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Kito weighs in on SB21, 'The Road'

Juneau lawmaker shares concerns with each project

Posted: May 22, 2014 - 11:04pm
Rep. Sam Kito III speaks to the Juneau Chamber of Commerce during their luncheon in the Alaska Room at the Juneau International Airport on Thursday.  Michael Penn | Juneau Empire
Michael Penn | Juneau Empire
Rep. Sam Kito III speaks to the Juneau Chamber of Commerce during their luncheon in the Alaska Room at the Juneau International Airport on Thursday.

There are multiple sides to every issue, and Juneau’s Democratic representative, Sam Kito III, made sure to touch on both sides of two of the hottest topics in Juneau these days.

The first of those being: When Alaskans go to the polls this August, should they repeal SB21? The state’s new oil tax system has been labeled a “giveaway” by Democrats while officially called the “More Alaska Production Act” by its supporters.

The second issue, whether the state should build a road out of the capital city, doesn’t carry the same debate-sparking potential statewide. But in Juneau, “The Road” can be as divisive as any other piece of public policy.

Speaking to the Juneau Chamber of Commerce crowd, Kito was noncommittal on both issues while highlighting aspects of each that concern him.

During his opening remarks, Kito started to discuss the SB21 issue, but quickly reverted back to prepared notes before offering his opinion. During a question and answer session following his speech, Kito was asked if he — like “the majority of Alaskan businesses” — is opposed to the repeal of SB21.

“I’m still in the decision-making process here; I wasn’t around when SB21 passed,” Kito said.

In a Q&A published in the Juneau Empire when he was appointed earlier this year, the Juneau Democrat took a stronger stance.

“I don’t know all the details. I do know I have concerns we’re giving money away in a time we’re seeing declining budgets ... at this point, I don’t believe (SB21) was the best way to move forward,” Kito said in that report. We went on to say, “... at this point, I am personally in favor of repealing SB21.”

He told the chamber that oil prices are at a “sweet spot” where both SB21 and the previous oil tax system are producing the same returns for the state, but that world events could indicate oil prices are on the rise — a fact that, if true, would result in less money for the state under SB21.

“If (oil prices are) going to be increasing, I’m concerned that, perhaps, we may have left money on the table that, with our declining revenue situation, could be very important for state services,” Kito said.

Republicans and other supporters of the new oil tax structure have pointed to billions of dollars of new investment on the North Slope as supporting evidence for their cause. Opponents say that is a facade by oil companies and not indicative of better days ahead.

Juneau Access

The road is “estimated at over $500 million to complete,” Kito said. “Do we receive $500 million in commerce or revenue back to the state or the city? That’s a tough one to support.”

He said that while the road would eliminate a costly ferry route that runs north from the Auke Bay ferry terminal, the project’s savings are mitigated by its proposed shuttle ferry near Haines.

“You still have 12 hours worth of fuel ... and then you’re going to have an additional 65 miles of road to maintain,” Kito said. “I haven’t seen the numbers that show that to actually balance out to the state’s favor, so I’m concerned we actually end up increasing the operating budget.”

He told the audience that, for him, this issue is about the timing of the project rather than it’s non-fiscal merits.

“I’m not sure this is the right time to spend a significant amount of money on a project that the state doesn’t seem to get any revenue from,” he said.

• Contact reporter Matt Woolbright at 523-2243 or at matthew.woolbright@juneauempire.com. Follow him on Twitter at https://twitter.com/reportermatt.

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Art Petersen
3686
Points
Art Petersen 05/23/14 - 01:05 pm
9
3
SB21

Sam Kito points out the "sweet spot," whereby right now Alaska receives the same amount of revenue as it did under ACES. Representative Kito also points out, though, that as oil prices rise, Alaska will receive much less revenue than under ACES. Even worse, though, under SB21, as the years go by, Alaska will receive a permanent 40% less under SB21, as pointed out by Representative Gara the other day.

So how much is enough for the oil companies? When asked what they thought about SB21 when their former oil lobbyist governor and their employee legislators pushed this oil-company "incentive," the reply was that no "additional" new investment was anticipated as a result of the proposed SB21 but that SB21 was "a good start" at what would be enough, implying that it was not yet enough. ... The implication is that no amount profit will be enough.

The other day an abusive, anonymous letter came my way. In part it read, "Way to go hating on the corporate beast while at the same time pigging out on oil slop." Two points: First, implied is that the oil companies in Alaska deserve to be hated. They don't, of course. They just should be held to the standard of a good business partner. In SB21, they were given something they weren't at first even particularly interested in. Now that they have it, of course, they want to keep it. Hence the flow of oil-industry advertising for all the good that is happening as a result of the gift that was given them.

Second, about "pigging out on oil slop," this implies that the oil belongs to the oil companies. It does not. It belongs to Alaskans. The governor and the majority legislators have given away a huge part of Alaska's oil revenue, forever, because of an antiquated notion about huge, rich corporations needing ever more stimulus to make profit.

Representative Kito is surely right that a renewed boom in fossil fuel demand is in the future. Oil companies in Alaska deserve to profit from their expertise and investment in infrastructure. But also deserving of profit are the owners of the oil. SB21 is as bad as ACES in terms of being lopsided in its sharing.

It's not hateful to want an equitable square deal. And it's not "pigging out" to benefit reasonably from something one owns. SB21 needs to be repealed so that ACES can be adjusted equitably.

dimitra Lavrakas lavrakas
293
Points
dimitra Lavrakas lavrakas 05/24/14 - 02:58 am
2
4
One more time

The South Klondike Highway from Skagway to the mind fields in the Yukon is a road of economy -- ore trucks use it to ship out of Skagway's Ore Dock.
The road from Juneau is a redundant form of transportation. The ferries do just fine.
If you want to see some more revenue from the ferries put slot machines in the gift shops they're closing. Yes, I know Alaska doesn't allow that, but if cruise ships can sail the Inside Passage and gamble why can't Alaskans on the ferries?

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