Gov. Sean Parnell called a 30-day special session to try to get a resolution to a question hanging over lawmakers since the passage of ACES.
The question: How should our state government balance the state’s need for oil tax revenue to fund present and future needs with the oil industry’s need for a profitable business climate? The state must collect revenues in a way that keeps oil companies coming here for the black gold without shortchanging Alaska taxpayers.
During the two years this Legislature has been in sesion, the Senate has been steadfast in its belief House Bill 110 gives too much back to the oil companies — $2 billion, by some counts — and does little to ensure oil producers will keep and expand their operations in Alaska. Parnell, who backed HB 110, and the majority of House members are firm in the belief Alaska’s Clear and Equitable Share tax structure does a disservice to petroleum companies by taking too much off the top when oil costs are high, defeating the purpose of investing in Alaska if those bets can’t pay off when the right holes are drilled. The Senate’s plan to revamp ACES, Parnell and the lower chamber maintained, didn’t go nearly far enough to make a difference.
So the deadlock seemed to stand as the state prepared for a 2012 election in which 59 of 60 legislative seats will be up for grabs, with most expecting any movement on oil taxes to be dependent on how much the ballot boxes shook up the makeup of the Legislature. But wait — Parnell came in with a last-ditch effort to try to get oil tax reform passed by calling a special session. Sure, there were other topics he wanted covered, but a sex trafficking bill that had no opposition could have been — and was — handled quickly and a gas line bill that had no clear consensus on direction but many lawmakers willing to listen to competing ideas were just tune-ups for the main event, oil tax reform.
However, instead of a fight plan worthy of a Mike Tyson or Muhammad Ali, Parnell’s strategy seemed designed more for Glass Joe. First, his new proposal was much too similar to the one Senate members said was a non-starter.
Then, Revenue Commissioner Bryan Butcher couldn’t defend the new plan intelligently, giving often contradictory and confusing information.
Things got even worse when Karen Rehfeld, Parnell’s budget director, said Parnell’s proposal could force a state accustomed to putting huge sums of money in the bank each session into deficit spending within a year.
Finally, ConocoPhillips reported it made $616 million in Alaska in the first quarter of 2012. That’s great for the Houston-based energy conglomerate and good for Alaska, given the taxes, royalties and indirect benefits heading for the state’s coffers — but it’s not a very powerful argument for the need for a reduced tax rate for ConocoPhillips or any other producer.
Usually, when confronted with facts that undercut an argument, most people either find new facts to bolster their claims or change the argument. Instead, Parnell did neither. He simply picked up his ball and went home by pulling the oil tax issue from the special session call.
The Senate responded by leaving when it became obvious the game had been canceled because of lack of competence from the executive branch.
Simply put, more than a week’s worth of work at state expense became pointless because Parnell didn’t like the natural and obvious direction the oil tax discussion was taking in the Senate.
We the people are now left no closer to a resolution to the oil tax issue than we were at the end of the regular session. As an added bonus we also have a constitutional quandary — crisis is probably too strong a word — because it’s not clear if Parnell had the constitutional authority to pull the oil tax bill from consideration after he called the special session and hearings began. Also, the Senate —despite a vote to adjourn — may have to meet anyway in some form or fashion if the House doesn’t OK the upper chamber’s adjournment.
The status quo on oil taxes might not have been ideal, but it was a far sight better than what we have now — the status quo plus highly increased acrimony. The blame here falls on the Governor’s Office, which should have been better prepared to defend its ideas and better able to compromise when it couldn’t get what it wanted. This issue will be taken up again in the near future, but it’s going to be even harder to come to a solution following Parnell’s special session foul-up.