Senate Republican Caucus  Highlight on Success
“Making a Difference”

Juneau - The five members of the Senate Republican Caucus commented today on their role during the 25th Legislative Session and highlighted policy areas where their interaction made a difference.

“We focused on five significant areas where we believed we could make a difference in the process,” Sen. Gene Therriault, R-North Pole, said.  “Although the majority in our political system has control of the political levers, the minority tries to ensure that the majority’s power is used correctly, fairly, and with the best interests of the entire state in mind.  The minority’s role is to use its voice to highlight problems, when necessary, and work cooperatively on solutions to them.”

With that in mind, the Senate Republican Caucus focused on five key issues:  1) Restoring credibility to a legislature damaged by recent criminal convictions, 2) ensuring adequate and dependable education funding, 3) saving state oil revenue surplus, 4) developing a long-term fiscal policy, and 5) securing energy cost relief.

Restoring Credibility  In December of 2007 the Senate Republican Caucus urged the Senate leadership to make changes in key leadership positions in light of the ongoing public corruption investigation.

“We appreciate the Senate leadership replacing the chair of the powerful Rules Committee,” Sen. Fred Dyson, R-Eagle River, said.  “Although a small step, it was a positive move in the direction of restoring public trust.”

Education Funding   A long time advocate for fair and reliable education funding, Sen. Gary Wilken, R-Fairbanks, called attention to an oversight that involved HB 273, publicized as the bill that increased student funding $100 per student.  Wilken discovered that HB 273 removed previously funded school grants, with the effect that the $100 increase to the student BSA was a mere $11.58 in the first year.  Wilken offered an amendment on the Senate floor that would increase funding, but the amendment was rejected by the Senate coalition.

Although the Senate coalition refused to fix the problem before HB 273 passed, they eventually agreed to a temporary fix that would provide an additional $20 million in the form of energy relief grants to the school districts.

“I’m pleased that they responded to the information that I provided and made good on the promises made early on in the session to educators,” Wilken said.

Saving Surplus  The Senate Republican Caucus has always advocated that the legislature control spending in an attempt to increase savings.  During this session, the Senate Republican Caucus kept up the call for savings.  On March 19, in a press release distributed statewide, the Senate Republican Caucus publically challenged the Senate to save an additional $3.6 billion.

“At that time the State Department of Revenue had projected FY 2008 revenues to exceed $8.5 billion,” Therriault said.  “Saving a total of $7 billion seemed reasonable.  The Legislative Finance Division assured us that this amount was justifiable if the operating and capital budgets stayed reasonably contained, or even reduced from the amount spent last year.”

The Senate Republican Caucus tried to increase savings one last time when the state’s FY 2009 operating budget was on the Senate floor.  Therriault offered an amendment to set aside an additional $1.9 billion of the projected oil tax revenue.  The amendment was rejected by the Senate coalition.

“Although my amendment was voted down, we were pleased that our continued pressure paid off in the end,” Therriault said. “By April 2, the Senate had set aside a total of $5 billion dollars.”

Long Term Fiscal Policy  Sen. Dyson and his colleagues are proponents of the state developing a long-term fiscal policy that would guide future legislators and encourage more disciplined spending and savings.  Last year Wilken and Dyson both introduced bills to that end:  SB 25 and SB 134.

“We hoped to get these bills on the table to encourage debate and to put many minds to the task of developing a plan,” Dyson said.  “That’s the benefit of the committee process.”

Although the bills got little attention in committee, the Senate Republican Caucus kept up the pressure throughout 2007 and 2008.

Eventually the Senate passed HB 125, Budget Planning & Long-range Fiscal Plan, which incorporated some of the contents of Dyson’s SB 25.

“Although the expectations set forth in the bill are vague, which might cause the governor confusion about what to submit each year to the legislature, this was a positive step forward,” Dyson said.

Energy Cost Relief  Recognizing that the soaring cost of oil would heavily burden Alaska citizens while at the same time fill state coffers with record breaking revenues, Wagoner and Therriault pre-filed SB 217.  After initial criticism the bill was changed to provide a $750 per year credit to every Alaska resident’s electric bill.

Instead of discussing options for immediate energy cost relief, the Senate appropriated funds to expand an existing program that provides weatherization grants to low income homeowners, a long-term approach to the problem.

“Weatherizing homes is good for lowering fuel consumption and will reduce the future cost to homeowners, but we haven’t done anything to deal with costs suffered by homeowners this winter,” Therriault said. “Constituents want energy relief now.”

“It’s shameful,” Wilken said during a floor debate.  “We’ve got $13 billion sitting in a coffee can and we can’t help people across the state who are hurting.  We have nine days left to do something.  If we don’t do something while we are here, shame on us.”

That same day on the Senate floor Wagoner offered to remove his name from the bill if doing so would inspire the co-chair of the Finance Committee to hear the bill.

“My bill could provide relief to Alaskans now by lowering electric bills $750 in this coming year,” Wagoner argued.  “The way the bill is set up, it could assist about 90 percent of all Alaskans.”

Shortly after the Republican Caucus members’ impassioned floor speeches, the legislature appropriated $10 million into the capital budget for an energy assistance program that targets energy needs of some Alaskans.

“I’m glad that the Senate coalition reached a little deeper to find funds for energy relief for a few,” Wagoner said, “but this is one of the Senate’s biggest failures this year.  There are many middle-class Alaskans also feeling the pinch that could have used some help.  My bill would have provided that help and also set up an energy council to look at how to address energy needs and distribution in Alaska long term.”

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Senate Republican Caucus urges Senate Coalition to Address Energy Needs Now

Juneau – Today the Senate Republican Caucus urged their colleagues in the Senate to address energy relief for Alaskans now.  One possible solution, SB 217, sits in the Senate Finance Committee.  The legislation would provide a direct reduction to citizens’ electric bills by about $750 a year.

SB 217, introduced at the beginning of this session by Sen. Tom Wagoner, R – Kenai, and co-sponsored by Sen. Gene Therriault, R – North Pole, has sat in the Senate Finance Committee since January 16.

“It’s shameful,” Sen. Gary Wilken, R – Fairbanks, said.  “We’ve got $13 billion sitting in a coffee can and we can’t even help people across the state who are hurting.  We have nine days left to do something.  If we don’t do something while we are here, shame on us.

“We have ways to do it and we have the money,” Wilken argued.  “We’ve got the Low Income Home Energy Assistance Program already set up that we could fund to provide additional relief to the needy, or there is Senator Wagoner’s bill.  We have the means, we have the knowledge, and we have programs in place that we could fund to help.  Why wouldn’t we give people a hand?”

During debate on the floor Sen. Wagoner even offered to remove his name from the bill, arguing that if his minority status was causing the bill to be held in committee, he would be happy to let a member of the Senate majority, made up of both Democrats and Republicans, take authorship in order for the bill to move.

“We have energy costs in Alaska all year around,” Wagoner said.  “This bill could provide relief to Alaskans now by lowering electric bills $750 in this coming year.  The way the bill is set up, it could take care of about 90% of all Alaskans.”

Alaskan residents without an electric meter would be able to apply for the same benefit from the Department of Commerce, Community & Economic Development.

“The sad irony,” Wagoner pointed out, “is that the state is getting rich with the high price of oil, but our people are being hit hard by those same prices.  The windfall we have been busy spending and saving is the very windfall that’s creating the burden on Alaskans.

“While we’re here in the capitol building enjoying the problem of what to do with the surplus, people on fixed incomes, people in Bush Alaska, in urban areas, in Southeast, all over the state, have to decide whether to pay for their medications, their food, or their energy bills.”  Wagoner said.

During the floor debate some members of the Senate majority highlighted other bills passed and under consideration that address some long-term energy issues.

“The weatherization bill the Senate recently passed is a good package,” Therriault agreed, “but it doesn’t address the immediate need.  Winterizing homes is good for lowering fuel consumption and will reduce the cost to home owners, but we haven’t done anything to deal with costs suffered by home owners now, this winter, or next year.  It would take a number of years to realize the benefits of winterization.  We’re talking about some kind of relief now.”

The relief afforded under SB 217, also called the Alaska Power Cost Reduction Program, would take affect when oil prices reach the level where the state’s ACES tax progressivity is triggered, about $60 per barrel, and stays at that level for at least 12 consecutive months.

SB 217 also sets up a commission that would be tasked with preparing an energy plan to address residential, municipal, and rural community energy delivery and needs in the years to come.

Senate Majority Declines Republican Caucus’ Challenge to Save $2.6 Billion of Alaska’s Windfall

Juneau – Sen. Gene Therriault, R-North Pole introduced an amendment on the Senate floor yesterday during the debate on the state’s FY 09 operating budget that would have bolstered savings and paid down debt by $2.6 billion.

“Today the Legislature faces record breaking surpluses,” Sen. Therriault said. “Rather than spend this new flood of money we challenged the Senate to save funds for future generations to use for future state budgets. Regrettably they refused the challenge saying it would be fiscally irresponsible.”

Although we are currently experiencing surplus revenues we continue to be advised by economists that we should be saving more in anticipation of deficits in the near future.

The Senate voted against the amendment by a vote of 12 nays to 6 yeas. Sen. Fred Dyson, R - Eagle River, Sen. Tom Wagoner, R- Kenai, Sen. Con Bunde, R - Anchorage and Sen. Gary Wilken, R - Fairbanks, co-sponsored the amendment.

Therriault’s amendment to the operating budget would have set aside $1.9 billion of the projected FY 09 oil tax revenue and deposit it into the constitutional budget reserve, a long term state savings account. This fund has been in existence for thirteen years. Over the last even years the Legislature has borrowed $5.2 billion dollars from the CBR. The Legislature is constitutionally required to repay those funds. The CBR earns considerably more in interest than other Alaska short-term savings accounts.

Therriault introduced a separate amendment that would have appropriated $700 million of the current year’s surplus to pay down the state’s obligation to the Teachers’ Retirement System. By making this deposit the state would have realized an additional savings of $46 million dollars. The Senate voted against this amendment 13 nays to 5 yeas.

“The debt to the CBR is constitutionally unavoidable and must be paid down.” Sen. Con Bunde, R-Anchorage, said. “Most Alaskans realize that in times of surplus it is wise to pay down debt.”

Senate Republican Caucus Reacts to News of Record Breaking FY 2008 Oil Revenues - Challenges Legislature to Increase Savings for Alaska’s Future

Juneau – Today the Senate Republican Caucus reacted to the Alaska Department of Revenue’s news that the General Purpose Unrestricted Revenue for FY 2008 is projected to be a record breaking $8.5 Million.

“This year’s projected revenue is almost 30% higher than last year,” Sen. Gary Wilken, R – Fairbanks, said. “With this dramatic increase in revenue comes an equally dramatic duty to exercise self-restraint in spending and to save for future generations of Alaskans.”

Repeatedly during the 25th Legislature, the Senate Republican Caucus has called for the creation of a long term fiscal plan that includes a commitment to saving. This year in particular, they stepped up the call.

“During the ACES debate last fall, we proposed that a mechanism be put into place to prompt future legislatures to set aside sizeable portions of the increase in oil tax revenue under the new law – particularly revenue generated by the progressivity component of the tax,” Sen. Gene Therriault, R- North Pole, said.

“While the $3.6 billion set aside in SB 256 sounds good, it is a fraction of what we should deposit into Alaska’s savings accounts in a banner year like this one,” Wilken said. “With Friday’s revenue forecast, the legislature has the financial ability to set aside far more money than $3.6 billion.”

The Senate Republican Caucus is challenging the legislature to set aside an additional $3.6 billion of surplus as savings or through a combination of deposits to savings and debt pay down.

“The Legislative Finance Division assures us that this amount is justifiable if the operating and capital budgets stay reasonably contained, or even reduced from the amount spent last year,” Therriault said.

The Senate Republican Caucus’ position is bolstered by a recent Institute of Social and Economic Research opinion. Dr. Goldsmith, an economist and director of ISER, suggests that Alaska should redouble its efforts to save money now and reduce the risk that future generations will be forced to meet Alaska’s operating and capital needs by imposing income tax, sales tax and dipping into the permanent fund earnings reserve account.

“Dr. Goldsmith suggests that we view the increase in revenues over the past few years not as a trend that will continue, but as a windfall,” Sen. Tom Wagoner, R- Kenai, said. “The best strategy for dealing with a windfall is to put as much as possible in the bank and spread the spending out over a long period of time. It’s prudent, it protects future generations. Let’s step up to the plate and do what’s right.”

“With the unpredictability of our oil and gas revenue stream, the revenues we enjoy now might not be enjoyed by future generations,” Sen. Con Bunde, R- Anchorage, said. “It’s not a question of whether we will face sizeable deficits in the future, it’s a question of when; now is the time to save.”

“If we discover in future years that this windfall is a permanent and predictable increase in income, then we can modify the savings plan,” Therriault said. “But for now it would be robbing from future Alaskan’s to spend our non-renewable resource dollars without a plan. A better public policy is to agree that the petroleum wealth of the state should be shared equitably among today’s and tomorrow’s Alaskans.”

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Senator Wilken Calls for Capital Budget Reform - Presents Roadmap for Change

Juneau – Sen. Gary Wilken, R-Fairbanks, in a letter to the House and Senate Finance Committee Co-chairs, today formally requested the Finance Committees initiate three key changes to the procedure normally used to develop and pass the State’s capital budget.

“Last year the capital budget process broke down and resulted in the Governor using her veto power, leaving a blemish on the legislature, the administration, and our capital budget process.” Wilken explained. “We need a review of the current capital budget process and ultimately we need to revamp the way our State’s capital budget is built. The three changes to the process that I propose will help the legislature begin that journey.”

The three steps Wilken proposes are

1. establish clear spending limits, agreed upon by the leadership of the Senate and House of Representatives and the Governor,
2. alternate introduction of the capital budget bill each year between the House and the Senate to create a check and balance between the two bodies,
3. reclassify public dollars that do not carry a “General Fund” label, yet in practice spend like general fund dollars in the budget process, and label those funds “Alaska Funds” so they are better identified and tracked when spent.

The three changes Wilken proposes would open the process for more public scrutiny and install needed checks and balances on the system.

Senator Wilken will explain his plan in more detail and make available copies of his letter to the House and Senate Finance Committee Co-chairs at the Republican Minority Caucus press availability today at 11:00 a.m. in the Capitol Building.

Senate Republican Minority Endorses Use of Pension Obligation Bonds

Juneau – The Senate Republican Minority today united in their support of paying down the State of Alaska’s mounting retirement and pension system debt using a combination of pension obligations bonds and cash.

Pension obligation bonds, also referred to as “POBs,” are issued by a state or municipality to help the government pay down its obligation to a pension and retirement system. In Alaska that debt has reached a staggering $8.6 billion.

“The State of Alaska Department of Revenue has shown that a mixture of cash from our surplus and POB arbitrage is a way to reduce future general fund requirements for our pension obligation for the next 25 years. We should have the courage to spend some of our available cash and incur positive debt.” Sen. Gary Wilken, R-Fairbanks said.

The long term savings would be enjoyed by both the state and municipalities because both pay into the retirement fund for employees who are part of the PERS/TRS system.

The State of Alaska’s Constitution mandates that the State’s PERS/TRS benefits be paid to all eligible state and municipal workers. “This is a debt that cannot be avoided” Sen. Gene Therriault, R-North Pole, explained. “What we are endorsing is not unlike what any one of my constituents might do when refinancing a home. You first look for a mortgage with a better interest rate, pay down as much as you can on the previous debt in cash, and then refinance the remaining balance with a lower interest loan. That’s exactly what we’re endorsing here.”

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Eni Offshore Project Positive for Future Oil Development in Alaska

Juneau - Members of the legislature were briefed today about Eni’s recently announced Nikaitchuq oil field project at a presentation hosted by the Senate Republican Minority.

Kevin Banks, Acting Director, Division of Oil & Gas, described the Italian based international company Eni as “a major oil company” and the project as “sizeable, with 73 wells, a 3.8 mile subsea pipeline, a 14 mile above ground pipeline and a separate dedicated processing facility. Production is expected to peak in 2010 at 40,000 barrel’s per day.”

Senator Tom Wagoner, R-Kenai, noted that, “the State’s royalty modification program successfully attracted Eni to develop its first producing oil field in Alaska. With a capital spending program of $1.45 billion, this project will add jobs to the Alaska economy during construction and expected 25 year operating life.”

Senator Therriault also observed that “with expected future declines in TAPS through-put rates, Eni’s 40,000 barrels per day is material, alone it will not save the day, but it will improve the TAPS through-put over the next 25 years.”

Mr. Banks explained that “Eni will get a royalty reduction when oil prices drop below $42.64 dollars a barrel during the first 25 years or if production rates fall below 4,000 barrels of oil per day from the field. This gives them an important down-side risk assurance that helps make their project economic in times of low oil prices or declining production and it also protects the state. When prices are higher the state continues to receive its full royalty rate.”

According to Mr. Banks, to apply for the royalty modification companies must provide detailed confidential economic modeling that proves that a royalty modification is justified.

Senator Gary Wilken, R- Fairbanks, noting that Eni will build it’s own processing facility, rather than rely on another producer’s facility, questioned if Eni has plans for the facility beyond the Nikaitchuq productive life. According to Mr. Banks, Eni has other property offshore so it could be expecting to use the facility for additional oil development projects.

Senator Gene Therriault, R-North Pole, said in comments after the briefing, “we were told during the Special Session on ACES that we were taxing Alaska out of the competitive market and would lose our oil and gas investors. Eni’s sizeable investment in Alaska is clear evidence to the contrary and shows that major oil companies still want a position in Alaska as part of a balanced global portfolio.”

Senator Wilken Announces He Won’t Run for Fifth Term

Juneau - In a personal statement to the press today, Senator Wilken explained:Sue and I have chosen today, January 24, 2008, which is my (and my mother’s) birthday, to announce I will be retiring from service in the State Senate as of January 2009. I will not be seeking re-election this November.

Education Task Force Wraps Up

Juneau - The Joint Legislative Education Funding Task Force met for a final time Thursday, August 30 to finalize the report it is mandated to submit to the Governor by Sept. 1.

The Task Force made several recommendations for policies to be implemented during the second regular session of the Twenty-fifth Legislature, including the creation of a standing Education Committee that would be separate from the current Health, Education and Social Services Committee. The Task Force referred many of the more contentious items to this Committee.

Sen. Gary Wilken, who represented the Senate Minority on the Task Force, authored a dissenting opinion that is included in the final report. Among his concerns is a recommendation to phase in funding over four years to cover district cost factors as outlined in a report by the University of Alaska’s Institute of Social and Economic Research. Sen. Wilken believes that the artificial deadline of Sept. 1 established by the resolution creating the Task Force resulted in the dismissal of all long-term options that would have included reviewing the entire K-12 education funding formula in total, rather than recommending a substantial adjustment to a single component. Sen. Wilken hopes that the entire Legislature, in cooperation with the Governor, will take the time necessary to thoroughly review the ISER study and question some of its basic assumptions.

Task Force Final Report - Adobe Acrobat file is 28 megs:
http://www.housemajority.org/coms/hlef/final_report_20070831.pdf
Dissenting Opinion by Senator Wilken:
http://www.aksenateminority.com/pdfs/25/wilken_20070829.pdf

Senate Minority Supportive of Budget Vetoes
Caucus Applauds Governor’S Efforts To “Live Within Our Means”

Juneau - Members of the Senate Republican Caucus reacted favorably today to Gov. Sarah Palin’s reduction of Senate Bill 53, the state capital budget, by more than $230 million.

“The budget grew despite cautions from the administration, and consequently the governor had to exercise her power to bring it more in line with revenues,” said Senate Minority Leader Gene Therriault, R-North Pole. “While our individual members are still going through the vetoes, we are supportive of the Governor’s efforts to control spending.”

“Although we are still digesting the details to make sure the criteria were applied consistently and equitably throughout all regions, we appreciate the administration’s deliberative process to fairly evaluate projects based on what is affordable and a legitimate state function,” Sen. Therriault said.

“The most consistent comment we have heard from voters is that there is too much state spending. The governor was elected with a huge approval rating, and I think this is what the people have asked her to do. The budget is unsustainable. We’ll be in a deficit in a couple of years and it’s better to make cuts now,” said Sen. Con Bunde, R-Anchorage.

Because of concerns regarding the level of overall state funding, all five members of the Senate Republican Caucus voted against Senate Bill 53 when it was on the senate floor. On May 22, the caucus sent a letter to Gov. Palin encouraging her to identify areas where spending could be reduced and judiciously exercise her line-item veto authority. The letter is attached.

Caucus letter sent to Governor Palin
http://www.aksenateminority.com/pdfs/25/veto_letter20070522.pdf