Parnell delivers State of the State address

By Becky Bohrer

Associated Press

Published: Wednesday, Jan. 18 2012 12:00 a.m. MST

Alaska’s Republican Governor Sean Parnell gives his annual State of the State address to the Alaska State Legislature, in Juneau, AK Wednesday, Jan. 18, 2012. Also featured in background is House Speaker Mike Chenault, R-Nikiski.

Chris Miller, Associated Press

JUNEAU, Alaska — Gov. Sean Parnell on Wednesday called on Alaska lawmakers to pass "meaningful tax reform" to spur new oil production, and laid out a timetable for progress toward a natural gas pipeline.

In his third — and strongest worded — State of the State address, Parnell issued a call to action, saying the state's future depends on steps taken during this legislative session.

"Rather than hunkering down and hoping for the best, it is time to act," he said.

While noting Alaska remains stable in uncertain economic times with an unemployment rate below the U.S. average and a foreclosure rate that is among the lowest in the nation, Parnell also cited in his address five areas of focus to chart a course to faster growth and more opportunity. Those are being smart with the state's money, limiting government spending while making investments in needed infrastructure and saving for the future; encouraging new oil production by changing the state's tax structure; developing Alaska's natural gas and creating a friendlier environment for entrepreneurs and resource development.

Parnell, a Republican, has maintained that overhauling Alaska's oil production tax is necessary to boost investment and help reverse the trend of declining oil production. Oil is king in Alaska and the state relies on oil revenues heavily to run.

A version of Parnell's tax-cut bill, HB110, stalled in the Senate last year after clearing the House, with leaders saying they didn't have sufficient information to make a sound policy call.

Critics of the plan also said that it amounted to a corporate giveaway, potentially costing Alaska up to $2 billion a year in revenues with no guarantees that companies would invest more here.

The Department of Revenue has called the $2-billion figure a worst-case scenario, occurring by about fiscal year 2017 if Parnell's tax-cut plan passes and there's no new investment. But the administration has cast that as an unlikely scenario, arguing that the governor and Legislature would never let a tax regime that wasn't working stand for years on end without change.

Parnell on Wednesday called for "meaningful tax reform," while stopping short of describing just what meaningful means. Last year, in reiterating his support of HB110, said the state needs a "game changer" — more than tweaks — to reverse the trend of declining production.

Parnell, in his speech, asked lawmakers to "join me in refilling Alaska's pipeline to prosperity. You have had time to study this issue closely. We cannot allow the paralysis of analysis to set in. We must act, and we must act now."

Parnell has set a goal of having 1 million barrels of oil a day run through the trans-Alaska pipeline. Throughput has been averaging around 600,000 barrels a day.

He also has been pushing for progress on a long-awaited natural gas pipeline. A pipeline has been seen as a way to shore up revenues as oil production declines, create jobs and provide more reliable energy. But there has been little movement on a line that would serve North America markets.

In October, Parnell called on Alaska's major North Slope players — Exxon Mobil Corp., BP and ConocoPhillips — to unite behind a project that would allow for liquefied natural gas exports to the Pacific Rim if the market has truly shifted away from the Lower 48. The CEOs of the companies expressed a willingness to talk.

But Parnell on Wednesday set timelines for progress, after saying he'd spoken to the CEOs within the last 24 hours and learned that agreement on key issues had yet to be reached. He said the companies must agree to resolve a long-running dispute over leases on the Point Thomson gas fields. He announced a settlement between the state and Exxon late last year but other interest-owners, including BP and ConocoPhillips, also must sign off.

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