Thursday, January 19, 2012

Alaska Governor Sean Parnell Proposes Five Steps Towards Faster Growth And Greater Opportunity In His 2012 State Of The State Address

To kick off the new legislative session, Alaska Governor Sean Parnell delivered his annual State of the State address on January 18th, 2012. He noted that Alaska had survived the recession better than most states, identifying us as a rock of stability. He cited low unemployment, low foreclosure rates, high median income, and high budget surpluses as our strengths. But Gov. Parnell reminded us that we are not completely insulated from global instability, and also noted that our revenue surplus stems primarily from high oil prices which mask declining production. Read the full text of the address at the Fairbanks Daily News-Miner.

The decline in production is one of Parnell's major concerns. From a peak of two million barrels of oil per day flowing through the pipeline two decades ago, less than 600,000 barrels now pass through. Unless we act to reverse this decline or compensate for it by further diversifying our economy, we will eventually pay a stiff price in lost jobs, lost state revenues, and lost opportunities. Consequently, to chart a course for faster growth and greater opportunity, Gov. Parnell proposes to act in five critical areas:

(1). Pass a balanced budget that holds the line on government spending, so we can add nearly $4 billion to our savings accounts for future years. This budget reduces total expenditures by $856 million without shortchanging important investments, and will eliminate 288 state positions which are currently vacant.

(2). Grow Alaska's economy by encouraging more private-sector investment in oil production. This will be done by lowering taxes, streamlining permitting processes, and by making Alaska's resources more accessible through the Roads to Resources initiative. Gov. Parnell said that if the Legislature passes meaningful tax reform, companies have already pledged at least $5 billion in new investments; this is important since the most recent Fraser Institute Global Petroleum Survey shows that Alaska continues to be one of the higher-taxed oil provinces in the world. Coupled with our remote location and our harsh climate, this dampens the incentive to invest. While we can't do much about our location and our climate, we can mitigate taxes.

(3). Grow Alaska's economy by accessing our natural gas. Experts estimate our state has more than 200 trillion cubic feet of natural gas in the ground. This gas represents cheaper heating fuel for Alaska homes and Alaska businesses, and these reserves can energize and grow Alaska's economy. Specifically, Gov. Parnell wants to combine two separate tracks -- the Alaska Gasline Inducement Act (AGIA) and the Alaska Gasline Development Corporation (AGDC) -- into one. AGIA represents the gas line to the Lower 48, and AGDA represents an all-Alaska gas line. This alignment must include work on a large-diameter liquefied natural gas line through Alaska to tidewater to service the growing Asian market.

(4). Promote investment in Alaska's other natural resources. This includes seafood, mining, and timber. In particular, Alaska's mining industry supports more than 5,500 jobs, and this is only scratching the surface of the potential. Indeed, Alaska has many deposits of untapped rare earth elements which are critical to America's security and economy. America should not have to depend on foreign rare earths when we have plentiful supplies here in this state. Gov. Parnell was too polite to note that some Alaskans need to change their attitude towards the mining industry, particularly the proposed Pebble Mine. While the concerns of Bristol Bay residents dependent upon fishing are valid and need to be addressed, their prohibitionist Luddite attitude against the Pebble Partnership is intolerable. Pebble deserves the opportunity to put forth their final plan before judgment is rendered.

(5). Act to support Alaska's entrepreneurs and small business owners who represent the true pioneer spirit of our state. While Gov. Parnell cited a number of steps already taken in this direction, to include reducing processing times for business filings, strengthening financing programs, stepping up tourism marketing, and promoting new avenues for trade, he wants to push education even harder. In particular, he wants to strengthen the Alaska Performance Scholarship program.

Other stated objectives include improving public safety, reducing domestic violence, and stepping up preparedness for natural disasters.

Legislative Reaction: In response to the speech, House Minority Leader Beth Kerttula (D-Juneau) said her caucus wants to make sure Alaska gets its fair share if there are any changes to the oil tax structure. She said her caucus would stand against any effort to give away our resources.

Senate Majority Caucus Leader Gary Stevens (R-Kodiak) told reporters that Parnell is right in saying this will be an important legislative session, particularly as it pertains to oil and gas issues and trying to find meaningful solutions. But he says there are problems with Parnell's oil tax-cut plan and says he'd like the Senate to craft its own tax bill. Alaska Dispatch opines it could be a bruising fight.

Sen. Joe Thomas (D-Fairbanks) said he'd like to see a plan that delivers increased production and doesn't simply give money away to companies and leave the state hoping for the best.

1 comment:

  1. I looked you up on line because I got a scare letter from NRDC and Robert Redford asking me to sign a pettion against Pebble Mine, now that I've read your responsible intentions, I will not sign the pettion! Wendy Emel