Legislators may try to dilute tax proposal

Some lawmakers fear session will end without change in PPT

Posted: Thursday, October 25, 2007

Some legislators didn't want to come to Juneau and didn't want to revisit the controversial Petroleum Profits Tax.

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Now, some in the Alaska Legislature think there will be an effort to pass a bill making a few tweaks to PPT but no substantive changes.

House Oil and Gas Committee Chairman Rep. Kurt Olson, R-Soldotna, is one of those who has been reluctant to change the tax the Legislature adopted a little more than a year ago.

His committee is now holding hearings on a a proposal by Gov. Sarah Palin to not only close loopholes in the tax that may have reduced revenues, but also increase the tax rate from the 22.5 percent adopted last year to 25 percent.

Palin's proposal is called Alaska's Clear and Equitable Share, or ACES, and also would include some limits on deductions and changes to make it more enforceable.

ACES is now being heard in the House Special Committee on Oil and Gas, chaired by Olson. Last year, when PPT was being adopted, that committee was chaired by Rep. Vic Kohring, R-Wasilla, who is now on trial in Anchorage on charges of taking oil industry bribes. Doogan is a member of that committee.

One change that it seems everyone will be able to get behind is augmenting the state's auditing capabilities. That may require the creation of a new class of auditor exempt from the usual state payroll system and able to take on oil company accountants.

Rep. Mike Doogan, D-Anchorage, is one of those who expects an attempt to end the special session without major changes to PPT.

"I'm expecting the committee chairman to roll out a substitute bill that exempts auditors and maybe does a few other administrative things the governor wants done but doesn't change the current tax law," he said.

Palin Legislative Liaison Russ Kelly said that would disappoint the governor.

"She's certainly hoping that no one has made up their mind just a week into this special session," he said.

"The governor's feeling is that this early in the process," he said. "She's hopeful that as the testimony and one-on-one briefings continue, everyone will keep an open mind," he said.

Sen. Gene Therriault, R-North Pole, said he hopes no one cuts short the governor's attempts to change the PPT.

"I don't think the citizens of the state of Alaska would stand for that," he said.

Therriault also is Senate Minority Leader, heading the group of five Republicans who split from the leadership of Senate President Lyda Green, R-Wasilla.

Green was reluctant to have the session, and she said last week her preference is to wait until 2011, when PPT calls for a review, to reconsider the tax.

Palin has said the there is a cloud over the PPT caused by allegations that numerous legislators were taking bribes to support a version of the bill favored by the oil industry. Also, PPT brought in hundreds of millions of dollars less in its first year than had been expected.

House Speaker John Harris said the Legislature should take action on an oil tax bill so the state's oil tax system would have been adopted by a legislative body without the tainted members.

• Contact Pat Forgey at 586-4816 or patrick.forgey@juneauempire.com.

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