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Legislature drops proposal for state-owned gas pipeline loans from Alaska Permanent Fund
Larry Persily Petroleum News government affairs editor
The Alaska Legislature, in its last days before it adjourned May 11, abandoned a proposal that would have given the Permanent Fund Corp. explicit statutory authorization to lend money for a state-owned North Slope natural gas project.
The lending provision was added earlier in the session to a bill dealing with the Permanent Fund’s investment authority, but after a bit of political maneuvering lawmakers passed a version of the bill without the gas line section.
The fund did not support the gas line lending authorization. Not because of any opposition to the project itself, but because the trustees are looking for more leeway — rather than additional explicit requirements in state law — in making investment decisions, said Robert Storer, executive director of the state’s $26.8 billion oil-wealth savings account.
The Alaska Natural Gas Development Authority, created by voters in November 2002 to build a gas line from the North Slope and a liquefied export terminal at Valdez, has no money for construction. Its state funding covers only feasibility studies and other preliminary reviews.
Freshman Rep. Bruce Weyhrauch amended the bill in early March in his committee, House State Affairs, to allow Permanent Fund loans for the gas line. The Juneau Republican said he wasn’t looking to force any loans but merely to make clear that the Permanent Fund could make loans for the project, estimated at between $10 billion and $12 billion. Gas line lending stripped in House Finance But several of his colleagues didn’t agree, and stripped the gas line lending provision from House Bill 466 in House Finance Committee just five days from the end of the session. And then rather than deal with the House version of the bill, which Weyhrauch could have tried amending on the floor to put back the gas line section, legislative leaders decided to let the House bill die and instead moved the Senate version of the same bill to passage.
Senate Bill 326, which had been waiting more than five weeks for a vote, passed the full Senate on May 7 and moved through the House in three days — reducing the chances of a possibly delaying amendment in the rush. It passed the House one day before adjournment.
Weyhrauch voted against the bill.
The legislation, now on its way to the governor for signature into law, eases a restriction on Permanent Fund investments. In addition to caps on stock, bond and real estate holdings, the fund is allowed a 5 percent “basket clause” to spread among any of those investment categories or other holdings such as private equities. Senate Bill 326 raises the basket clause to 10 percent of the fund’s portfolio.
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