AD Main Menu

John Havelock: Alaskans face choice of self-rule or corporate control

Many years ago, the Alaska legislature insisted on setting statutory requirements for "local hire" by the oil industry. Notwithstanding the federal constitution's prohibition of discriminating against interstate commerce, this insistence was nearly unanimous, excepting a few fastidious lawyers. Now the governor and his legislative supporters are trying to repeal laws that require members of government boards to be Alaska residents so that he may hire retired Exxon executives from Outside for regulatory positions.

Apart from the obvious questions about who gave the governor the name of these nominees and who in the industry may have vetted their qualifications, one can ask: has the Alaskan electorate changed that much? Apparently the legislative supporters of outside hire think their reelection prospects are not endangered.

Considered with other machinations, such as firing a board member who supported the court's affirmation of a high value for the TAPS line, it is obvious to the point of a declaration that the governor is trying to help the TAPS owners get a reduced value for the TAPS line for property tax purposes.

The oil and gas production facilities property tax at issue is a revenue sharing measure. Municipalities on the line get a handsome share of tax revenue from the TAPS evaluation. If the value drops substantially, the obvious purpose of the revamping of the committee, property taxes in Barrow, Fairbanks and Valdez must shoot up to replace the lost revenue.

How can anyone owning property in these revenue sharing communities possibly vote to retain any elected official pushing this plan? Yet legislators supporting board restructuring and consequential reduced taxes on TAPS appear unconcerned about increased taxation of constituents. Apparently a grass-roots spirit of self-sacrifice in response to the appeal for lower taxes has taken hold.

It has long been known that production at Prudhoe and related fields is in inevitable decline. Production slopes out like the profile of a snail, facing right, with a very long neck. As production slopes down and along that neck, new technologies are used and more money is invested to get the oil out, meaning more jobs. The split of profits with the state does not control this development. There are plenty of dodges to hide profits from taxes anyway, as indicated in the billions of dollars that have been paid in settlement of past state claims for taxes on unreported profits.

That neck of continuing production gets very long. Cook Inlet was supposed to expire decades ago. The state leases which govern North Slope companies require production if there are profits, without regard to their size. The tax picture plays little to no role in this description of slow decline over many years with increased costs and continued profitability.

The big three multinationals, fighting to preserve the billions in tax reductions enacted last session, have advertised "new" development projects that were already in the works. Some people apparently believe that these projects, which will help to sustain the level of production, are a result of the billions in tax breaks handed out last year. Maybe many legislators do also. That doesn't make it so to the tune of billions in surrendered revenue.

A legislator with a predilection to favor a proposal, whether it offers enhanced oil production, the excitement of the most expensive gas pipeline in the world, a colossal hydro dam or a giant bridge, is going to listen to "experts" who support that pipedream and play deaf to the skeptics, especially homegrown. Alaska has a small cadre of university experts, particularly at ISER, but their advice is run over by project enthusiasm. One result is topsy-turvy politics -- the Democrats as fiscal conservatives, Republicans as big spenders.

The basic question was posed by Bob Bartlett to the state Constitutional Convention. All in attendance were aware of the Territory's history of dominance, first by the great mining companies, then by the Seattle-based canned salmon industry. Bartlett pled for a state run by and for its people. What is it to be? Is Alaska run by multi-national oil companies or are its people self-governing?

As attorney general, John Havelock negotiated oil property tax policies for Gov. Bill Egan's administration, later serving on various policy commissions for governors Hammond, Hickel and Knowles.



By JOHN HAVELOCK