Parnell Withholds Oil Tax Information

Sean Parnell got his wish for a Republican-controlled state senate this time. Last session, the bipartisan coalition prevented the massive $2 billion a year no-strings-attached oil wealth giveaway. This time, preventing our coffers from being drained into the pockets of the world’s most profitable multi-national corporations will require even more effort from Democratic legislators, fiscally responsible Republicans, and Alaskans themselves.

Doing his part, Representative Les Gara (D-Anchorage) today called on Gov. Sean Parnell to release information he has withheld regarding his proposed oil tax legislation. Two weeks ago Gara filed a public records request for important oil tax information so legislators could receive information needed to make vital decisions about how to address the proposed bill.  The governor has not yet responded. I know. You’re shocked.

“Withholding information that the public has a right to know is wrong, especially when the governor’s asking the Legislature to make historic changes to how we benefit from our most valuable natural resource,” said Gara.

In a letter dated February 6, 2013, Gara sought the following information on oil tax consultants:

Silenced Experts? 

Two expert oil tax consultants seem to have had a sock stuffed in their mouths by the Parnell administration, as indicated in a phone call Gara placed to their companies in February.  Rick Ruggiero and David George consulted with, and provided analysis and various oil tax proposals to the Legislature during the original ACES oil tax discussions in 2007, during the Palin administration. The two appear to still be on contract with the Parnell administration, which conveniently gives the governor control over whether they speak with legislators or not.  Gara has requested the Legislature either have access to these consultants, or a confirmation that they have not been under contract by the administration.

“Hiring world-renowned experts who can help Alaskans analyze oil tax proposals, and gagging them by keeping them on contracts so they can’t consult with legislators would be wrong. We have asked Governor Parnell to reveal whether he has contracts with these gentlemen.  The indication is that the administration does. Legislators and the public have a right to hear from them,” said Gara.

 Then, on February 20, 2013, Gara asked the governor for two other pieces of important information.

8 out of 10 oil companies surveyed recommended ACES

8 of 10 oil companies contacted by the administration thought ACES was just fine. A few even went out of the way to say they were actually thankful for it. In 2009. Only two companies wanted to see ACES changed. Rep. Gara asked to know exactly which companies the governor was referring to in this conversation with the Petroleum News:

“Parnell also said that he has already discussed ACES with 10 oil companies.  Of those, he said, ‘four to five’ thought the tax system was just fine, while ‘two or three’ thanked the state for the tax credit program and two companies wanted to see ACES changed.” Petroleum News, 12/20/2009.

Obviously, that information is critical in determining the truthfulness of oil company testimony, and for the legislature to analyze what those two companies claimed was needed in terms of reform.

Where’s the money going?

Way back in 2010, the governor said he was all about keeping profits in Alaska, not sending the money off to some other country. Rep. Gara asked the governor what exactly made him change his position supporting progressivity, the provision allowing the state to share in windfall oil profits, as a way to keep investment in Alaska.  In 2010, the governor stated:

“I’m not interested in changing progressivity so they can take that money and invest it somewhere else.  If they’re willing to invest it here, I’m open to considering it, but I’m standing up for Alaskans in this, not some other country.” Petroleum News, Jan, 24, 2010.

Just a year later, he did a 180, and proposed his first major reduction in Alaska’s share of oil returns with no requirements for increased production or new investment in Alaska. Today, he is all about making Alaska the oil companies’ cash cow, proposing to completely eliminate progressivitty, giving away, at $120 per barrel, roughly $1 – $1.5 billion per year to oil companies and allowing them to spend that money in Texas, or Libya.

The Solution

Democrats, who agree with the governor’s January 24, 2010 statement, targeted their oil tax proposals (HB111, SB50) to new production so tax breaks will not be spent outside Alaska. Those radicals. Their proposals include a 10% gross revenue exclusion (GRE) to incentivize new heavy oil production; a 10% GRE for new production in new geological pools of oil in existing fields; a 10% GRE for oil above a producing company’s production 2012 levels; and a seven-year temporary 20% GRE reduction for oil from new units.  Democrats also propose to help companies build new processing facilities needed to put new oil in the pipeline. Basically, they came up with a good plan for Alaska.

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