Legislators want special session

House Democrats want to redo last year's oil production tax in light of indictments

Posted: Wednesday, May 09, 2007

Last year a bitterly divided Alaska Legislature fought through several regular and special sessions to create a new oil production tax plan and develop a natural gas pipeline.

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Since then, 15 percent of the House Republican caucus that pushed through the plan has been accused by federal prosecutors of selling their votes.

Often, just a vote or two decided matters such as whether the oil tax rate would be 22 or 23 percent - a percentage point worth billions over the years.

Now, several House Democrats are saying a special session of the Legislature is needed to undo what they say was done in a a tainted session.


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Rep. Les Gara, D-Anchorage, said the deal passed by the Legislature last year taxed oil at a billion or more dollars a year below the world average.

"We should call ourselves into special session to stop the bleeding," he said.

The House Democrats have allies in the Senate. Appearing with Gara and other House Democrats at a Tuesday press conference were two Democratic members of the bipartisan Senate majority coalition, Hollis French and Bill Wielechowski, both Anchorage Democrats.

And Sen. Tom Wagoner, R-Kenai, later said he'd support such a move as well.

French said legislators need to take another look at the tax, now that they know more about what they passed and how its passage was influenced last year.

"It begs for reexamination with a fresh set of eyes," he said.

Opponents of the production tax have received a boost from several recent actions. First, Gov. Sarah Palin, who has been skeptical of it, replaced Gov. Frank Murkowski, its architect.

Then the tax in its first year has brought in less revenue than expected, despite higher than expected oil prices.

Finally, in the last week, three current and former state legislators were indicted on allegations of taking bribes to pass the tax, and two oil industry executives pleaded guilty to paying those bribes in a scheme to support its passage.

In documents filed in federal court, prosecutors said Rep. Vic Kohring, R-Wasilla, was recorded explaining what he would do for a bribe.

"I'll politely and gently as carefully as I can influence them in a positive way to see that the governor's (Murkowski's) bill is the vehicle they consider," Kohring said, according to the indictment.

Gov. Palin would be open to having a special session, said spokeswoman Sharon Leighow.

Palin has asked for a legal review of PPT from the Department of Law and an informal review of the rate from the Department of Revenue, she said.

The economic review is expected to take at least a couple of months, Leighow said.

Wagoner questioned the basis of the tax, which involves taxing oil profits instead of the easier-to-determine total oil sales. That's known around the Capitol as the debate between a net tax and a gross tax.

The net tax allows companies to deduct some, but not all, expenses, making it difficult to estimate and audit, he said.

"The problem is this is a continual guessing game, and you don't know what the oil companies are trying to write off," Wagoner said.

Wagoner is a member of the Senate Republican minority.

Indicted last week were one sitting and two former representatives, Oil and Gas Committee Chairman Kohring, and former Reps. Bruce Weyhrauch, R-Juneau, and Pete Kott, R-Anchorage. Indicted last year on separate charges was Rep. Tom Anderson, R-Anchorage.

• Pat Forgey can be reached at patrick.forgey@juneauempire.com.

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