A Citizen’s Guide

Gov. Frank Murkowski’s legacy just got somewhere between a lot harder and impossible to secure, according to legislators past and present.

Murkowski, who lost Tuesday’s Republican primary election, made a natural gas pipeline deal with Alaska’s major oil companies the focus of his administration.

Murkowski could still find a deal that works in the next three months, but the lack of support from Alaska’s voters and the governor’s lame duck status undermine his traction, political observers say.

“Part of it is that these guys have some pretty tough races coming in November,” said Rep. John Coghill, R-North Pole and the House majority leader, of his legislative colleagues. “I think you’re going to see a lot of them trying to read that vote.”

Murkowski’s loss simply dooms the governor’s gas line contract proposal, said Rep. David Guttenberg, D-Fairbanks. But don’t expect the governor to go away, he said.

“Knowing his belligerent personality, I think he’ll keep pushing,” Guttenberg said. Another special session on the proposed contract will be pointless, he added.

“I think the message will be clear to him, but I don’t know if he’s smart enough to hear it,” Guttenberg said Tuesday evening before the polls closed.

Murkowski said Monday he will continue negotiations with the oil companies and present a revised contract sometime in September, regardless of the outcome of the primary.

During a talk to the Anchorage Chamber of Commerce and at a press conference after, Murkowski said he would call lawmakers back to Juneau for another special session. Waiting on the proposed contract and related legislation would put the state at a disadvantage, he said.

The governor’s spokesman, John Manly, said the special session could begin in mid to late September and noted that state law requires a 15-day advance notice.

The Legislature approved a change in the petroleum production tax earlier this month, raising the state’s take to 22.5 percent from 15 percent but allowing oil companies to deduct and take credit for spending in the state. That was the first step in executing the governor’s proposed gas line deal, although the tax rate approved by the Legislature is higher than the 20 percent tax that oil companies had supported in Murkowski’s original proposal.

The next step is to sign an actual contract with the oil companies. That will require resolving such questions as whether to lock down tax rates for decades to come, how much of the line the state should own (if any) and under what terms, and how disputes will be resolved.

The governor’s proposed answers to these questions have been finding great resistance, even among his fellow Republicans who control the Legislature, noted John Davies, a former Democratic state representative from Fairbanks. With the governor’s loss, that resistance could prove fatal to the governor’s hopes to finish a contract, Davies said.

“I’d say it’s pretty close to impossible, unless he wants to essentially start over,” Davies said. “If he just keeps trying to drive the same train, I think it’s hopeless.”

That’s in part because Murkowski’s loss sends a message of voter disapproval to legislators, Davies said. It’s also because the governor no longer has the influence over legislators that comes with four more years in an office featuring a veto pen and other political tools.

“It’s a combination of both,” Davies said.

Jeannette James, a former Republican state representative from North Pole, wasn’t as skeptical of a contract’s chances, though. She described herself as an “optimist.”

“I believe there is a lot of good in that contract,” she said. “I think he will be putting it forward again with changes.”

She doesn’t believe the contract is doomed by Murkowski’s loss. “I don’t think so, because I think it’s imperative that we move on this,” she said. “What will throw me off is if all those people, who I think are responsible and will straighten up and listen, don’t,” she said.

The governor’s loss could make some legislators a little harder of hearing, though, when it comes time to consider such things as a 45-year freeze on the natural gas production tax rate.

Sen. Gary Wilken, R-Fairbanks, already opposes that idea. He also has a problem with the proposed dispute arbitration terms in the governor’s proposed contract. Wilken wants to see terms of the limited liability corporations the companies and state must form to own the line, too.

Wilken said he is trying to ignore the politics and work toward a good contract. But “it’s all going to be muddled up in elections,” he acknowledged.

“The contract has its fallacies and we need to address those and move on,” he said. “It’s clear that Alaskans want a gas line, but you can’t make the leap that they want it at any price.”

Coghill has similar concerns. The House will not lock in long-term tax rates, he said.

“The constitutional question is a real question,” he said. “I don’t think there was the support in the House to bind a future Legislature. I just don’t think it’s there. I can tell you I’m not one that supports it. I think we can do this gas line without the fiscal certainty provisions.”

The details of the limited liability corporations also must be made public, Coghill said.

“The oil companies are the problem there. The oil companies still haven’t come to terms with what they want to do with the LLC,” Coghill said.

However, even if Murkowski and the oil companies agree on the corporate structure, the governor’s loss will undermine progress on the “overall contract,” Coghill said.

Staff writer Sam Bishop can be reached at 459-7504 or sbishop@newsminer.com.