Halcro, Wielechowski have high-octane debate over oil taxes

rmauer@adn.comFebruary 25, 2013 

After failing to get Gov. Sean Parnell to debate, Sen. Bill Wielechowski landed another advocate for lowering oil taxes, Anchorage Chamber of Commerce president Andrew Halcro, for a spirited noon-time matchup Monday.

Halcro, a one-time independent candidate for governor and former Republican legislator, and Wielechowski, a Democratic leader in the push-back against Parnell's oil-tax cuts, dueled facts and policy before a largely business-friendly crowd at a Chamber luncheon in Anchorage.

Aside for some name-calling by Halcro -- perhaps a spillover from his other career as a blogger and AM-radio talk-show host -- the debate was largely civil but energized. Halcro characterized Wielechowski as an opponent of oil-company profits, though Wielechowski, a labor attorney with the IBEW, never said that during the debate and denied he held that belief.

The current tax structure, Alaska's Clear and Equitable Share, or ACES, became law in 2007 when Gov. Sarah Palin was in her most populist phase. The measure had strong bipartisan support in the Legislature that year, following the 2006 Veco-fueled corruption scandal over another oil-tax bill.

But Parnell, who supported ACES as Palin's lieutenant governor, has been saying now that taxes are so high that oil companies are directing their investments elsewhere, leading to a sharper production decline than forecasted for Prudhoe Bay and other aging, but still-rich fields.

It takes continued drilling and expensive equipment and technology to keep fields productive, and the industry and Parnell say the return on investments in Alaska just isn't high enough because of taxes. That point is under dispute, with a large faction of Democrats and some Republicans in the Legislature saying ACES needs tinkering, but not wholesale abandonment.

While the debate Monday was about oil taxes, the sold-out banquet ballroom at the Dena'ina Convention Center had the air of a warm-up for the 2014 gubernatorial race. Halcro, since getting about 10 percent of the vote as an independent in 2006 against Palin, has not ventured far from politics, and Wielechowski, a strong vote-getter, is frequently cited as being on the short list of Democratic possibilities.

For Halcro, the debate was an "I told you so" opportunity.

"This was a train wreck waiting to happen and many of us predicted it in November of 2007 when the Legislature, in a fit of emotion and anger and just plain get-eveness, jacked up tax rates over three times," Halcro told the big lunch-time crowd. "The idea was that ACES was going to purify the previous tax structure, PPT, which was passed the year prior -- under interesting circumstances."

Wielechowski, citing experts who have testified before the Legislature and state data, said that oil production rates in the United States, including Alaska, doesn't appear to be linked to production taxes. That was the experience in Alaska through 2006, he said.

"You would think that if this philosophy worked -- the philosophy of low taxes or zero taxes -- we would've seen a boom in production during that time. Here's what we found: between 1988 and 2006, we had a production decline, we went from 2 million barrels to 750,000 barrels. No one can blame that on ACES, because it didn't go into effect until November 2007."

Under ACES, he said, state records and corporate filings show that the North Slope is flourishing.

"We've never had more investment than we have on the North Slope today," Wielechowski said. "We've never had more people working on the North Slope than we have today -- all-time highs in jobs. Business is booming. I know this is contrary to what you're hearing out there, but let's look at the facts."

Halcro countered that much of the work is in maintenance, not capital projects that produce more oil. And he said the growth in jobs and investment was not nearly as strong as Wielechowski said.

The real number to look at, he suggested, was production -- and it's 100,000 barrels behind what was predicted at the time ACES passed, Halcro said.

"Just remember this: decline is still happening," Halcro said. "The people up on the North Slope are not looking at finding new oil, they are maintaining the facilities. ACES has not worked."

Wielechowski said he wants to see production rise as well, but opposes tax cuts without a direct link to more oil.

"I wouldn't do billions of dollars in tax breaks with no strings attached," he said. "You tie tax breaks to more investment."

Halcro said such a carrot and stick aren't necessary. The state, as a sovereign power, can always increase taxes again if tax breaks don't result in more oil, he said.

Both men mainly spoke without notes, projecting slides with data to document their facts. The subject is second nature to both. Halcro has been speaking and writing against ACES for years, while Wielechowski supported it in the Legislature and until this year, when Senate Democrats found themselves in a tiny minority, played a significant role on committees dealing with the tax and oil production.

Two weekends ago, after Parnell declined several invitations to debate, Wielechowski held a public "one-man debate" in Anchorage. After his debate with Halcro, he traveled to Fairbanks for a two-hour public presentation Monday night entitled, "Debunking Myths about Oil Taxes."

 

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

 

 

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