Restoring public trust may be behind rush for a new oil tax

Time running out in special session

Posted: Thursday, November 15, 2007

State lawmakers have until midnight Friday to put their stamp on oil tax reform or risk having Gov. Sarah Palin call a second consecutive special session.

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But with the regular session starting in just eight weeks and holidays looming, what's behind the rush to get a bill now?

Getting the job done immediately isn't just about more money for the state's coffers or sticking it to an industry flush with cash.

It's about the Legislature regaining the public's eroding trust, and it comes at a time when Alaska's political climate faces national scrutiny, if not ridicule.

The current oil tax law comes strongly tied to federal corruption probes that have already produced two bribery convictions of former state lawmakers.

The federal investigation started in Juneau with state lawmakers, but it's reached Capitol Hill, where Sen. Ted Stevens and Rep. Don Young, both Alaska Republicans, are under scrutiny.

Rebuilding public approval starts in Juneau.

"It goes beyond the state's borders," Palin said. "There needs to be some healing in this state in the political arena, and establishing a trust begins that healing."

Carrying the work into another special session or delaying to Jan. 15 when the Legislature returns for its regular work won't cut it.

Most lawmakers seem to get that point.

"I don't think it helps to drag it out," said House Speaker John Harris, R-Valdez, whose members backed Palin on a tax hike on the oil companies' net profits from 22.5 percent to 25 percent Sunday night. The change could mean billions to state coffers.

"I think the public wants us out of here," Harris said. "The longer we are down here, the public probably feels like they don't know what we are up to."

Senate President Lyda Green has balked at the need for a special session, saying this issue could have been resolved next year. Still, she believes the public can place trust in the work being done.

"If people have been watching, they see we've been working 8- 10- and 12-hour days, including weekends," she said. "I'm pretty confident in the process we've gone through, which has been very open and vibrant."

The federal courtrooms are quiet - for now - but another trial of a former state lawmaker awaits and several investigations remain open.

And for lawmakers who forget why Palin really called them back to work, there is always Rep. Mike Kelly, a Fairbanks Republican to remind them.

Kelly, a member of the House Finance Committee, didn't mince words about the purpose for reworking an oil tax a second consecutive year.

"We have to recognize the reason we are down here - the only reason in my opinion we are down here - is that we have folks either indicted, convicted or under investigation - and they weren't the janitors around here."

Three former legislators have been convicted of federal bribery charges, and another one faces trial. Three of the four were convicted for their ties to VECO Corp., the oil services company that lobbied hard and freely for the state's current tax scheme, passed last year.

For the current batch of lawmakers, coming back in January and picking up the oil tax bill doesn't seem practical for a 90-day session, the first ever legislative session held after a citizen initiative shortened the lawmakers' time in Juneau by about half.

Lawmakers will have plenty on their plate: a capital budget, education funding and plans for a pipeline Palin says is vital to ship natural gas reserves from the North Slope to market.

North Slope oil producers BP, ConocoPhillips and Exxon Mobil Corp. have reminded lawmakers that higher taxes jeopardize future investment, even though they will receive tax credits for new exploration.

While the tax rate grabs the headlines, there are several subplots also at play.

• Palin v. Green. They are of the two most powerful elected officials in the state who live about five miles from one another in Wasilla. Don't look for them to be at the same table for Thanksgiving dinner, but Green says too much is made of any rivalry.

"It's overblown - absolutely," Green said. "You have to give the other person room to disagree. That does not mean there is a bad relationship; it's just some policy disagreements really."

• Palin v. oil industry. A Republican who was elected on a reform platform, Palin has not been afraid to stand up to the oil companies, an industry the old guard has long protected. Her gas line legislation, which the industry vehemently opposed, received the Legislature's backing last spring. Often asked if she's anti-industry, she reminds people her husband Todd works a blue collar job on the North Slope for BP.

• The Senate v. the House. The House backed Palin's plan; the Senate has taken its time and has yet to vote on a bill. Those who have roamed these halls for years are used to legislative sessions being pushed to the final minutes.

The most visible difference has been the tax rate: 22.5 which the Senate Finance Committee is recommending to the Senate or 25 percent as Palin and the House support.

Some lawmakers have called the 25 percent rate politically driven more so than a fiscal decision.

"I don't see it as symbolic," Palin said. "It's a hard number that makes sense for Alaska's future. Nothing more."



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