We can have a Hootenanny--The Homer Tribune reported last week on a conference call between the Kenai Borough School Board and their legislators. Board members were frustrated with lack of movement on fixing the area cost differential recipe in the school funding formula. The fix sends more money to the borough. One board member suggested bringing skeptical legislators to remote borough schools to see how much a gallon of milk cost. One legislator said you're preaching to the choir. Another school board member said: "well, then sing."

That's the way I like it--Under the headline "Seafood savvy hits the market", the February 22 USA Today touted the benefits of wild Alaska salmon. The paper noted wild fish tests low in pollutants and is sustainably caught. The story also said wild tastes better than farmed and has fewer environmental impacts.

Never put off 'til tomorrow what can be done next week--Overheard at a recent committee was a committee member's response to the chair's statement he wasn't planning to move bills out of committee: "Then why are we here?"

Go ahead, make a joke--A neighbor recently gave us her copy of a glossy magazine named Modern Dog. It's kind of a Vogue for dog lovers. One of the advertisements was for the insecure male demographic. It was an ad for silicone implants for neutered guy dogs that would help them, and presumably their owners, get beyond the embarrassment of missing vitals.

Hmmmm--Liz Dodd has emceed the AWARE Juneau women of distinction awards banquet now for nine years and each of the years she leaves the audience in stitches. This year her monologue focused on a new capitol suggesting we could move it to the abandoned K-Mart building at Lemon Creek and call it the kapitol. She also suggested we should do what major league baseball, basketball and football owners do--sell the naming rights. She suggested the Conoco Phillips Capitol and added that the architect who suggested etching the state's constitution in the glass dome was not thinking broadly enough. Instead of the constitution she suggested etching advertisements.

Oil taxes don't take a hike

     When we talk oil taxation, we inevitably spiral down into numbers that numb. So, at the first sign of brain torpidity, I recommend scrolling down to graphs that make some of the numbers picturesque.
     Here's where we are: the price of a barrel of Alaska crude hovers near $50 and Alaska's severance tax rate is the same as when the price of a barrel of our crude is at $10 per barrel. We keep the tax rate flat while oil profits balloon.
     Here's where we should be: windfall profits accruing to multi-nationals when the price of our oil gets beyond $20 a barrel should be shared with the owners of the oil--Alaskans. It should be noted here that one multi-national operating in Alaska is using profits garnered when oil gets beyond $20/barrel to buy back outstanding shares of its stock. They're not exactly plowing excess profits back into Alaska.
     Three bills (HB 63, by Les Gara; SB 50 by Hollis French, and SB 38 by me) change the severance tax structure so the owners of the oil--us--share equally in the oil price windfall with those we let pump the oil. Under the existing tax and royalty structure and with oil prices near $50 Alaskans get about $2.7 billion while the pumpers of the oil take in $7 billion. With the changes proposed in the three bills, the owners get about $5 billion and the pumpers get about $5 billion. 
     Our bills come with some risk. If the price of oil drops to $10 per oil, Alaska's share will be less than it is under the existing tax structure. If we participate in the windfall, we ought to share the pain during a price crash. That's basic fairness.
     And fairness meets a central tenet of Alaska's constitution--that our resources shall be developed and used for the maximum benefit of Alaskans (Article VIII, Sec. 2). We encourage continued development by taking less when prices are low and maximize benefits for Alaskans by taking more when prices are sky high.
     But the three severance tax bills face uphill battles. There's a huge legislative hurdle that must be overcome--the phalanx of oil lobbyists who stand guard over oil company profits. In this legislative culture, those who hire lobbyists have a huge advantage over those who don't hire lobbyists. Multi-national oil companies that have leases for our oil have a lot of lobbyists. The owners of the oil, Alaskans, don't. (I know, you shouldn't need a lobbyist if legislators represent you.)
     The oil lobbyists are backed by a huge network of oil company and oil field service company executives who reinforce lobbyists' messages. A few weeks ago, the Senate and House Resources committees met jointly in Kenai and it didn't take long to figure out that the oil and gas multi-nationals have their headquarter flacks make sure everyone sings from the same sheet of music. (Webster's: flack [flak] n. [Slang] 1. same as press agent 2. see flackulance {okay, number 2 was gratuitously added by me}).
     Here are the lyrics written elsewhere but lip-synched in Kenai by some Alaska oil and gas executives--many of whom rotate in and out of the state in service to their companies:

• Alaska should be "providing tax and other incentives to attract new exploration and development;" or
• legislators should provide "non-discretionary tax credits for exploration and new investments;" or
• Alaska needs "non-discretionary tax credits;" or
• Alaska must move "to incentivize" exploration.

     Incentivize, by the way, is not a word defined in Webster's but the word was used frequently and apparently is a popular part of the oil execs' lexicon. Their definition would be: in*cen*ti*vize [in sen'tiv eyes] vt. [from LL. incentivum ] 1. give away 2. give away a lot.
     In Kenai it soon became clear that irony is not found in the oil exec's lexicon. (Webster's does include: i*ro*ny [eye' ren ee] n. [Fr. Ironie] 1. a method of humorous or subtly sarcastic expression in which the intended meaning of the words used is the direct opposite of their usual sense 2. an instance of this.) Irony dripped so much the floor got slick when industry execs asked us to incentivize while insisting they need tax stability. (They're using their lexicon again: tax sta*bil*ity [taks stah bill' it ee] n. 1. go down but not up 2. to incentivize, in the best sense of the word 3. the antonym of tax hike.)
     It's not that we haven't incentivized. The most recent and quite dramatic instance of incentivizing was in 2003 when the legislature genuflected to an oil company tax break that may cost the state $200 million - $400 million over four years. That classic case of incentivization took flight in a Monday gubernatorial press conference, winged through the Senate by Wednesday, and was out of the House less than a week later. I don't remember, but the House must not have been working that weekend since it took twice as long to pass the House than it did to pass the Senate (see the above definition for i*ro*ny since I just made an ironic observation).
     Earlier in the column I suggested the oil industry, the oil field service industry, and their army of lobbyists work off the same sheet of music. Lyrics penned in London, or Oklahoma, or Texas and set to appropriate melodies and performed in Alaska.
     When it comes right down to it, the oil lyrics aren't that different from the words in the folk song "Big Rock Candy Mountain." You know, that's the song that describes paradise as a place where bulldogs have rubber teeth and cops have wooden legs. When it comes to protecting oil company windfall profits, their vision is a legislature with rubber teeth and tax collectors with wooden legs.

The above graph is based on a study conducted by Sen. Kim Elton's office using historical data from fiscal years 1981 - 2004. It does not include recent changes by the governor.

Both of the above graphs are based on a study done by the Department of Revenue in February 2005. This includes the recent changes by the governor.