- Associated Press - Sunday, March 9, 2014

JUNEAU, Alaska (AP) - With the Legislature more than halfway through its scheduled 90-day session, major bills are starting to take shape - and a controversial bill from the past has re-emerged.

House Finance is set to complete its version of the state operating budget with a floor vote expected later this week. The committee took public comment last week after unveiling a $9.1 billion proposal that included $41 million less in unrestricted general funds that Gov. Sean Parnell’s proposal and $1.3 billion less than the authorized level of spending at the start of the current year.

The package does not address how the state will approach its unfunded pension obligation. Parnell has proposed moving $3 billion from savings toward helping pay down the roughly $12-billion liability for the public employees’ and teachers’ retirement systems.

Senate Finance Committee co-chair Pete Kelly said he sees that as a different discussion than determining what the cost of government operations for next year will be. But he said the pension discussion will have to happen.

Here are three other things to watch for:

-GAS LINE: Senate Finance is expected to unveil its version of SB138 as early as Monday. The bill, from Parnell, would help set the state’s equity share in a major liquefied natural gas project and allow the project to advance to a stage of preliminary engineering and design.

The state signed an agreement with pipeline company TransCanada Corp., BP, ConocoPhillips, ExxonMobil Corp., and the Alaska Gasline Development Corp., setting broad terms for moving forward. The state signed a separate agreement with TransCanada to manage the state’s interest in a pipeline and gas treatment plant. The agreements are subject to passage of enabling legislation deemed acceptable by the parties.

Kelly, R-Fairbanks, said Thursday he didn’t think the bill would change that much. He said issues that needed to be figured out included the state’s participation rate and concerns raised by municipalities about having a say on project terms that would affect them, such as payments in lieu of property tax.

He said the temptation with lawmakers has been to start discussing “THE gas line” when the bill would allow simply to move to the next step in exploring a project. But some lawmakers have argued for limits to be incorporated into the bill for what can - and can’t - be up for negotiation as part of the project-enabling contracts that would be brought back to the Legislature for approval, to make clear what the Legislature would be willing to accept. Sen. Hollis French, D-Anchorage, has said oil taxes should be off the bargaining table.

With the state eyeing a role, questions have been raised about the kind of cash the state would have to come up with and what the state might get in return for its investment. While lawmakers have been given answers, the numbers depend on the potential equity stake and other assumptions. It’s not clear what the gas price will be. And what happens if a project goes over budget? How much will be left in savings when the state will have to make its cash calls, and what will those cash calls mean for other parts of the budget?

Sen. Click Bishop, R-Fairbanks, called it the fear of the unknown. He said he wanted to make sure the state wasn’t looking at the project through “rose-colored glasses” and said he would have to feel confident in the state’s ability to meet its financial obligations to the project moving forward. But first, he said, a bill has to move out to allow for work on project estimates to continue.

Senate President Charlie Huggins, R-Wasilla, said he took comfort in the stepped approach. “We don’t have to be too bold in the first step,” he said, “but we have to have a bit of courage.”

-PERMITTING BILL: HB77, also from Parnell, has resurfaced and is scheduled for hearing by Senate Resources. The bill, which has been billed as a way to improve the permitting process, passed the House last year but stalled in the Senate amid lack of support.

Sen. Peter Micciche, R-Soldotna, asked that the bill be sent to Senate Resources for further review after hearing concerns from his constituents during the interim.

Critics say the bill court hurt the public’s ability to participate in permitting decisions and give the Natural Resources commissioner too much power.

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