Measure 3, the All-Alaska Gas Line Initiative that passed by a 60 percent majority, now presents state policy-makers with the decision whether to fund a state-owned Gas Development Authority. Policy-makers must be aware of the time and resources that such an investment would require as well as the significant financial risks to the state.

Alaska does not have a long-range fiscal plan. The state needs to identify new revenue sources and immediate budget reductions. This all must be done before any gas line generates revenues.

Unfortunately, Measure 3 had nothing to do with the commercialization of North Slope gas to Lower 48 markets. In fact, creation of the new state-owned Gas Development Authority is now the very distraction that could kill the Alaska Highway gas pipeline project.

Measure 3 was a cleverly crafted 11-page statute that sets up a state-owned corporation authorized to purchase permits and engineering studies that "have been pledged to the Alaska Natural Gas Development Authority." Who has pledged the permits and how much are they going to cost? One company has allegedly spent more than $100 million on permits and engineering studies for the very project identified in Measure 3.

Hopefully, Measure 3 is not just another company bailout. Alaska's past participation in government subsidies gone awry deserves mention: the Delta Barley Project, the Point Mackenzie Dairy Project, the MarkAir bailout, Alaska Seafood International, and that granddaddy of them all when the 1978 Legislature awarded a 27-year contract to the Texas-based Alaska Petrochemical Co. to sell nearly all the state's North Slope royalty oil. Three years later, a bankrupt Alaska Petrochemical walked away from its contract, still owing the state nearly $60 million.

Even if buying the permits and taking over the project were a good idea, it should be done by the private sector -- not government. People talk a lot about running government like a business, the truth is government is not a business. It has rules and regulations and procedures and public access laws that present formidable challenges when government signs on as a partner in a private venture. Speed and decisiveness are essential to running a multibillion-dollar construction job; unfortunately government is neither speedy nor decisive.

The new state-owned authority must do what at least two private sector independent groups could not do and that is acquire and sell gas; build, own, operate and transport gas to markets.

Twenty times the North Slope gas reserves are known to exist in the Pacific Rim; these reserves are at or close to tidewater and are not burdened by an 800-mile-long pipeline to get to market. Asian utility companies are not entering into long-term contracts but purchasing gas in "spot-markets" at prices close to marginal cost of production. An All-Alaskan LNG pipeline owned by the state would deliver the highest marginal-cost gas in the Pacific Rim, thereby making Alaska gas noncompetitive.

High-risk projects costing $12 billion are not financed at 100 percent as proposed in the initiative. The standard is a 30 percent owner equity contribution. Alaska's Permanent Fund becomes the only viable source for the state's owner equity.

The risks of construction cost overrun and low market prices to the state are significant. Unlike large corporations, the state does not have cash reserves for such risks. In addition, the state-owned pipeline proposed would be exempt from all local property taxes.

If the message behind the passage of Measure 3 is that the majority of Alaskans want to see a gas pipeline project succeed, then we are encouraged. If building a gas pipeline is a priority for Alaskans, the single biggest, most important thing the state can do is to create clear and predictable rules on taxes and royalties for the petroleum industry. Alaskans should demand that from their elected officials. To spend energy and resources on any other activity to promote an Alaska gas pipeline is simply wasteful.