As state senators plow through their own version of a new oil tax system for Alaska, the debate is heating up inside and outside the Capitol.
A new, union-backed group called Stand Up, Alaska has jumped in with TV and radio ads opposing oil tax cuts pushed by Gov. Sean Parnell, saying "it's our oil" and "no blank checks." A state senator has released a poll that found more Alaskans think oil taxes are too low or just right compared with those who think taxes are too high.
On the other side, three organizations -- an oil industry group, a business group and Conoco Phillips -- all are airing ads backing big tax cuts. Business leaders are planning a rally next week in Anchorage. They use the same lingo as Parnell, arguing that "meaningful tax reform" is essential to spurring more oil production and stemming the decline in oil flowing down the trans-Alaska pipeline.
Last year, the governor-backed House Bill 110 passed the House but stalled in the Senate, which is working on its own measure, Senate Bill 192. Senators say the governor's bill would cost the state $1.8 billion a year in lost tax revenues while their proposal would provide more modest cuts, roughly $250 million a year.
The Parnell administration counters the Senate bill is the real tax giveaway because it would lower the tax on profits, but not enough to boost investment and ultimately oil production. And with more production, there would be more oil to tax.
PARNELL SCOLDS SENATOR
The governor seems to have lost his patience with the Senate. Last week, he fired off a sharply worded 2 1/2-page letter to Sen. Bert Stedman, co-chairman of the Senate Finance Committee, taking issue with a Thursday speech Stedman gave to the Juneau Chamber of Commerce.
"You crowed that HB 110, my bill proposing meaningful tax reform, is 'dead on arrival,' " Parnell wrote. The senator's claim that the Senate measure would spur investment "rings hollow where NO new investment commitments have been made if SB 192 passes."
A number of senators are proud of the work they've done so far on their bill, the governor said.
"But like a group of hens in the barnyard clucking together over a new egg that has taken more than a year to lay, the egg is shiny on the outside, and empty on the inside," Parnell wrote.
Stedman, a Republican from Sitka, took the governor's missive in stride.
"He called me and told me he was sending me a love letter," Stedman said in an interview Monday, chuckling.
He said he wasn't attacking the governor but rather wanted to lay out tax issues for the Chamber and emphasize how members should avoid alarmist and misleading messages. For instance, lawmakers last year were diverted by fears that the oil pipeline might shut down within a dozen years if the oil volume dropped too low -- a baseless rumor, Stedman said.
Parnell has set a goal of increasing North Slope production to one million barrels of oil a day, a huge boost over the current level, which has dropped below 600,000 barrels a day. Production has been falling since the peak of two million barrels a day back in 1988.
Stedman calls the one-million-barrel goal "a good bumper sticker." He said Monday the goal is not realistic for oil produced from leases on state lands. That state oil generates the oil revenue that the state relies on for schools, roads, troopers and other essentials. He hopes to first stabilize production at 600,000 barrels, and gradually ramp that up to 700,000.
As to the Senate's approach, Stedman said the Finance Committee has been working on the tax issue for two years, and that he expects some fairly significant changes in the bill now before the panel that should do more to lure investment.
"We're going full speed," he said.
BATTLE FOR THE PEOPLE
Another part of the oil tax fight consumes the airwaves.
A couple of months ago, various union leaders formed their own group, Stand Up Alaska, to counter the pro-tax-cut message from businesses and the oil industry, said Vince Beltrami, president of Alaska AFL-CIO. The union is one of the effort's leaders. Six other unions have signed on, including the Alaska Public Employees Association, NEA Alaska, and IBEW Local 1547. The nonprofit Alaska Public Interest Research Group and the grass-roots Alaska United Against the Oil Tax Giveaway also are on board, as are dozens of individuals.
The group is worried that the state will find itself in a financial hole if oil taxes are severely cut with no guarantee of new oil production and new revenue, Beltrami said. Public employees could lose their jobs. Government contracts with private businesses could shrink. Since oil taxes were raised in 2007 during the Palin administration, the state has spent $3 billion or so a year on capital budgets alone, he said.
Stand Up Alaska started airing its ads last month. The Legislature must hold the "multinational oil companies" accountable, the group says in one ad. "No $2 billion blank checks or bailouts." It urges people to "call Juneau."
Under the governor's bill, the state's healthy savings account could be drained in just a few years, Beltrami said.
"We just couldn't get behind something like that," he said.
The Senate's methodical approach makes better sense, he said.
That runs opposite to the view of the oil industry and business leaders. Parnell says the group just wants to lock up Alaska's wealth.
A year ago, a group of prominent Alaskans injected itself into the oil tax debate. The Make Alaska Competitive Coalition includes two former governors, Native corporation leaders, business owners and a Teamsters leader along with hundreds of individuals. Its ads, which are still running, convey a grim message of Alaska stagnating under high taxes while other places, like North Dakota, are booming.
"The negative side of that is our folks are just fearful that the status quo or a watered down bill like (the Senate's) 192 is not going to change that investment," said Jim Jansen, chairman of the Alaska transportation company Lynden Inc. and co-chair of the Make Alaska Competitive Coalition.
Teamsters Local 959, while part of the AFL-CIO, has branched off for the oil tax debate because its members believe a strong oil industry means more jobs.
"Really, for our organization it's about the governor and Legislature hitting the sweet spot on the tax rate," Teamsters leader Rick Boyles said in an email.
The Make Alaska Competitive doesn't accept any money from oil companies, Jansen said. But neither the business coalition nor the Stand Up group were willing to disclose what they're spending and where the money is coming from.
Eighteen groups including the Alaska Bankers Association, the Alaska Crab Coalition and the Alaska Cruise Association have joined to sponsor a March 28 "Rally for Reform" luncheon at the Dena'ina Center. Sponsors hope the event draws 1,000 people supporting big tax changes. Parnell plans to be there. People can sign up through the Resource Development Council, which is among the sponsors.
"It is our oil but at the same time we can either tax more now and have less oil in the future or tax less now and have more oil in the future," said Kara Moriarty, executive director of the Alaska Oil and Gas Association, which is running pro-tax-change ads of its own. One features Pioneer Natural Resources Co., an independent explorer on Alaska's North Slope.
COMPETING POLLS
Along with dueling ads, Alaskans also can wade through dueling public opinion polls.
State Sen. Hollis French, D-Anchorage, used leftover campaign funds to commission a poll earlier this month by Hays Research Group of about 500 registered voters. Asked whether oil taxes were too high, too low, or about right, 30 percent said too high, 22 percent said too low and 28 percent said they were about right. The rest didn't know or wouldn't say.
But a January poll by Hellenthal & Associates found that 59 percent backed the governor's oil tax changes. And the pro-tax-cut House GOP-led majority is presenting results from yet another poll, by Dittman Research & Communications Corp., on Tuesday.
Public testimony on oil taxes has largely been running in favor of the governor's proposal or something like it. Senators said many who testified are organized oil industry employees. The testimony is not as powerful as it would be if people were coming forward on their own, Stedman said.
French said that's why he commissioned his own poll, to find out what the public really thinks.
Reach Lisa Demer at ldemer@adn.com or 257-4390.
By LISA DEMER
Anchorage Daily News