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Seeking Champions for Alaska's Economic Future

2012 Alaska Business Report Card Grade Descriptions

Governor: B
The governor showed good policy instincts on a range of economic issues, from the Alaska Coastal Management Program to much needed oil tax reform. Also, his post-session budget vetoes in 2011 were principled and managed to curtail some of the worst excesses of the bloated operating and capital budgets in that year.

However, the Administration encountered significant struggles with both internal preparation and external messaging during the two year period. The 2012 special session was particularly troublesome in this regard. Also, during the 2012 regular session the Governor conceded an unnecessarily high and unsustainable level of spending to House and Senate leaders without getting significant economic policy concessions in return. Accordingly, the Administration gets an “A-” on policy stances, but lower marks on the internal coordination and external leadership required to enact its agenda.

Senate Majority: F
The Senate Majority organization has, to date, been one of the poorest performing in recent memory. While supposedly a bipartisan coalition, in practice it is dominated by a core group of anti-business senators. They were an obstacle to passage of virtually every major piece of legislation important to the Alaska business community. The important priorities that the Alaska Business Report Card group and its individual member organizations communicated to legislators at the outset of the 2011 and 2012 sessions nearly all passed the House, but then died in Senate committees, typically Senate Judiciary (Hollis French, Chair) or Senate Finance (Bert Stedman and Lyman Hoffman, co-chairs).

There are several important examples of this, as follows:

1. A clean renewal of the Alaska Coastal Management Program (ACMP) passed the House in March, 2011 on a unanimous vote. However, a clean renewal of an existing program that was already working fairly well under federal guidelines was not sufficient for several anti-business Senators. They let the bill die without a floor vote in the regular session, then proceeded to insert provisions into the bill during special session that allowed for the consideration of unscientific “local knowledge,” thus adding even greater permitting uncertainty into an already difficult federal permitting process. The delays associated with the special session caused the ACMP program to begin to shutting down in May, 2011. This, combined with the “local knowledge” language, caused the special session bill to fail in the House on a tie vote. The upshot is that a group was formed to gather signatures for a ballot initiative, which is now on the August primary ballot. That language is even more onerous than the version that passed the Senate during special session in 2011.

2. On budget matters, the Senate Majority attempted to circumvent the normal balance of power between the House, Senate and Governor during the 2011 session in order to force the adoption of their version of a bloated operating and capital budget. Fortunately, House leaders called their bluff, but the 2011 regular session ended without a capital budget and a special session was required to sort it all out.

3. A key litigation reform bill which would have increased accountability for frivolous, anti-development lawsuits, passed the House with strong bi-partisan support. On the Senate side, it died in Judiciary Committee without being seriously considered.

4. On the creation of an Alaska Transportation Infrastructure Fund (ATIF) to smooth out and de-politicize critical road, port and airport funding, the House passed a resolution that would have allowed the public to vote on this important idea. An ATIF has been listed as a high priority by numerous business organizations across the state. The House vote was bi-partisan. In the Senate, the supposedly bi-partisan coalition was unable to even give the House resolution a floor vote. It died in the Senate Finance Committee without being seriously considered.

5. On oil tax reform, Senators refused to even hear legislation that had passed the House in March, 2011. Claiming that they had “too little information,” Senators delayed action and spent upwards of $1,000,000 on consultants. (Ironically, many of these same Senators had expressed remarkably little need for information when they rammed through some of the worst provisions of the ACES tax hikes during a late-night Senate Finance session in 2007.) After two legislative years, Senators were unable to garner enough votes in their own “bipartisan” coalition to pass their main tax reform bill, SB192. So, in the final day of regular session in 2012, Senate leadership grafted some very limited oil tax provisions onto a state film tax credit bill, rammed it through the Senate, and left the House only hours to consider this hastily assembled bill. Yet another special session was then called, which also ended in failure. Consequently, the single most important economic issue facing Alaska has been left unresolved.

Senate Minority: A
As individuals, its four members were strong and committed advocates of resource development and a competitive business environment. Several of the members showed strong leadership in committee meetings and articulated their positions well in public forums, earning high individual grades.

House Majority: A-
The House Majority was the superstar of the 2011-2012 legislative session. Led by veteran House Speaker Mike Chenault, the majority was both productive and strategic in its actions. The majority showed outstanding leadership and consistency on a variety of issues, including coastal zone management, litigation reform, Alaska transportation infrastructure policy, oil tax reform and solid activity on lower profile business issues. The House also cut the excessive capital budget that it finally received from the Senate in the closing days of the 2011 session and did not let itself get boxed by Senate trickery. However, the House still passed unsustainably large budgets in both years that have set Alaska up for fiscal reckoning in the not very distant future – hence the minus on its “A”. Overall, though, a solid pro-business and pro-resource development performance.

House Minority: D
The House Minority organization turned in a mixed but generally poor performance in 2011-2012. While slightly better than the Senate Majority, the House Minority struggled on the larger issues while performing better on lower profile issues. For example, all members of the Minority initially supported a clean renewal of the ACMP, resulting in a unanimous vote in the House. But later, that performance was muddied when most of the Minority supported the much more onerous version of ACMP that came out of the Senate, which inserted unpredictable and unscientific criteria into an already difficult permitting process. Some minority members voted pro-business on litigation reform, and a handful supported the transportation infrastructure fund. However, on much needed oil tax reform the House Minority aligned itself with the Senate Majority. A core group of leaders at the center of the House Minority are consistently among the most anti-business members of the Alaska Legislature.

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