Governor candidates debate tax policy

Republican Gov. Sean Parnell says he wants to make changes in the 2007 tax revision plan of his predecessor, Sarah Palin. Democrat Ethan Berkowitz calls Parnell's plan incremental when bold action is needed.

"We cannot continue to do what we've been doing and expect the results to be different," he said.

The candidates spoke Thursday at Commonwealth North, a nonpartisan public policy forum with a goal of educating its members on issues affecting Alaska. In a format that departed from other candidate encounters, they were asked four questions and they took turns giving responses of up to five minutes.

Alaska receives upward of 90 percent of its general fund revenue from the petroleum industry, but the trans-Alaska pipeline has been operating at less than one-third capacity as production diminishes in North Slope fields.

Berkowitz throughout the campaign has sounded an alarm that Parnell has not done enough to provide incentives to petroleum companies to drill new oil wells or take on challenging fields. Employment has dropped and rig counts have remained flat in Alaska while increasing elsewhere, Berkowitz said.

Investment certainly for companies, he said, could be created by negotiating the state's tax share field by field, project by project, for new or non-performing fields. He called it an Alaska version of a production-sharing contract.

"Industry shouldn't have to worry that once they begin production, the state take is going to increase," Berkowitz said. "You're locked in with a contract. A contract is constitutionally protected. It's beyond the reach of the Legislature to change it. That's incentive, a very strong signal that this state is going to be open for business."

Parnell questioned negotiating royalty rates on individual leases.

"It's a make-work project for lawyers," he said. "It is not a stable tax system."

The state was in litigation for more than a decade for royalty rates for first North Slope leases.

"What we need is a tax regime that applies across the board with incentives built into it for the kinds of investment that we want to see," he said.

Parnell said that he has taken steps already to attract investment. Earlier this year, he said, he proposed tax credits that would provide incentives for investment. The measures were applied to Cook Inlet but not the North Slope, he said.

His two-prong approach next term will be to "cap progressivity."

"As the price goes up, the level of the state's take is capped," Parnell said. "Two, I propose incentives for technically challenged fields, such as heavy oil."

Berkowitz dismissed Parnell's plan.

"We can't just tinker with ACES and cap progressivity at some unknown rate," he said.