Some folks involved in the roiling debate on oil taxes seem to presume the three equal branches of government in Alaska are: the executive branch; the North Slope multi-nationals; and the legislative branch.
     Worse, they assume the least of the three equal partners should be the legislature. How else to explain the way the governor and the producers have their fingers on the scale as we debate changing the oil and gas tax recipe for Alaska?
     The scales tilt toward them because the legislature is debating new oil and gas taxes with half the information available to the governor and the three multi-national oil conglomerates he's negotiating a gas line deal with. We know what they want future oil taxes to be and we know they want to roll the new taxes into a gas line contract they all say they've agreed to. 
     But the governor also knows what's in his secret gas line deal he's duct taping the oil taxes to. So does Exxon. So does Conoco. So does BP. But nobody in the legislature knows zip about what's in the secret gas line deal. The legislature, supposedly an equal partner, is supposed to just trust them--agree to an oil tax deal so they can sign a gas line deal they won't show us. That's not a game of Texas Hold 'Em--that's more like a Texas holdup.
     The governor may disagree with my poker/holdup comparison but his actions, and then his words at a press conference this week make me even more comfortable with my analogy. Several weeks ago, the governor delayed his debut of an oil tax plan for the duration of a long weekend when he met with oil executives who jetted in for a private screening. Coincidentally or not, he then ratcheted back his oil and gas tax rates and added in some hundred million dollar sweeteners for the industry before unveiling his tax plans to Alaskans.
     Then, at a verrrrry interesting press conference Wednesday morning, he said he and the three multi-national oil and gas conglomerates agreed to a "package deal" on oil taxes and the gas pipeline. The governor also said, according to the Fairbanks Daily News-Miner, "the [gas pipeline] contract specifies the tax rate and if it's changed by the legislature it cancels the contract. There's a point where this deal breaks apart." 
     He knows the full deal and oil execs know the full deal. I think it's a big deal he and the oilies won't share the full deal. Texas Hold 'Em or Texas holdup?
     Here's the unsubtle message to Alaskans--including the Alaskans in the legislature representing all other Alaskans. He wants the legislature to nod in agreement with his oil and gas tax regime while he and the oil companies hide all the other details of the gas pipeline contract. He wants us to be a nod squad. If we aren't, he says, it probably kills a deal for the gas line--a deal he won't show anybody but BP, Exxon and Conoco.
     The legislature did not expect he'd bind oil taxes tightly to the gas pipeline contract when we passed the stranded gas act that gave him authority to negotiate with pipeline applicants (the act does not authorize the oil tax component). And we didn't expect he'd negotiate with just one set of applicants--the multi-nationals sitting on our gas. And we really, really didn't expect he'd do what he says these oil companies demand of us before they build a gas line--a promise not to change oil taxes (the oil companies and the governor call this "tax certainty"). 
     Alaskans who pay property taxes don't get "certainty" but multi-nationals setting earnings records because of windfall profits as prices hover at $60 a barrel want certainty on their severance taxes. Go figure. 
     We also know granting oil tax "certainty" in the pipeline contract with the oilies means there is another "certainty"--an extended court battle that delays any potential gas line. The demanded tax "certainty" provision runs hard up against Alaska's constitution which says: "the power of taxation shall never be surrendered. This power shall not be suspended or contracted away . . ." (Article IX, Sec. 1).
     Put simply, the governor wants the legislature to:

1. pass his tax that morphed after private meetings with oil companies;
2. acquiesce to the notion that, despite clear constitutional language, we guarantee the oil and gas multi-nationals a long-term contract that keeps us from changing oil taxes for years and probably decades; and
3. agree to points 1) and 2) without seeing any of the components of the gas contract that Conoco, BP and Exxon have seen.

     But, so far legislators aren't acting like bobble-head dolls in anybody's nod squad. Solons on both sides of the aisle are asserting they must be truly equal in the decision-making process with the governor and oil companies. 
     I've been especially impressed by the balance Sen. Gene Therriault has brought to the Senate discussions. The world-renowned experts he's involved in preparation for legislative decisions on taxes and on the gas pipeline contract have brought a different perspective than we get from the oil companies and the governor. Equally impressive has been Sen. Tom Wagoner, the stolid chair of the oil tax bill's first committee of referral in the Senate--the resources committee. Both senators have worked in a bi-partisan, constructive manner.
     I've also been very pleased with the rest of my colleagues in the Senate. Not once have I heard a colleague ask: "what's the politics of all this?" They've all been focused on policy and they've all stuck to the premise they will make a decision on oil taxes independent of a gas line contract--a contract the governor and the oil companies want to keep as their hole card.
     In short, the legislature is acting as a true equal in this decision-making process--even though the governor and oil companies don't treat the legislature as an equal partner. I suspect also, if tax "certainty" really is rolled into the gas line contract, the governor and the multi-nationals will find the judiciary is a lot more equal than the major North Slope producers--especially when Alaska judges compare the gas pipeline contract with the far more important contract, the state's constitution, our founders wrote for Alaskans.

Phone: (907) 465-4947 Fax: (907) 465-2108 Mail: Sen. Kim Elton, State Capitol Juneau, AK 99801   Got a scoop? Call or email your tips and suggestions to any of the email addresses below: Email: Senator.Kim.Elton Jesse.Kiehl Paula.Cadiente Web: http://elton.akdemocrats.org

Capitol Undercurrents  

Who is that man?--A constituent, who shall remain unnamed, was late for church and desperately searching for a parking spot on a downtown street. She finally decided to park in front of a fire hydrant (by simply telling this story, I'm not endorsing such behavior). While backing in, an older gentleman (her description) stood by and watched and, when she climbed out, told her she couldn't park there. Frazzled, she told him "this doesn't concern you, just move along." Her kids, piling out of the car moments later with jaws open said: "Mom--don't you know who that is? That's the governor!"

Present company excepted?--The chaplain's invocation that opened a Senate floor session earlier this week dropped some jaws. At one point, it sternly intoned: "We are blemished from birth. We are beastly by nature. If we fail to see that in ourselves we certainly can see it in the person sitting next to us." I've been tempted to get the Gavel-to-Gavel tape of that session to see if any of my colleagues cast furtive glances at those seated on either side.

Troublesome--This week's column focuses on the oil tax debates in the legislature. In it I discuss a press conference the governor conducted Wednesday morning. One of the items I cut from the column (it was getting pretty long-winded) was a snippet that really bothered me from a policy standpoint. In a response to a reporter who asked how soon we'd all see the gas line contract, Revenue Commissioner Bill Corbus answered for the governor by saying there would be a period of time between legislative adoption of an oil tax which would become part of the contract and the unveiling of the contract. That's because, he said, the department would have to write regulations based on the oil tax legislation so the regs could also become part of the contract. Bad idea! Really bad idea. Regs need to be flexible to, among other things, incorporate all the changes brought about by arbitration or court decisions. You never want reg changes to prompt contract challenges.