Senate Republican Caucus Concerned with Massive Overspending on Capital Budget; Questions Propriety of Ignoring 90-day Session Limit

Juneau – Noting that the Senate majority leadership may have overstepped its bounds by violating the 90-day session limit when it continued to conduct business beyond midnight of April 18, Sen. Con Bunde, R-Anchorage, today questioned whether legislation passed after the deadline might be found illegal by a court.

“It’s an odd phenomenon, that we encourage the average Alaskan to do his or her civic duty and get involved with their government, yet, when they do that, and pass an initiative that limits our sessions to 90 days, the majority has no qualms about ignoring that limit,” Bunde said. “This is simply the predictable result of poor management of the first 89 days of the session.”

“I note that several of the majority’s top priority bills, such as the bloated capital budget and the bill to de-couple gas taxes from oil taxes, passed after the deadline. The leadership of the 26th Legislature may not have broken the law, but has certainly broken new ground by ignoring the limit set by the initiative. Does this signal that the Legislature will extend itself as a matter of course in future years?”

Bunde repeated his concern about the size of the capital budget, which spends a total of more than $3 billion. “We have spent far too much now, and will rue the day when realize we have spent our future security to satisfy our current wants, well beyond our needs,” Bunde said.

Sen. Tom Wagoner said he was disappointed that the capital bill included $75 million for a new crime lab in Anchorage, a project he has been fighting all session. “Two former directors of the crime lab have made it clear that this project is way bigger and much more costly than the State of Alaska needs,” Wagoner said.

Sen. Fred Dyson said he supported the process in the capital budget when it left the Senate. “The House added 28 pages and we had four minutes to look at it,” said Dyson. “I cannot approve that amount of spending without some time for analysis.”

Bill Includes “Cook Inlet Stampede” Tax Credits to Incentivize Jack-Up Drill Rig Exploration of Cook Inlet

Juneau – Sen. Tom Wagoner, R-Kenai, today said the inclusion in SB 309 of incentives for deep level exploration of the Cook Inlet basin will trigger a stampede to bring a jack-up drill rig into the area. Amendments made in the Senate Finance committee incorporate the incentives from Wagoner’s SB 290. Wagoner worked with Sen. Lesil McGuire, R-Anchorage, to put the language in SB 309, and with House Speaker Mike Chenault, R-Nikiski, who introduced a companion bill in the House of Representatives.

“The only way we are ever going to offset the declining oil and gas production in Cook Inlet is to get down to the Jurassic zone and start producing the hydrocarbons in those reservoirs,” Wagoner said. “Cook Inlet is an underexplored basin, and there has not been a jack-up drill rig operating there since the early 1990s. I believe the way these credits are structured will cause a stampede by independents to the Inlet.”

“At a time when natural gas production and supply in the Cook Inlet is declining and demand continues to grow, this legislation will strongly encourage companies to invest additional capital in exploring for new gas reserves,” said Senator McGuire. “This will be another step that will help provide energy for South Central Alaska.”

The tax credits will apply to the first three unaffiliated explorers to drill down to the pre-Tertiary, or into the Jurassic zone, and are structured as follows:

• First explorer is credited 100 percent of costs, or up to $25 million;
• Second explorer is credited 90 percent, or up to $22.5 million;
• Third explorer is credited 80 percent, or up to $20 million.

If the exploration results in sustained oil and/or gas production from a reservoir discovered by the drilling, then 50 percent of the credits awarded would be repaid to the state.

A jack-up drill rig is a mobile drilling platform that uses extendable legs that reach the ocean floor for support and stability.

SB 309 passed the House of Representatives by a vote of 37-2 and passed the Senate unanimously last week.