JUNEAU — Senate President Gary Stevens railed against Gov. Sean Parnell’s push to lower taxes on the oil industry, saying in a rare floor speech Monday that the Senate would not be “bullied into making a $2 billion mistake.”
The nearly 30 minute speech, applauded by Stevens’ Senate colleagues, essentially dashes any remaining hopes by Parnell and the industry that an oil tax cut would pass before lawmakers are scheduled to adjourn Sunday.
Parnell has threatened to cut the capital budget, which includes projects for legislators’ districts, if he doesn’t get tax bill passed this year. But Stevens said the information is simply not there to make a sound policy call, including knowing what Alaskans will get in return for a plan that could eventually cost the state up to $2 billion a year in revenue.
Stevens also noted conflicting data and rhetoric on issues like jobs or the potential of the trans-Alaska pipeline system — Alaska’s economic lifeline — shutting down if more oil doesn’t begin flowing soon.
He said he wants to find the right answer to spur more oil production. “But we will not be bullied into making a $2 billion mistake. We need answers. We need data. We need information,” he said, adding that the Senate also needs cooperation from the administration.
“Telling the Senate to rush to a decision without the facts is not working and will not work,” he said. “Helping us to find the right answer will work.”
Parnell spokeswoman Sharon Leighow said the fact that oil production is decreasing is not debatable “and that equals a shrinking economic pie for Alaska.”
“We are at day 84 (of the session) and the Senate has not allowed any public or industry testimony on the governor’s proposed legislation,” she said in an email. “Senators will have to explain to their constituents why they failed to increase oil production and did nothing to improve Alaska’s economic future.”
Parnell has proposed cutting taxes and expanding credits to help make Alaska more competitive with other energy-producing regions and to boost investment. The Republican governor, whose legislative agenda is built around fiscal, economic and family issues, believes urgent action is needed. But he’s also said he has no plans to call a special session if a bill doesn’t pass and instead would view inaction by the Senate as lawmakers consigning the state to a future of declining production and would cut capital spending accordingly to ensure adequate reserves are maintained.
State Revenue Commissioner Bryan Butcher has called the $2 billion a year loss in revenue a worst-case scenario that assumes no new reinvestment over years. He’s said he couldn’t imagine the Legislature or governor standing by and not changing taxes again if that came to be.
But Stevens, R-Kodiak, said repeated changes to the tax structure only add to uncertainty for industry. He said the “world does not come to an end” if lawmakers take more time in making their decision.
The House narrowly passed a version of Parnell’s plan, and members of the GOP-led majority have joined Parnell in stepping up the public pressure on senators to act.
Stevens’ floor address was, to a large degree, the Senate’s rebuttal and its reasoning for why Alaskans shouldn’t expect a bill this year.
While he took exception to Parnell’s swipe of a “do-nothing” Senate, he said the Senate will ensure it does nothing to harm Alaskans.