A big fight is going on in Juneau, and it's coming to a head. The stockholders of three of the world's largest oil companies are trying to take money away from Alaskan citizens. So far, the governor and the House have helped the oil companies. On Monday, twenty members of the Alaska Senate will have to decide whose side they are on.
This takeaway/giveaway is Senate Bill 21, masquerading as an inducement for future development of Alaska oil resources. Nobody supporting the takeaway/giveaway even pretends any actual development by the oil companies is required. The oil companies don't have to do anything to take $1 billion a year away from Alaskans. Nothing. Nada. Zero. Cutting to the chase, SB 21 is the reality of billions of tax breaks married to the pipe dream of an unidentified future bliss, if not marriage or a kiss, then possibly holding hands.
The Department of Revenue's fiscal note calculates, without increased oil production, SB 21 will transfer more than $5 billion over the next five years alone from Alaskans to the stockholders of these oil companies. Starting in 2014, it will double from $625 million to $1.375 billion.
Obviously, it embarrasses the supporters of SB 21 to defend the takeaway/giveaway. Senator Pete Kelly has spoken the truth. I've known Senator Kelly and his brother Mike since Mike and I were on the University of Alaska Board of Regents and Pete was a lobbyist for our University — doing a fine job helping Mark Hamilton and Wendy Redmon get more money out of the Legislature. A few days ago, Senator Kelly acknowledged that Alaska is spending too much money. He and Mike were always candid. As much as I respect his candor, the policy of giving away billions, without getting a concrete commitment in return, is a disaster.
While I served in the Legislature between 1969 and 1978, every significant piece of oil legislation was considered in one form or another – from complete state ownership of the pipeline, to royalty bidding, right of way leasing, ad valorem taxation, severance taxation, cents per barrel and separate accounting income taxation. In the 1970s, we all wanted to get Alaska's fair share while insuring the development of Alaska's great resources. Even so, no one suggested we simply give money to the oil companies and merely hope they do something good with it.
The three oil companies did not like separate accounting either. Jay Hammond said that allowing the repeal of separate accounting in 1981 was his biggest mistake as governor. Alaska has lost tens of billions of dollars since then, and oil company stockholders laughed all the way to the bank.
In 1975-76 I was Senate President. We knew non-renewable resources would run out but Alaska's needs would not, so we created the Alaska Permanent Fund. If Senator Kelly is correct that we do not need the money now, and the companies won't commit to using the money for Alaska's benefit, I suggest we store excess revenue in the Permanent Fund. That way, it will be available to Alaskans at the point it's needed in the future. The stockholders may not like that, but the citizens of Alaska will and that's what's important. After all, we are not buying love, we are selling oil.
Chancy Croft served for almost a decade in the Alaska Legislature. He is currently an attorney at The Crofts Law Office.
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