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Senate ponders ACES changes, House Dems defend oil tax

No evidence yet of need for tax reductions, Kerttula, others say

Posted: February 29, 2012 - 12:03am
House Minority Leader Beth Kerttula, D-Juneau, center, speaks along with Rep. Berta Gardner, D-Anchorage, left, and Rep. Pete Petersen, D-Anchorage, during their weekly House Minority press conference at the Capitol on Tuesday.  Michael Penn/Juneau Empire
Michael Penn/Juneau Empire
House Minority Leader Beth Kerttula, D-Juneau, center, speaks along with Rep. Berta Gardner, D-Anchorage, left, and Rep. Pete Petersen, D-Anchorage, during their weekly House Minority press conference at the Capitol on Tuesday.

If the Alaska Senate passes an oil tax reduction, as Gov. Sean Parnell has asked, it may have difficulty getting through the House of Representatives, House Democrats said Tuesday.

“I don’t think we’ve seen much, if any, evidence the current oil tax system is not working,” said House Minority Leader Beth Kerttula, D-Juneau.

A bill making dramatic tax reductions, which Parnell calls “meaningful,” narrowly passed the House last year before stalling in the Senate.

A replacement Senate bill has been introduced, but doesn’t yet include a final tax rate. Hearings on that bill are ongoing.

The bill that passed the House last year, House Bill 110, did so by a 22-16 margin, meaning it had a single vote to spare.

Rep. Berta Gardner, D-Anchorage, the minority whip, called that bill a “tax giveaway.”

Arguments made to persuade the House to pass the bill, including that the state’s ACES tax system was costing the state jobs and the Trans-Alaska Pipeline System was within 10 years of shutting down due to low flows, have since proven false, she said.

“Clearly, the rationales have not held up,” Gardner said.

Earlier this year House Speaker Mike Chenault, R-Nikiski, declined to speculate on whether an identical bill to the one that passed last year could pass this year.

The ACES tax itself probably couldn’t pass again either, he said.

Also Tuesday, the Make Alaska Competitive Coalition, an industry advocacy group, posted an “action alert” from Parnell to its members, urging them to weigh in on behalf of lower taxes.

“At high prices, Alaska’s oil production tax is the least competitive among all oil producing regions in the Western Hemisphere,” Parnell’s message said.

“I don’t’ think that’s accurate,” Kerttula said.

The Senate Resources Committee, currently hearing Senate Bill 192, the Senate’s oil tax bill, heard testimony from a variety of consultants who said Alaska was generally competitive with other jurisdictions worldwide.

Sen. Bert Stedman, R-Sitka, said one Western Hemisphere oil-producing region, Argentina, took 100 percent of profits at high prices.

Parnell’s “action alert” also said the Senate had not held public hearings on the House’s tax cut proposal.

“After being passed by the House last year, HB 110 languished in the Alaska Senate, without any public input,” Parnell said.

However, during hearings before the Senate Labor and Commerce Committee, members of Parnell’s administration testified despite statements in the House, North Slope employment had reached all-time highs since ACES passed.

Later, Chairman Sen. Dennis Egan, D-Juneau, took the committee to Fairbanks and Anchorage for hours of public hearings during which industry representatives, workers and others debated the impact of ACES.

Kerttula said the Legislature should demand evidence that ACES is not working before considering changes.

“We’re not changing until we’ve seen the need to do it, and that hasn’t appeared yet,” she said.

• Contact reporter Pat Forgey at 523-2250 or at patrick.forgey@juneauempire.com.

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