Governor Sarah Palin Stands by AGIA Process

Alaska governor Sarah Palin released a statement Saturday expressing her belief that AGIA is on track and that she has spoken to Conoco about their alternate (and unqualified) proposal - despite president Jim Bowles’ inference that she hasn’t.

Jim Bowles has been a controversial figure in Alaska's oil politics.

Bowles' name came up on June 6, 2006 during the Pete Kott corruption trial. With the state House of Representatives on the verge of adopting a new 23.5-percent tax on oil production, convicted oil company bagman Bill Allen placed a phone call to Bowles. The FBI recorded every word.

From governor Palin's press release: Governor Sarah Palin today responded to claims made by ConocoPhillips regarding the State's rejection of the company's natural gas pipeline proposal, which was submitted outside the AGIA process."AGIA sets forth a vehicle that delivers North Slope gas to market with certification and construction benchmarks, expansion provisions, tariff terms, and other protections the state, and the nation, need. It is unfortunate that ConocoPhillips elected not to participate in this sensible competitive process as did other fine companies."The Governor also clarified that the state has never refused to work with ConocoPhillips on a mutually beneficial plan to get the producers' gas into a pipeline to market.

Governor Palin on Wednesday spoke with ConocoPhillips president Jim Bowles about this issue.

"While the ConocoPhillips' alternative obviously falls outside of AGIA's terms, we have long sought a way for ConocoPhillips to work with the state and the AGIA licensee toward a mutual goal of getting ConocoPhillips' gas into a line to market. We have had several discussions along these lines, and will continue to do so. Statements to the contrary are simply untrue, and only serve to confuse Alaskans."

Source: The Alaska Report
January 26, 2008

Conoco responds to Palin

Source: KTUU

Conoco Phillips has fired back a letter to Gov. Sarah Palin in response to her rejection of their gas line proposal.

In the letter the company said it is surprised and disappointed by Palin’s negative response.

It goes on to say that Conoco Phillips feels the governor has an apparent misunderstanding of what it really takes to economically support a pipeline - and asserts its proposal, though outside the Alaska Gasline Inducement Act is the best option.

In the letter, Conoco Phillips Alaska President Jim Bowles urges Palin and her administration to meet with his company to discuss the options. Including new fiscal terms the company feels would work well.

“We’ll remind Alaskans that we’ve met many, many, many times,” Palin said. “I’ve met with Jim Bowles. Our gas line team has met many, many times. We’ll continue to do so, so that aspect of the letter kind of caught us off guard.”

Conoco Phillips’ letter to the governor is available here.

Budget dispute is about terminology

Alaska may be awash in cash thanks to high oil prices and a boost in oil taxes, but it hasn’t made building a state budget any easier or less sly than it was in the lean years.

Only two weeks into this year’s session, lawmakers already are engaged in a dispute with the administration over Gov. Sarah Palin’s claim to be reining in state spending.

Palin touted a modest 4 percent growth in state spending last December when she unveiled her $8.3 billion operating and capital budgets, made up from various funding sources, including $4.4 billion from the state’s treasury.

Lawmakers say it’s actually a much larger increase — as much as 15 percent — under their method of accounting.

And in this election year, they are worried they will be cast as the big spenders by the time the dust settles over next year’s budget plan.

“What does it say? Does it say that the governor was wrong in her budget approach? Not necessarily. Does it say, well, the Legislature is at it again: just spending away. That’s the concern,” said Rep. Mike Chenault, R-Nikiski.

Members of both the House and Senate Finance committees have wrestled with the issue over the last two weeks in meetings with Palin’s budget director, Karen Rehfeld, and her legislative counterpart, David Teal. It’s just the start of a long budget process that is typically only resolved in the last hours of the session.

Both sides agree on the anticipated revenues and expenditures for the current year and the year that begins July 1. The disagreement boils down to a difference in where the numbers appear on the summary sheet.

It often comes down to conflicting views over use of the surplus, a $2.6 billion gift from skyrocketing oil prices and a hike in the state’s oil production tax. What Palin counts as savings, like her plan to sock away three years of education funding, lawmakers describe as deferred spending.

Palin’s budget also places programs like revenue sharing, education increases and tax credits for small producers in the capital budget instead of the operating budget, where lawmakers believe they either should be or traditionally have been placed.

As a result, Palin’s spending overview showed a mere bump of $39 million from the state treasury to pay for the cost of operating state government. In the Legislature’s accounting, using the same numbers, that bump is closer to half a billion dollars.

Rehfeld and Teal are working to reconcile the placement of numbers, though some differences still exist.

“At least we are all saying the same things. We are trying to restrain the operating budget, we want to make room to do some good things in the capital budget and we want to save surplus. So it’s just how are we going to get there,” said Rehfeld.

Palin, however, took exception this week to lawmakers’ suggestions that her budget is not open and transparent.

“It is the Legislature’s responsibility to appropriate and we anticipate changes to our (fiscal year 2009) fiscal plan; however, we fundamentally disagree that spending is higher than reported, due to some committee members’ arguments over which column the funds are in,” Palin said.

The arguments are not new. One veteran lawmaker says the budget process has always been particularly challenging in Alaska given the volatility of its main revenue source.

The state gets 85 percent of its revenue from oil production, but the state’s largest field, the North Slope, is experiencing a 6 percent decline yearly.

Sen. Gary Wilken, R-Fairbanks, a former and longtime member of the Senate Finance Committee, points out that five years ago, the budget balanced at $25 dollars a barrel. Today it balances at $61 a barrel.

Wilken said the tendency of lawmakers, from both the administration and the Legislature, to put the best light on spending with creative budgeting has complicated the budget picture over the years.

Conflicting views on how to deal with the massive surplus further confuse the matter, he said.

“Problems now are with new-found wealth. What a wonderful problem to be burdened by savings: how to classify it and how to save it. I go back to 1999, we would have died to have that problem,” said Wilken.

Palin and lawmakers agree they need to save much of this year’s surplus for the lean years ahead.

Next year’s surplus is expected to be much smaller and, with oil production in decline and oil prices uncertain, experts say the state could be back to deficit spending by 2010.

That prediction exacerbates the need for a common yardstick to measure the budget if they want to control growth in spending, lawmakers say.

“Anything that is done that doesn’t paint the true picture or has us falling off a billion-dollar cliff in four years, I stand firmly against because it is brain-damaging budgeting carried to the extreme,” said Rep. Mike Kelly, R-Fairbanks.

Forest Service opens 3.4 million acres of Tongass Forest to logging

Seattle Times:

More than 3 million acres in Alaska’s Tongass National Forest would be opened to logging and road building under a Bush administration decision that supporters believe will revive Alaska’s timber industry but environmentalists fear will devastate the forest. Read more

Conoco says Palin doesn’t understand pipeline

Conoco Phillips, whose gas pipeline bid was bluntly rejected by Gov. Sarah Palin, has fired back with a letter saying she has “an apparent misunderstanding” of what it takes to complete the multibillion-dollar project. The letter urges Palin to keep the Conoco proposal in the game as a “viable alternative.” And it says Conoco has drafted a plan for dealing with a key sticking point - how the state should tax the gas that would go into the pipe. The letter challenges Palin to pull together a group of administration officials and legislators to talk about the plan.

Read the full story at the ADN

Source: Anchorage Daily News

 

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