Legislature(2001 - 2002)
2002-02-13 House Journal
Full Journal pdf2002-02-13 House Journal Page 2244 HB 423 HOUSE BILL NO. 423 by the House Rules Committee by request of the Governor, entitled: "An Act relating to the Alaska Railroad; authorizing the Alaska Railroad Corporation to provide financing for the acquisition, construction, improvement, maintenance, equipping, or operation of facilities for the transportation of natural gas resources within and outside the state by others; authorizing the Alaska Railroad Corporation to issue bonds to finance such facilities; and providing for an effective date." was read the first time and referred to the House Special Committee on Oil & Gas and the Finance Committee. The following fiscal note(s) apply: 1. Fiscal, Dept. of Community & Economic Development The Governor's transmittal letter dated February 12, 2002, appears below: "Dear Speaker Porter: The State of Alaska has a unique opportunity to jumpstart the construction of the Alaska Highway natural gas pipeline by using creative financing to lower the cost of the project. This bill I am transmitting today authorizes the Alaska Railroad Corporation to issue bonds for the pipeline project, leveraging the ability of the corporation to issue tax-exempt bonds for industrial development. This financing plan can push pipeline construction all the closer in our future, resulting in jobs for Alaskans and revenue to the state while delivering natural gas to a waiting continent. The railroad's ability to issue tax-exempt bonds to finance industrial development was authored by Alaska Senator Ted Stevens and approved by Congress in 1983 with the transfer of the Alaska Railroad from federal to state ownership. Congress reaffirmed the railroad's authority to issue tax-exempt bonds in the Tax Reform Act of 1986. 2002-02-13 House Journal Page 2245 Estimates prepared by Goldman Sachs and the Department of Revenue suggest the financing plan presented in this bill will increase the economic viability of the natural gas line construction project by saving the facility owners more than $1 billion over the life of the project. The bill allows the Alaska Railroad to provide financing for the acquisition, construction, improvement, maintenance, equipping, and operation of facilities for the transportation of natural gas resources within and outside the state. It specifically authorizes the railroad to negotiate with producers of natural gas and issue up to $17 billion in bonds for construction of a natural gas pipeline that follows the Trans Alaska Pipeline System from the North Slope to Delta Junction and the Alaska Highway into Canada. While the railroad would issue the bonds, neither the railroad nor the state would own the gas line nor be liable for the debt. That responsibility would fall on the private companies that build, own, and operate the gas line. The bill also requires that prior to issuing bonds, the railroad must determine that any contract or lease is sufficient to pay back the bonds as scheduled, maintain reserves for the payments, and pay all costs necessary to secure the bonds. The railroad has always been important to Alaska's economy. Anchorage was born as a railroad construction town. The railroad supported construction of the Alaska Highway during World War II and the subsequent military buildup in Alaska. It helped build the Trans-Alaska Pipeline System and along its 611 miles of track, the Alaska Railroad carries 7 million tons of freight and half-a-million passengers every year providing jobs to 700 Alaskans. I urge you to take prompt action on this measure. This is an important step in advancing the construction of an Alaska natural gas pipeline. Sincerely, /s/ Tony Knowles Governor"