Homer Alaska - Business

Story last updated at 4:16 PM on Tuesday, November 20, 2012

Oil taxes to be major issue during session

The Associated Press

JUNEAU -- Republicans are looking to capitalize on their newfound control of the Alaska Legislature, taking on oil taxes and raising social issues dear to more conservative members.

This month's elections helped dismantle the bipartisan coalition that has ruled the Senate since 2007 and resulted in Republicans controlling both legislative chambers -- and holding the governor's office -- for the first time since 2006.

Gov. Sean Parnell, who arguably stands to gain the most politically in this new environment with re-election or a possible U.S. Senate bid looming, said he was pleased with the results. GOP gains, particularly on the Senate side, show "Alaskans are concerned about the economy, and wanted to change some of the direction there," he said.

Parnell has not announced his plans for 2014 yet.

During the campaign, GOP leaders, including Parnell, took aim at Democratic members of the coalition, which they cast as obstructionist on issues including changes to Alaska's oil tax structure. In 2011, the coalition, comprised of 10 Democrats and six Republicans, refused to follow the House's lead and pass Parnell's tax-cut plan, with leaders saying they didn't have the information needed to make a sound policy call.

This year, the coalition failed to agree on a comprehensive overhaul. The Senate ultimately passed a proposal aimed at encouraging production from new fields but it died in the House. A bill Parnell introduced during special session was criticized by lawmakers in both parties and chambers before he pulled it.

Oil taxes top the agenda for the legislative session that begins in January, but some Republican lawmakers also expect social issues, like abortion and school choice, to be raised. Conservatives say these kinds of bills haven't gotten attention in the Senate in recent years.

"It's not an either, or," incoming Senate Majority Leader John Coghill, R-North Pole, said of oil taxes and social issues, adding: "I can't even think that way. To me, they're both important."

Other issues include education funding, energy costs and availability and deciding how much to spend or save. Outgoing Senate President Gary Stevens, R-Kodiak, said he's concerned about the growing divide between urban and rural lawmakers, and said ensuring rural Alaska has a voice at the decision-making table was a motivating factor in his decision to join the majority caucus.

Getting more oil into the trans-Alaska pipeline is a goal shared by state political leaders, but there are disagreement over how to do that.

Oil is Alaska's economic lifeblood but production has been declining. Parnell sees cutting taxes on the oil industry as a way to get them to invest and produce more. Democrats say the plans Parnell has put forth would be disastrous for Alaska's budget, with no guarantee of increased investment, and they fear having Republicans in charge could mean a rubber-stamping of his ideas.

"I hope it's a great big fight, because I think leadership wants to slam through something that will not be for the long-term benefit of the state," said incoming Sen. Berta Gardner, D-Anchorage, who expects to be part of the minority.

A Parnell spokeswoman said it's too early to say whether Parnell will submit an oil tax bill of his own or leave that to lawmakers. The administration had hired a consultant to advise it on oil taxes.

Incoming Senate President Charlie Huggins, R-Wasilla, said he's comfortable that whatever leaders ultimately come up with, "it will be supported by the Alaska people."

"I don't know anyone who supports a course of action that was described during the campaign as `giving away Alaska's money,'" Huggins said.

Coghill promised a "robust, deliberative" discussion on what it will take to increase oil flow and said an answer may not be found within the Legislature's scheduled 90 days.

"If we can get the answers in 90 days, good," he said. "If not, I think we keep going until we get those answers."

He said the Senate will work with Parnell, but made clear it is a separate entity.

Incoming House Majority Leader Lance Pruitt, R-Anchorage, said his caucus looks forward to working with the new Senate leadership and governor "to finally push Alaska forward."

He's hopeful for progress on oil taxes because, on the Senate side, "you have people who campaigned on getting a resolution to the issue."

Unknown yet is whether Senate leaders on the oil tax issue the past two years, namely, Sen. Bert Stedman, R-Sitka, will serve on either the Resources or Finance committees, the panels likely be involved in crafting a bill. Stedman, who co-chaired the Senate Finance Committee and also was an architect of the state capital budget, will chair Senate Health and Social Services.

"Time will tell if it's a deliberative process," he said. "If it's not, I think it will be readily apparent."

He and Stevens, coalition members who were critical of Parnell's oil tax approach, said agreement on oil taxes was not a condition of their joining the majority for the upcoming session.

"Every senator has a right to vote their conscience" on that, Stevens said.

Sen. Bill Wielechowski, D-Anchorage, attributes Democratic losses in the Senate to redistricting, not a referendum on the coalition's more cautious approach on oil taxes. Wielechowski, an ardent supporter of the current tax structure, hasn't been asked to join the majority.

"I certainly hope that we have a good dialogue on it (oil taxes) and don't just give the oil companies the key to the state treasury," he said. "I just don't think the will of the public is there, and I don't think the facts are there."