Foes of oil-tax cuts boost Senate coalition

Anchorage Daily NewsJuly 22, 2012 

With the governor and conservative Republicans targeting members of the bipartisan coalition that governs the Alaska Senate, the public interest group Backbone is stirring to life again to defend those senators in the conflict over oil taxes.

As the direct successors to the late Gov. Wally Hickel's notion of the "owner state," the Republicans and Democrats in Backbone say Alaskans should be thanking the coalition for resisting Gov. Sean Parnell's big oil-tax cuts, not voting its members out of office.

"We're pro-Alaskans who stand up for Alaska first," said Malcolm Roberts, a consultant and Hickel's long-term aide. The campaign to back the coalition of 10 Democrats and six Republicans "is going to be very positive in support of their strength and courage in standing up to the pressures in the past session."

The tax cuts, amounting to about $2 billion a year, were passed in the Republican-controlled House but died twice in the Senate, the second time in the special session. Parnell said the cuts were necessary to induce industry to drill for more oil on the North Slope, but he never got a commitment from the major companies that they would increase production to make up for the lost revenue.

The Senate, after hearing from independent consultants, rejected the cuts as a giveaway to industry. It proposed more modest tax reductions, many tied to production increases, but that counter-proposal was rejected by the governor and the House.

Backbone members met Wednesday in the Anchorage law office of Bill Walker, a leading advocate of a large diameter, "all-Alaska" gas line, who lost to Parnell in the 2010 Republican primary. After they approved an announcement of the first public event in their campaign -- a news conference next week featuring past and current state leaders -- they discussed their plans with a Daily News reporter.

Walker himself missed the meeting. Roberts said he was out of the office and preoccupied with his daughter's ascent of Mount McKinley.

But as other members sat around Walker's conference table, David Gottstein, an investment advisor and a founder of Backbone, said the 2012 election would be "a historic vote" because of the implications for the state's future.

10-10 SPLIT IN SENATE

Most of the state treasury is built on oil revenues. Giving billions back to industry on a "highly speculative" bet that it would lead to more drilling would be a big mistake, Gottstein said.

The oil producers and the support companies that depend on contracts from the industry have "overly influenced the governor's mansion, they have overly influenced the House of Representatives, and the last place that they haven't overly influenced is the Senate because of the bipartisan working group," Gottstein said. "Alaskans who are in favor of maximizing the wealth to the benefit of the residents should be very interested in not having the Senate be the final piece in the legislative and executive process to be overly influenced by the oil industry."

Roberts said Alaskans should also be happy that the Senate majority killed off a House-passed bill to promote construction of a small-diameter gas line from the North Slope to Southcentral.

"That was a really weak concept," Roberts said.

The legislation would have led to expensive gas bills for local residents because of its small scale, Roberts said. The only pipeline that makes sense is one that would have the capacity to meet the massive, long-term needs of post-nuclear Japan through a liquefaction plant at tidewater in Alaska, he said.

For the last four years, Alaska voters have sent 10 Democrats and 10 Republicans to the 20-member Senate. Traditionally, the Legislature's two chambers build governing coalitions across both parties, with significant horse trading over leadership positions and key committee assignments.

The House's coalition has been overwhelmingly Republican, with four rural Democrats serving in minor capacities.

The Senate president and majority leader are Republicans, while Democrats have held key committee chairmanships. Finance, politically the most important committee, has two co-chairman, one Republican, the other Democrat.

The split has meant many compromises "to work from the middle," as Sen. Hollis French, D-Anchorage, described it.

But that has given campaign fodder to ideological conservative purists from the Tea Party, several of whom are challenging Republicans who joined the coalition. One incumbent facing such a Tea Party opponent, Sen. Linda Menard, R-Wasilla, attended the Backbone meeting Wednesday.

Other Republicans like Bob Roses and Bob Bell, running for seats held by incumbent Democrats Bill Wielechowski and French, are fundraising among supporters of the oil-tax cuts.

'BIPARTISAN IN NAME ONLY'

On July 14, Parnell added his voice, telling the Associated Press that he too wanted to break up the Senate coalition.

"I'm not opposing the bipartisan coalition, I'm opposing Democratic control of the Senate," Parnell said in a phone interview Saturday from Fairbanks. "It's bipartisan in name only. That's a facade to make the public think that's what it is."

Parnell said it wasn't just oil taxes that concerned him -- "it's also about the spending side of government." Parnell said he wants a Legislature he wouldn't have to "fight over restraints" in spending, and to him that means reducing the number of Democrats.

"It's about growing our economy -- yes, through lower taxes, and also yes, through restraining our government spending," Parnell said.

Backbone was started in 1999 by Hickel, Gottstein, Walker and others when a global merger of BP and Atlantic Richfield would have given BP control of some 75 percent of North Slope production and the trans-Alaska pipeline. Gov. Tony Knowles didn't object to BP's near-monopoly position, so Backbone stepped in and asked the Federal Trade Commission to intervene. It did, and the result was that BP sold off the former Arco holdings on the North Slope to Phillips Petroleum, now Conoco Phillips.

Hickel died in 2010. His widow, Ermalee, plans to attend the press conference next week.

Since the BP merger, Backbone has occasionally weighed in on other issues, such as objecting to the proposed TransCanada gas pipeline from the North Slope through Alberta, but has also gone through dormant periods.

"We're saddling up again," Gottstein said.

Gottstein described Backbone as a kind of citizen's militia with no formal organization. Even as it supports the Senate coalition, it doesn't plan to raise money for individual legislators, though Backbone members most likely will, he said.

"We don't have members, we don't have bylaws, we're not a 501(c)(3), we're not a PAC," said Roberts. "It's just citizens who care about Alaska."

The group around the table Wednesday included Vince Beltrami, the president of the Alaska AFL-CIO; Barbara Gazaway, vice chair of the state Democratic Party; anti-corruption activist and one-time Republican legislator Ray Metcalfe; and retired Teamster reformer Mike Kenny, who ousted Teamster Local 959 head Jerry Hood in 2003 but then was voted out himself in 2006.

Gottstein, a third-generation member of the former wholesale and retail grocery clan, said that with few exceptions, Alaska doesn't have a lot of home-grown wealth and "political capital and financial capital" to counteract the Outside industries that come for its resources.

"Alaska has a history of being overwhelmed -- with the fishing industry, the timber industry, the mining industry," he said. Backbone is a response, he said.

"When things happen in the Alaska political process where it appears that the oil industry is overreaching, and has been successful or could be successful at it, Backbone has been a place for people who want to get involved with like-minded people ... to see if there's an effective way to level the playing field so people can make good choices and so Alaska can be properly represented."


Reach Richard Mauer at rmauer@adn.com or 257-4345.

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