in a way that will cause a significant reduction in oil revenues if a gas pipeline is built and gas production begins. Gov. Sean Parnell has said that he will consider making changes to the gas production tax in the 2013 legislation session if North Slope producers come to agreement on a gas pipeline and liquefied natural gas export project, and Stedman feels the “decoupling” of the two must take place first.
As the state Senate readies its own proposals for oil production tax changes, a response to Parnell’s House Bill 110, which reduces the oil tax, Stedman’s decoupling proposal is very likely to be part of the Senate’s proposals.
Senate leaders have indicated, meanwhile, that their oil tax proposal will be tied to commitments by oil producers to invest in new oil development. The lack of such a link to investment is a major point of criticism of HB 110, which has passed the House and is now in the Senate.
Meanwhile, Democrats in the state House renewed their criticism of the state administration’s handling of oil and gas tax issues, particularly the lack of information about generous tax credits the state now offers for new industry investment and exploration.
In a Jan. 25 briefing by House Minority Democrats, Rep. Berta Gardner, D-Anchorage, said she estimates the state has allowed industry to offset $3.5 billion in state taxes through investment tax credits allowed in the production tax law.
However, the Department of Revenue is behind on its audits of industry tax returns, so there is a serious lack of information on what these investments are and what benefits the state is getting.
Gardner said she had been promised a report from the revenue department on the status of the audits.
“How can the Legislature endorse the governor’s jaw-dropping giveaway of revenues with such a shameful lack of information,” on what the tax credits are being used for, she said.
Gardiner said there are reasons why the audits are taking a long time. The department has been grappling with antiquated computer systems and lack of personnel, although the Legislature did approve more funding for auditors. There have also been some uncertainties caused by regulations drafted for the production tax after it was changed to a net profits tax in 2006, she said.
“There are undoubtedly some legitimate reasons for why the audits are taking so long, but we need to know,” what the problems are, she said.
Gardner has introduced two bills, HB 262 and HB 263, which would require an industry applicant for tax credits to state what the investment was and how many Alaska jobs were created.
Rep. Dave Guttenberg, D-Fairbanks, said in the same briefing by Democrats that he wants to know whether the investments funded by state tax credits are being made in new oil field development, for projects in existing fields, or in maintenance.
Funding for schools will be an issue in the 2012 session as it has almost every year. School districts received increases over three years to the Base Student Allocation, or BSA, a formula used in state funding for local schools, but that ended two years ago.
Last year Sen. Lyman Hoffman, D-Bethel, succeeded in getting an appropriation to help schools offset rising fuel costs, which has the effect of freeing up money for teaching and other activities.
This year school districts are pushing to have the BSA adjusted automatically for inflation so that schools don’t have to reduce programs to deal with rising costs including for fuel.
Kerttula, the Democratic House Minority Leader, said the Juneau school district, which is part of her constituency, had to send layoff notices to 66 teachers because of a looming deficit in the local school budget.
“We’re hearing from parents about this. It’s unacceptable for a state with this much wealth,” Kerttula said.
Despite that, even the current amount of state funds going to schools, about $1.2 billion per year, isn’t getting desired results, Rep. Dave Guttenberg said.
Guttenberg is on the House Finance Committee. In budget briefings to that committee by the Department of Education and Early Development Jan. 23, Guttenberg learned that Alaska is still woefully behind in achieving acceptable reading levels by third graders.
“We’re 46th in the nation in reading ability at the third grade,” he said.
The key to solving this is more money invested in early preparation for schools for children. State education commissioner Mike Hanley told the House Finance Committee that the state has gotten very good results in a multi-year pilot program of pre-school preparation, and hopes the program can be expanded.