Parnell was unprepared to sell oil-tax reform bill

commentApril 28, 2012 

Well, it's over. A special legislative session called by Gov. Sean Parnell in part to reform Alaska's oil tax abomination is el croako -- done in by recalcitrant senators' greed and the governor's ineptitude.

It was a monumental defeat for Parnell and the second time in two years that desperately needed oil tax reform has died.

Last year, the House passed Parnell's House Bill 110 to fix Alaska's Clear and Equitable Share oil tax, but the Senate balked. Senators tut-tutted that they needed more information; that the measure was a "giveaway" to the oil industry; and that it lacked industry guarantees of more oil for less tax. A cynic would surmise they wanted to keep the money ACES generated.

You would think, given the Senate's last do-si-do, that Parnell this year would have been ready with truckloads of data. You would think he, himself, would have led the charge, demanding to testify, hectoring the media, twisting the screws to counter the blanket of union ads aimed at blocking reform. Forceful, savvy leadership -- always with a red line-item veto pen in his pocket. Smart guys up front. You would think that. You would be wrong.

Instead, the hope for oil tax reform wandered aimlessly in the Capitol's halls with a note pinned to its sweater until it stumbled into an April 19 hearing before the Senate Natural Resources Committee. It died as Revenue Commissioner Bryan Butcher tried to sell the reform. In the process he made a brilliant case for his dismissal. It was, by all accounts, as if Butcher were completely unprepared and speaking Klingon.

The commissioner's delivery was so clumsy, so contradictory, so embarrassing that Sen. Lesil McGuire, who describes herself as a tax-cut supporter and someone who sees herself aligned with the governor on oil taxes, ended up calling Parnell's legislation "half-baked." She even characterized the proceedings as "a waste of time and money that will end in a 'train wreck,' " the Fairbanks Daily News-Miner reported.

You can feel the train wreck coming, but the Senate continued to balk and Parnell folded, pulling the plug only eight days into the special session. Senators quickly blamed Parnell, saying he quit too soon, that there still was hope. Nobody believes that. The governor left the Senate -- or Alaska, if you like -- holding the short end of the stick.

So we'll go another year without reforming ACES, a gift from former Gov. Sarah Palin and oil industry-hating Democrats that steals about $2 billion from the companies' shareholders annually.

Thanks to ACES, North Slope production is down, investment is off and throughput in the trans-Alaska oil pipeline is drying to a dribble -- plummeting from more than 2 million barrels a day in the late 1980s to fewer than 600,000 per day now. It is plummeting at about 6 percent a year. All that is incontrovertible.

Skyrocketing oil prices have saved Alaska's government so far -- keeping its hands out of your pockets. Those prices -- and ACES' punitive, progressive taxes -- are making state government porcine. A $12 billion budget overall. A $3 billion capital budget. Surpluses every year.

Who in government willingly would give that up? Listening to a senator dispute the painfully obvious -- that drilling in North Dakota costs less than in Alaska -- tells you how far they were willing to stretch to ensure ACES remained intact. That, even if nobody will admit it, is the issue. The real debate about tax reform centers on government and money.

Some see government as taxing to pay for needs; others see it as taxing to pay for wants. The current oil tax -- and resistance to reform -- is a product of the latter view, pervasive among state senators who came up with as many reasons to dodge tax reform as there are rabbits in a magician's hat -- and why not? They have unions to feed, a government to pamper and more cash than they can spend.

For this year, because of the Parnell administration's failures, it appears they again have won; Alaska has lost unless the governor calls yet another special session.

It is not the end. If oil prices hold, if the industry does not just say "enough is enough," if redistricting allows us to rid ourselves of a coalition that saddles a conservative state with a liberal-led Senate, Parnell will get another shot.

With luck, he will do better next time.


Paul Jenkins is editor of the AnchorageDailyPlanet.com.

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