It appears something is happening in the endless, grinding effort to amend the Alaska's Clear and Equitable Share oil tax abomination. Or not.
The Senate has the ball and what is going to happen when it finishes producing its answer to the North Slope oil tax problem will be pivotal to Alaska's future.
The Senate's ACES reform measure is expected in the Resources Committee by Friday and the panel plans to send it to the House with 30 days left in the session.
Gov. Sean Parnell's House Bill 110, his proposed fixes for ACES, passed the House last year but is kaput in the Senate Labor and Finance Committee, where it will not even get a decent funeral. Sen. Gary Stevens, R-Kodiak, says the Senate's effort is the true path to oil tax nirvana.
Parnell, a latecomer to the oil tax fight, had wanted major changes to ACES, especially the ridiculous progressive feature that puts Alaska's North Slope behind Outer Slobovia as a place for the oil industry to do business. ACES, when oil prices are high, contributes to one of the highest marginal taxes in the world -- above 90 percent. That has caused problems.
North Slope production is down; investment is down; throughput in the trans-Alaska oil pipeline -- which pays for 90 percent of state spending and fattens up the Permanent Fund -- continues to dry up at about 6 percent a year. It is running at about 600,000 barrels daily, slightly less than one-third capacity. Suddenly, there is concern about future revenues.
Parnell, who unfortunately rolled out his reform bill amateurishly, leaving unanswered questions and conflicting data, said he wants to boost pipeline throughput to 1 million barrels daily. In 2010, as a candidate for re-election, Parnell rejected the need for oil tax reform but by 2011 became a true believer.
Despite Parnell's best efforts, the Senate Bipartisan Coalition last year balked at fixing ACES, claiming it wanted more information. More likely it wanted another fat capital budget stoked with ACES tax money plundered from the North Slope companies' shareholders.
During last year's fracas, Parnell slapped our august upper legislative body as a "do-nothing Senate" and hinted at capital budget vetoes for recalcitrant senators, triggering near-panic. That was the fun part. From there, it careened downhill.
The tax issue stalled, splashing all the water out of the pond, but this year seems somehow different. There is movement, of sorts.
Senate Resources will send the bill to Senate Finance, the Senate floor and the House. Among other things, it will address "progressivity," but differently than HB110.
If the Senate measure radically differs from the House's -- and it could -- anything goes. The House could choke down the Senate version, which is unlikely. It could make changes, hoping for a conference committee compromise. It could agree to a small chunk of the Senate legislation this year and hope for a better deal later. It could go for a special session.
Or it could use the nuclear option and flatly reject the Senate measure, letting the oil tax issue die for this session -- leaving Alaska with a Palinesque mess that could further erode its fiscal future. The attraction of that tack for the House would be that some Democrats in the Senate Bipartisan Working Group, which blocked ACES reform, likely -- and thankfully -- will be tossed out in the next election, thanks to redistricting.
Could it be done? Could the House turn its back? Would Alaskans stand for it? The sad part is that most would not squawk, knowing nothing of ACES, and could not care less -- despite the issue's importance and pressing urgency. Why should they? The state is socking away "surplus" revenue. The unions have multibillion-dollar, porky capital budgets to play with. Gas prices are rocking along near $4 a gallon. The average person sees no reason to give oil companies a tax cut and is blind to the black clouds on the horizon.
Redistricting is the game-changer. Huge money wants to demolish the Senate bipartisan coalition -- unless a squishy judge someplace delays redistricting's implementation.
With new voting boundaries, the House and Senate could have Republican majorities and simply come back next January for the whole ACES enchilada. The question is: Would the gamble be worth it? Politically? Economically?
In large measure, the nature of the Senate's offering and the House's mood will determine the outcome.
Something will happen. Or not.
Paul Jenkins is editor of the AnchorageDailyPlanet.com.