Oil taxes to top agenda for next Legislature

JUNEAU — Oil taxes once again figure to be the dominant issue facing lawmakers as they begin their work in Juneau on Tuesday, though issues like education funding, energy and social concerns also are expected to be raised.


Gov. Sean Parnell, who failed in attempts to get an oil tax-cut passed during the past two years, plans to try again this session. This time, the Republican governor will have Republican majorities in both the House and Senate.

The GOP seized control of the Senate in last fall’s elections from the bipartisan coalition that had ruled it for years. The new Senate leaders have insisted, in the face of concern from critics, that they will deliberatively study the issue and won’t merely rubber-stamp anything Parnell sends their way.

“But there’s also a willingness to say Alaska has to move forward, we need to be competitive and still take care of the benefit to Alaska,” incoming Senate Majority Leader John Coghill, R-North Pole, said. “I think we can navigate through that and do it well.”

There is a shared desire to get more oil flowing through the trans-Alaska pipeline, the state’s economic lifeline, but a divide over how best to do that.

The Senate’s bipartisan majority last year failed to agree on a comprehensive tax overhaul, settling instead on a proposal to provide tax breaks on oil production from new fields — a proposal that died in the House. A major stumbling block in the Senate talks centered on how best to address legacy fields like Prudhoe Bay and Kuparuk, the mainstays of Alaska’s oil industry, where production has been declining. One of the concerns had been with giving too much money to oil companies, especially for oil they would have produced anyway.

Parnell, in a recent opinion piece, said he has been “encouraged by the consensus that has emerged over the past year. Where two years ago, some legislators denied there was a problem, today there seems to be agreement that Alaska’s tax system is out of balance when prices are high, and that something needs to be done.”

“Although we may disagree at times on the details of tax reform, most Alaskans agree that something needs to be done,” he wrote. “By building on that consensus and focusing on the opportunity before us, I am convinced we can come together collaboratively and move Alaska forward this year.”

Parnell said he told members of his administration tasked with developing a new plan that any proposal must be fair to Alaskans, encourage new production, be simple and be durable.

“If we work with these guiding principles in mind, we can maximize the benefit of Alaskans’ oil for Alaskans,” he said.

Sen. Bill Wielechowski, D-Anchorage, one of the staunchest supporters of the existing tax structure, said he will advocate for more oil production “without a giveaway.”

Wielechowski, a coalition member who is now in the minority, said he thinks some tweaks could be made, particularly to address government take at high oil prices, but he believes Alaska has a competitive tax system overall.

He said there are things the state can do, besides cutting taxes, to get additional production — a view shared by House Democratic Leader Beth Kerttula of Juneau. He said those could include requiring development plans for leases and even looking at partnerships with companies to make projects economic to develop. Wielechowski said he will be looking at the economic impact of Parnell’s new plan and what Alaska stands to get in return.

House Speaker Mike Chenault, R-Nikiski, said it’s possible for some kind of conclusion to be reached this year on oil taxes. “I think that we’re hopeful that there is at least the ability with the makeup of the Senate now to have those conversations and at least committee hearings on this type of legislation and see if we can come up with some kind of agreement ... and see if there’s a way for it to be a win-win for all Alaskans,” he said.

The 90-day session starts Tuesday.

Conservative groups have expressed hope that there will be a greater focus on social issues now that Republicans control both chambers. A proposed constitutional amendment has already been filed, aimed at allowing public money to be used for private schools.

A voter ID bill has also been introduced.

Sen. Fred Dyson, R-Eagle River, who will chair the Senate State Affairs Committee, said he plans to hold hearings on “federalism” related to land issues and access, and hopes hearings also will be held on fraud involving the Medicaid program.

Energy projects, including a proposal to advance an in-state natural gas pipeline, additional education funding and questions of how much to spend — or save — amid declining oil production are also facing lawmakers.

Kerttula said she has met some of the new legislators, and is hopeful about the upcoming session. “There are a lot of people here to put Alaska first, and that’s what it takes in the Legislature,” she said.


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