Parnell seeks consultant for wrangling over gas taxes

The bid document says the state anticipates oil companies that would produce the gas from the North Slope will seek changes to Alaska's oil and gas production tax. The consultants' work would include "evaluation of options for modifying the oil and gas tax structures to facilitate a major gas pipeline project."

Revenue Commissioner Pat Galvin said legislators, as well companies, may want tax changes.

"The administration wanted to have consultants on staff to be able to evaluate those and determine whether or not they have actually made a case that changes are needed," he said.

The revenue department put out the request for proposals June 17 and bids are due only 13 days later, June 30, with the consultant to be selected the next day and a computer model of Alaska's tax system due in August. The computer model would be interactive and would show what different taxes would do to the state and the oil industry.

Anchorage Republican Rep. Mike Hawker, co-chair of the House Finance Committee, said that's not much notice for bidders.

"It's an extremely short lead-time project which means they probably already picked who they want to give it to and it's a sweetheart deal for one of their existing consultants," said Hawker, who opposes the Parnell administration's strategy for getting a gas pipeline. "More money to the people who have basically come up with all the answers they've wanted them to come up with in the past."

Hawker said consultants for the Legislature already produced such a model of Alaska's tax system. He called it an "incredibly sophisticated model," done at far less cost.

Galvin said that whoever is hired as consultant will build on the Parnell administration's existing models, which he said are already more advanced than the Legislature's, Galvin said.

Galvin said the new contract would continue the work done by state consultant Gaffney Cline, whose contract is expiring. He said the administration doesn't have a firm picked out and is open to any bidder who feels prepared.

Galvin said the selection process could be extended if multiple bids come in and the state needs to do more work to pick a winner. The contract is to last for almost two years and the consultant would basically be on retainer, he said.

The pipeline company TransCanada is currently in the midst of an "open season" during which companies with North Slope gas to ship can bid for transportation space on the pipeline. TransCanada expects the bids to be conditional, and would likely include oil company requests for how North Slope gas should be taxed into the future.

TransCanada has a state license and state reimbursement of up to $500 million of its costs under the Alaska Gasline Inducement Act, commonly known as AGIA.

Anchorage Rep. Hawker is among a number of Republican state legislators who argue AGIA isn't working. "It's really interesting to me the administration finally got around to recognizing that, gee, they're going to have to change their tax regime if they want to save the state's economy," he said.

Revenue commissioner Galvin said that's not so. He said the administration is open to tax change proposals but would need to be convinced they're necessary.

Find Sean Cockerham online at adn.com/contact/scockerham or call him at 257-4344.