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Oil tax cut repeal unites old political foes

Jenny NeymanRedoubt Reporter

To those who follow the central Kenai Peninsula political scene, the following could sound like the setup for a bit of local humor, or at the very least be cause of a wryly raised eyebrow: Dick Waisanen, Tom Wagoner, George Pierce and Bob Shavelson walk up to a bar or meet up at the post office, and …

The humor is predicated on the premise that while these folks share a reputation of outspoken political involvement, they do so from often widely divergent points on the political spectrum.
Waisanen, of Soldotna, has twice run as a Democrat for a Kenai-Soldotna seat in the Alaska House of Representatives, supportive of many party platforms, such as wanting to increase state spending on education and development of alternative energy projects in the state. Wagoner, a Republican, was Kenai’s senator from 2003 to 2012. Pierce, of Kasilof, with undeclared voting registration, has been a proponent of fiscal conservatism, limited government and having term limits for elected officials on a state and local level. He’s been particularly outspoken lately against the assembly’s passage of expanded protections — through rules and regulations — for lands bordering anadromous streams.
Shavelson, of Homer, has been a vociferous leader in Cook Inlet’s environmental conservation community, in 1996 becoming executive director of Cook InletKeeper, which Pierce has lambasted in his public testimonies as a “special interest group” in the anadromous streams issue.


What do they have in common, other than being regulars in the Peninsula’s political fray?

Since May 22 they, and many others in the state representing a wide continuum of political persuasions, have all been on the same side of an issue, united behind one banner — or clipboard, rather — in support of a recall initiative targeting repeal of the bill recently passed by the Alaska Legislature that revamped the state’s structure of taxes and incentives for the oil industry.


“This probably is a first in the fact that the issue itself is so important to people of all different walks of life and different political persuasions that they’re looking at this and saying, ‘This is an Alaska issue, this is something for the state. If this is allowed to continue, the state is going to suffer dramatically,” Waisanen said.
He and his wife, Sharon, are two of about 30 people on the peninsula who volunteered to gather signatures to get a repeal question on the next statewide election ballot.

Does SB 21 benefit all Alaskans?

The list reads like the public testimony queue of people weighing in on an issue before the assembly, or a list of frequent authors of letters to the editor. Many of the names are political activists seldom on the same side of an issue.
 “This is not identified as a Democrat issue or a liberal issue. I think it’s important enough that we just have to get on-board — I don’t want to say against the oil companies — it’s just against their philosophy of trying to get every dollar they can out of the product they’re working with, and we just say, ‘Hey, the oil belongs to the state of Alaska. The constitution says the government has to work the resources to the best benefit of all Alaskans,’ and this legislature has not done that,” Waisanen said.


The Waisanens, active in the local Democrat caucus, took an initiative book to Wagoner, Kenai’s Republican former senator, to sign. “We’re on the same side of an issue, but probably for entirely different reasons,” Wagoner said of his willingness to sign the petition. 
He was in the legislature when the previous tax structure, Alaska’s Clear and Equitable Share, was debated and enacted and had proposed his own elements of the oil tax structure. Both ACES and SB 21 are meant to buck the trend of decreasing oil production in the state — as the state’s budget largely is fueled by royalties from development of its oil and gas resources — by offering exploration and development companies incentives to search for and produce more oil, while still generating profits for state coffers. While ACES offered incentives to smaller companies to get them more involved in exploration and development, as well as a progressive tax structure that garnered the state a higher percentage of revenues as oil prices rose, SB 21 scaled back that progressivity in the tax rate, removed the incentive focus on smaller companies and seeks to make Alaska more competitive for oil and gas investment in the global marketplace.

“I’m not totally against a change in the tax structure, because I thought the progressivity was about two points too high, but that’s about the only place I would have been willing to go,” Wagoner said. “What has happened now with the new law, to the best of my knowledge, is, number one, the credits that were incentives to have small companies explore have been eliminated, and that turns basic control back over to the three majors again. And that’s not the way to get more oil production underway.”

One of the recurrent concerns voiced about SB 21 is that it scales back tax revenues for the state while offering incentives to companies up front on investments, without requiring a guarantee that those investments result in increased production.
“They (oil companies) have said they can increase production. Well, why haven’t they? Production’s been declining since its peak years ago. The governor wants to get a million barrels back in the pipeline, and that’s very commendable, but I would just like to see it leveled off as far as the reduction in barrels going through the pipeline first,” Wagoner said.


He would rather have seen — and proposed when he was in the legislature — a tax structure that offered a tax break once production had been demonstrated, rather than as a carrot to encourage development. “It would have forgiven the payment to the state for the royalty oil of a new well that is put into production until the company pays itself back the cost of exploration, drilling, equipment and everything related to bringing the well into production. In other words, 100 percent of those costs would be reimbursable, but to get anything from the state, instead of these credits, it would have had to be done as a reimbursement for production,” Wagoner said.
 Gov. Sean Parnell and others in favor of SB 21 point out the trend of declining oil production in the state and a need to make Alaska more competitive in the worldwide marketplace. Companies have particularly rankled at the progressive tax structure under ACES, and supporters of SB 21 point out that penalizing companies for making money in Alaska is philosophically opposed to wanting them to invest more in the state. Parnell has touted recent announcements of new oil projects in the state, and says that the new tax structure will result in even more over time. Opponents question whether the recently announced new developments can fairly be attributed to the recently revised tax structure, since projects don’t just happen overnight, what with permitting requirements.
“The new tax structure had absolutely nothing to do with that. They had already made the deal,” Wagoner said. Pierce said he, too, takes issue with a lack of guarantees that tax breaks will result in increased production.

“I’m for production but, by golly, get something where you’re going to hire more Alaskans, or have a deadline — if you don’t produce before a certain time you don’t get that tax break. Or they could have said, ‘You get that tax break after you start producing, not before,’” he said. He also has an increasing distrust of politicians these days, at the local and statewide level, and sees SB 21 as further evidence of elected officials ignoring the will of the people.


“Usually when they’re (legislators) going to give someone a tax incentive they debate it for one or two sessions. But this year it seems to me with this redistricting it was all a big setup to get more oilfield politicians elected to get this thing passed. I mean, that had to be a record time to pass a big tax initiative like that, in my opinion, and they didn’t get anything in return. What kind of a commitment did we get?” Pierce said.
Peninsula signature gatherers in the repeal effort are volunteers, not being paid to stand in front of post offices or roam the crowds at community events.


Final push before deadline

Waisanen said it’s difficult to tell so far how many signatures have been collected. In order for the petition to be certified and the question to make it to the ballot, signatures must be gathered from 7 percent of the vote tally in the last election from 30 of the 40 voting districts. That’s more than 30,000 required statewide, and about 533 from Waisanen’s District 29, covering the Kenai-Soldotna area. But it’s hard to keep a running tally. Any registered Alaska voter can sign anywhere in the state, so not all the signatures gathered in any one spot count to that district’s total.


“Yesterday I had one signature from Big Lake, one from Eagle River, one from Fairbanks, one from Wasilla, so I’m hoping people in other areas of the state are getting people from Kenai. We’re noticing a lot more people now at this point in the signature drive that have already signed. I think we’re closing in right now,” Waisanen said.


Waisanen added that he’s been surprised by the across-the-spectrum support this issue has garnered. He’s certainly had his share of people not wanting to sign the petition, those strongly in support of SB 21 as a way to encourage investment in the state, increase oil production and create jobs. But he said he’s also had Republicans sign the petition, and even oil company employees. Signature gatherers hope to overshoot the required number of signatures in case some aren’t accepted by the Division of Elections. Someone might write their name illegibly or make a mistake in their address or ID number. Waisanen said he hopes the Division of Elections is fair in evaluating the validity of signatures, but wants to make sure there are plenty of extras just in case.

“The Division of Elections will look at it and they figure if the intent of the person was to sign it correctly, and if they have a numerical identifier, they will most likely verify the person. But there’s all these different things (reasons why a signature might be invalidated), that’s why we want to have a good extra margin to make sure we have enough signatures. I’m hoping we’re quite close to it right now. It’s real tough to know where we are but, overall, I think we’re pretty close statewide to closing in on 30,000 signatures.” On the peninsula, signatures will continue to be gathered until July 6, with a big final push at Fourth of July events. Then volunteers will have their books notarized and sent to petition headquarters in Anchorage in order to be turned into the state by the July 13 deadline.

“It seems to me like there’s more than just a select few people concerned about this — you’ve got a lot of big wigs signed on to this,” Pierce said. “A lot of people are concerned about what happened, or they wouldn’t have gone out and tried to get signatures.”

Jenny Neyman is editor of the Redoubt Reporter, which covers news on the Kenai Peninsula. Used with permission.