Oil tax tests political ethics

Posted: Sunday, April 02, 2006

Alaska Rep. Kevin Meyer says he has worked in the oil industry ever since he pumped gas at a Phillips 66 station as a teenager in Nebraska.

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Now, the Anchorage Republican is a procurement officer for ConocoPhillips. For example, he helps the company decide between buying Dell or Compaq computers.

Meyer, who has served in the Legislature since 2000, holds one of the most powerful positions in Juneau as House Finance Committee co-chairman.

Lawmakers are reviewing the governor's proposal to restructure oil taxes for the next 30 years, and the bill is sitting in his committee. But Meyer will not be chairing the meetings on House Bill 488. He is voluntarily giving up the position, but will vote on the bill.

"There's people in my district who understand there is no bias there," Meyer said of himself. "But I understand the perception of people outside my district who don't know me. They think that there is (bias), and I'm very sensitive to that."

Meyer is the only legislator who works for an oil company between sessions, though a handful of other lawmakers have family members or a spouse who work for companies contracting with the oil industry.

According to the state elections watchdog known as the Alaska Public Offices Commission, corporations cannot donate to political campaigns. Instead, workers of those companies can form employee political action committees and make such donations.

ConocoPhillips spokeswoman Dawn Patience declined to comment about employee political contributions.

Employee groups from oil companies and VECO Inc., a multinational corporation that provides services to the oil industry, also contribute to political campaigns, mostly Alaska Republicans. Various labor unions are major contributors to Democrats.

"I encourage everybody to watch their actions ... and ask yourself if it makes sense for them to take these actions on behalf of Alaskans," said Lori Backes, executive director of the All-Alaska Alliance, a group that favors building a natural gas pipeline that would deliver the resource from the North Slope to a port in Valdez instead of a line, constructed with major producers, that would run through Canada to markets in the Midwest. State officials including the governor have linked a compromise oil tax bill to agreement with the companies on gas pipeline construction.

Backes also served as chief of staff to former state Rep. Jim Whitaker.

"The reason why someone donates to a political campaign is because they believe that person will act in a fashion that they want them to," she added.

Action on the proposed oil tax bill could be a litmus test for politicians having relationships with oil companies, Backes said.

The bill is a tax increase on the industry but also includes incentives for companies to go after harder-to-reach oil as production declines. The new system would tax oil companies' profits instead of their production levels.

Many legislators argue that the bill needs a higher tax rate than the 20 percent that the governor has proposed, and that it should climb when oil prices rise starting between $40 and $50.

Other lawmakers argue against changing the bill's tax rate because it may discourage producers from drilling future wells.

"The oil industry has largely concluded with their campaign contributions that Republicans are more likely to give them access to our resources at a better price for the oil industry," said Senate Minority Leader Johnny Ellis, D-Anchorage.

Ellis said several Republicans are mindful that the public will notice in years to come if they give away the state's oil at "fire sale" prices in the tax bill. Each lawmaker this session is being overwhelmed with public-relations campaigns, advertising and lobbyists related to this historic issue, he said.

"That's a character test for every one of us this year," Ellis said.

Meyer said he wants to hear testimony from the producers, economists and the administration before deciding on the tax rate.

Senate President Ben Stevens, R-Anchorage, who sits on the Senate Resources Committee, does not support an increase in the tax rate. Stevens has worked as a consultant for VECO.

"Stevens' actions are very telling where his allegiances lie," Backes said. Proving that legislators are working directly for industries may be near impossible, but by looking at how they vote, "you can put two and two together," she added.

Stevens said he has not been told by VECO or another company to vote a certain way.

"This concept that people contribute money to a campaign and therefore that candidate is going to vote the way that contributor tells them to vote is absurd," he said.

VECO does not pay royalties or severance taxes or a corporate tax based on oil facilities, Stevens said.

Rep. Vic Kohring, R-Wasilla, chairman of the Oil and Gas Committee, opposes the tax bill, saying that from a philosophical standpoint it is not a fair bill for the private sector. On other issues, Kohring said he applies the same philosophy of less government regulation.

Kohring is one of the Legislature's top beneficiaries of the company's executives, collecting $14,708 between 1998 and 2004.

"I don't feel pressure from these guys," said Kohring, adding that they contribute because they think like he does.

As a Teamsters union member for 30 years, House Speaker John Harris, R-Valdez, said he often votes with labor.

"I guarantee you there are legislators out here who are influenced by a variety of different things, and sometimes a variety of different people. That's just the nature of the business. And it's on both sides," he said.

• Andrew Petty can be reached at andrew.petty@juneuaempire.com.

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