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Palin to convey plans for fall special session

Announcement on oil tax meeting expected today

Posted: Tuesday, September 04, 2007

Gov. Sarah Palin will announce plans for a special session on oil taxes today, ending speculation of where she'll hold it and what she wants lawmakers to do.

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Her discussion comes one day before two former lawmakers begin their federal corruption charges trial that is linked to the oil tax and has helped thrust the state's questionable political climate into the national spotlight.

For now, state lawmakers are most anxious to hear Palin's plans for the petroleum profits tax deemed by Palin as a failure and tainted by the federal corruption charges being linked to the law passed last year.

Will it be an overhaul, as some lawmakers are calling for, or a tweak of the existing format of taxing the net profits, as others are hoping?

Either way, many lawmakers say they want clear, concise direction before moving forward on the second tax change in as many years.

"What I don't want is to have hearings on a concept," said House Speaker John Harris, R-Valdez.

"I want to have something black and white so that everybody is singing off the same sheet of music," he said. "It might be a different tune, but at least we'll be on the same sheet."

Last month, Palin and Revenue Commissioner Patrick Galvin announced the Oct. 18th special session, which could last up to 30 days.

At the time, Galvin said the new tax formula, based on profits, not gross sales, is coming up short of projections put forth by former Gov. Frank Murkowski's administration.

Galvin issued a preliminary report showing that recent petroleum tax forecasts will fall short of projections of a year ago and that the tax is not doing enough to stimulate investment.

On one hand, Galvin's forecasts for fiscal year 2008, which began July 1, show PPT would generate $250 million more than the previous system.

On the other, it still comes up $800 million short of what was predicted last year by Murkowski's administration.

Galvin concluded in his six-page report:

"Clearly, there are aspects to PPT that should be re-examined by the Legislature. In particular, the Legislature should reassess whether the state is getting its fair share of oil and gas revenues, and whether the credits are designed optimally to provide the maximum impact on the state's goal of encouraging investment that leads to more oil and gas production."

This, many Democrats say, is why the current system needs to be fixed. It's too complicated and may even be unenforceable, they said.

"It's clear from the Department of Revenue's report that the PPT doesn't work," said House Minority Leader Beth Kerttula, D-Juneau.

Kerttula added she would like to see a tax that is "transparent, predictable and consistent, something that we can rely on."

"By simple, I don't mean something that is going to take a decade of accountants and lawyers to figure out," she said. "If we don't get the full value of our oil, it's going to be paid for on the backs of Alaskans."

Senate President Lyda Green, R-Wasilla, however, said a special session isn't necessary, nor is this the time to be discussing oil taxes so soon after passing a plan last year.

"Everything being talked about can wait until January, and it can get done just as well," she said. "Any substantial change would be really difficult in a special session.

"If you start changing any of those moving parts, you've really changed the whole thing, and that's a little scary."

Senate Minority Leader Gene Therriault, R-North Pole, said there is a problem with the new law, but an effective session starts with a sound plan with a strong foundation.

"What I'm hoping for is that we don't get a plan that isn't backed up," Therriault said. "Whatever they come up with is going to have to be fairly well documented."

As for where the session is to be held, lawmakers, even those in the southeast near Juneau, seemed less concerned about the venue than the task.

In June, the Legislature held a one-day special session in Anchorage to determine funding for elderly on fixed incomes.

Palin has said she would like a special session in a city with road access, which Juneau lacks.

She sought feedback from lawmakers. Most have supported reporting to the Oct. 18th session in Juneau rather than outside the state's capital.

Harris told Palin most members of the House preferred Juneau, but believed the final decision rested with the governor.

Green refused to poll the Senate, but Palin's staff did and were told by most who responded that Juneau was their choice.



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