Palin's troubling choice

Governor thinks it's OK to bargain away people's right to change laws

Posted: Tuesday, May 15, 2007

Gov. Sarah Palin made a troubling choice when she chose economic development over democracy in her top-priority gas pipeline legislation.

I suppose she doesn't see her choice in those terms, but her moral obliviousness is in some ways worse: It raises questions about how much she really knows or cares about democracy. It suggests she may be as willing as her predecessor to bargain away our fundamental political rights in return for a promise by major oil producers to unlock their hoard of Alaska gas.

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I'm talking about the right of the people to change their laws. Oil industry officials claim they won't participate in a gas pipeline project unless they have ironclad assurances that Alaskans won't raise their taxes after the pipe is buried.

"If we get the resource terms defined clearly, the pipeline will follow," BP's Dave Van Tuyl testified last month to a legislative committee. As you know, "resource terms" is producer code for a long-term contract in which the state establishes its tax rates as they apply to the project, and promises that it won't change those rates for many years to come.

Unlike former Gov. Frank Murkowski, Palin has acknowledged the questionable legality of contracting away our taxing power. She has told the oil companies that in any gas deal, it will be the companies - not the state - that will take the risk some judge will invalidate the contract. But Palin seems to think the principle of contracting away is just fine, and if it gets through the courts, then hey, no problem. She has already offered 10 years of tax certainty on gas production, and her commissioner of Revenue has said Palin's willing, at the proper time, to discuss additional resource terms.

These concessions are wrong regardless of how significant the economic benefits gained in return, unjustified regardless of how long the contract runs or how limited the range of taxes it covers, and morally indefensible regardless of the legal or constitutional issues that will be decided in the courts.

Palin should ask herself: How would she feel if someone offered her $500 per year for not voting in any initiative election related to, let's say, abortion, marriage or any other subject? If she considers such a deal repugnant, then she doesn't need lawyers to sort out the gas pipeline contract - its provisions on tax certainty are cut from the same cloth and are just as morally and ethically suspect. The economic system we have in Alaska is one investors have prospered under throughout American history. None of the great American railroads of the 19th century was built with concessions of democratic sovereignty, nor were any such incentives granted to sponsors of the great pipeline projects of the 20th century.

Corporations have always looked for creative ways to reduce the uncertainties surrounding investments and costs. More power to them. But so have households and individuals. I'm sure Alaska drivers would love a contract that says the oil companies couldn't raise their gasoline prices at the pump. And wouldn't homeowners be pleased if they had a contract from their respective municipalities promising never to raise property taxes?

Corporations and households alike deserve fairness. There is no fairer system of governance than the system in which a free people democratically decide what the rules are and when the rules need to be changed.

No pipeline payoff, however rich, justifies bargaining away a fundamental political right cherished for centuries by free people everywhere.

I hope Palin gets her gas line bill. It's a good plan. It stands a good chance of moving Alaska toward a gas project. But Palin can get that project under her plan without contracting away the democratic right of future Alaskans to change the laws under which we are governed.

• Juneau economic consultant Gregg Erickson is editor-at-large of the Alaska Budget Report, a newsletter covering the state budget and economy. He can be contacted at gerickso@alaska.com.



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