Government spending, business incentives under scrutiny during new Alaska Legislative session

Alaska lawmakers focus on spending, oil incentives

JUNEAU, Alaska — House majority leaders want to limit government spending this year, worried about what the expected, continual decline in oil production will mean for Alaska’s energy-dependent economy.

They were noncommittal Tuesday on key pieces of Gov. Sean Parnell’s agenda, including his proposed crackdown on domestic violence and a $400 million merit scholarship plan, saying they had questions about the cost of the first and the scope and fairness of the second.

They also pledged to keep working on an energy policy and looking at whether Alaska’s oil and gas production tax was stifling production and needed more drastic changes than the expanded incentives fellow Republican Parnell has sought.

House Speaker Mike Chenault said he believed lawmakers could accomplish at least a portion of the work before them within 90 days, but that they should not be “hemmed in” to that time constraint.

Much of what they’ll take up isn’t new, particularly on the energy front. But this session comes against the backdrop of an election year, with 50 of 60 legislative seats and the governor’s office up for grabs.

It also comes amid still-unanswered questions about companies’ commitment to — and, ultimately, the fate of — a major gas pipeline in the state. Whether lawmakers take steps aimed at prodding pledges and production remains to be seen.

While lawmakers expect to have a budget surplus, they seemed, at least initially, to have little interest in significantly increasing spending.

Parnell, who gives his first State of the State address on Wednesday night, has said his budget would hold growth of state agency operating budgets to about 2 percent, far less than they’d sought. House Majority Leader Kyle Johansen, R-Ketchikan, said agencies would need to justify their funding requests. State finance officials are slated to give revised budget estimates later this week.

House Minority leader Beth Kerttula, who’s been receiving treatment for a compressed nerve and missed the start of the session Tuesday, said Democrats agree on the need for responsible spending, given the state’s heavy reliance on oil revenue to run and forecasts of slumping production.

But she said the state also must “think big” when it comes to energy, and ensuring competition. She said she was not convinced oil companies need more incentives to do business here, and that she’d view a push for any major cuts under the current oil tax system as “holding the state back.”