My turn: Gov. Palin: Call the special session

Posted: Thursday, July 26, 2007

Gov. Sarah Palin is waffling on whether to call a special session of the Alaska Legislature to reconsider oil taxes.

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On May 18, the Anchorage Daily News reported: "Gov. Sarah Palin said Thursday she intends to call state lawmakers into a special session this fall to revisit the Petroleum (Profits) Tax."

Recently, the same newspaper reported: "Gov. Sarah Palin said June 29 that she would wait on a recommendation from (Revenue Commissioner Pat) Galvin before deciding whether to call a special session in the fall to reconsider the PPT."

Why has Palin changed her position?

The public explanation is that Galvin's department is having a hard time figuring out why the first payment made under the tax was $137 million short of what the state expected. Galvin also says his department can't figure out how Alaska's oil tax take compares to other oil-producing governments.

Are those hard questions to answer? Not really. The answer to the first is, because the oil companies kept the money. The answer to the second is, who cares? We should be getting as much from our oil as we have the political will to take. A Prudhoe Bay only comes around once.

And how, or whether, the current tax works is only one of at least three reasons to reconsider the tax.

First, there's the question of whether a tax on net profits is a good idea at all. That approach pits the oil industry's accountants against the state's and, ultimately, the oil industry's lawyers against the state's. The history of such disputes shows that they take a long time to resolve, and the state ends up settling for pennies on the dollar. A tax on the gross value of oil wouldn't allow creative oil industry accounting, and we'd get our money right now, not 10 years from now.

Second, there's the question of how, or whether, the current tax works. One of the reasons that's difficult to determine is that the law allows oil companies to wait two years before finally saying what they think they owe. That's just one of the questionable provisions. Another is that it allows a company to deduct the costs of corporate malfeasance, such as letting the collector pipes on the North Slope get so corroded that they leaked.

Third, there's the question of how the current law was written and passed. So far, four members of the House of Representatives that passed the tax have been indicted for influence peddling, three of them on charges directly related to the bill. In fact, people have pleaded guilty to bribing the three in return for their support on the issue. And we're told there are still grand juries meeting.

What effect did these shenanigans have on the final version of the bill? Who knows? Some people of the bean-counting persuasion seem to think there's a way to analyze the votes of the indicted and tell whether they influenced the bill. But votes are just a small part of how a legislator, or group of legislators, can influence a bill. No amount of post-session analysis can determine how much the indicted - let alone legislators who might still be indicted - affected the tax.

To put the worst possible face on things, a corrupt process caused the Alaska Legislature to pass a tax that does not get Alaskans a fair share of the revenue from our oil.

That alone is reason enough for me to say we need to reconsider the tax. It should be enough for Palin, too.

So here's hoping the governor can get beyond the woes of her number crunchers, and see that the important questions about the tax aren't what gets put on which line of a tax form, or how much money we get compared with Texas or Saudi Arabia. They are: Do we have the courage to demand our fair share of the oil revenue? And, how do we erase the stigma of a corrupt legislative session?

We need to answer those questions. The sooner the better.

• Rep. Mike Doogan, D-Anchorage, represents House District 25 in the Alaska Legislature.

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