Parnell addresses legislators on energy taxes, 'spending frenzy' STATE OF STATE: Governor also criticizes the federal government.

JUNEAU -- Gov. Sean Parnell told legislators in his State of the State speech Wednesday night that he wants lower taxes on the oil companies and hopes to impose a state spending limit to avoid a "spending frenzy" by lawmakers before they leave town.

Parnell's address, which comes on the second day of this year's legislative session, drew defensive remarks from senators. They said last year's burst of state construction spending was key to keeping Alaska out the recession that gripped the Lower 48.

Parnell also used his State of the State speech to criticize the federal government, call for a suspension of the state's eight-cent-a-gallon gasoline tax, and promote his legislative initiatives against domestic violence and sexual assault.

Parnell spent much of his speech talking about what he considered the accomplishments of the past year. Parnell said Alaska is in a good position, adding private sector jobs over the last year while nearly every other state has seen losses.

He noted the state had about $12 billion in reserves, which have swelled in recent years along with the price of oil.

"At a time when most states face staggering budget shortfalls, we balanced our state's budget, cut taxes and paid off debt that once exceeded $5 billion," Parnell said in his speech, which ran less than 30 minutes.

He highlighted last year's passage of his proposal to offer merit scholarships for Alaska college students, a program he's asking the Legislature to fund this year.

He singled out the film industry, saying the production of two major films in Alaska is just the start, and that there's much interest in the state film tax credit.

"Get ready for your close-up, Alaska," Parnell said.

Parnell also expressed confidence in the state's progress toward a natural gas pipeline to the Lower 48.

"Because of the work we've done together, our natural gas industry had an historic year. For the first time, companies bid gas toward a gas pipeline project, bringing us closer to a pipeline," Parnell said.

Parnell renewed his call to lower taxes on the oil companies, although he didn't spend much time on the subject. Parnell is asking the Legislature to agree to cut taxes on the companies by an estimated $5 billion between 2013 and 2017.

"Let's pass legislation to make our oil tax regime more globally competitive. Lower taxes lead to more resource development, and that leads to more resource development, and that leads to more jobs for Alaskans," the governor said.

The state House and Senate met in joint session to hear the governor's speech. Parnell said during the speech that he had already met with legislative leadership to talk about how much the state will be spending.

"I have asked the leadership gathered in the chambers to establish a spending limit with me early in the session that will help us all avoid that spending frenzy that can occur at the end of session," Parnell said.

Parnell clashed with legislators last year over the size of the construction budget, and he vetoed projects.

Senate leaders said following Parnell's speech that they can't set a spending limit until they get an updated forecast later in the legislative session of current state revenues.

Sitka Republican Sen. Bert Stedman noted that Parnell's own budget proposal for the coming year includes about $100 million more spending than the state expects to have in revenue coming in.

Stedman and his fellow co-chair of the Senate Finance Committee, Bethel Democratic Sen. Lyman Hoffman, also defended the size of last year's state construction budget. The senators said the spending helped prevent a recession in Alaska. Hoffman noted that Parnell singled out in the speech how Alaska's unemployment rate was a point-and-a-half better than the national average.

Hoffman said he believes that is primarily due to the "healthy" state construction budget passed last year.

Stedman was far less optimistic than Parnell about the progress on a natural gas pipeline to the Lower 48. Stedman said the state is paying big money to the pipeline firm TransCanada to pursue a "project that looks like it won't be built."

"It's quickly approaching the time we need to look at cutting our losses and freeing the state from the shackles put on us by (the Alaska Gasline Inducement Act)," he said after Parnell's speech.

House minority leader Beth Kerttula praised the governor for focusing in the speech on his efforts against domestic violence and sexual assault.

But she criticized Parnell's proposal to cut oil taxes, saying he's talking about giving billion-dollar "subsidies" to the oil companies.

Members of the bipartisan Senate majority also appeared lukewarm to Parnell's talk about oil taxes. They said they are going to gather information about how the tax stacks up to other oil producing areas, and suggested that review could go on longer than the three months that the Legislature is scheduled to be in session this year.

Parnell spent much of his speech criticizing the federal government, a subject that was popular among many legislators, judging by the applause.

He said the federal government has locked up lands to development, breaking promises made at statehood.

"Congress did not want Alaska to become a ward of the federal government, and neither did we ... we demand to be treated as a state, not as a colony," he said.

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