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After five weeks on the frontlines
Snippets from the PPT tax debates
I spent what seemed like a year this March immersed in oil and gas taxation minutia. As a  member of the first committee of referral in the Senate, the resources committee, I was one of seven members who customized the governor's initial tax proposal.
Our recipe for oil and gas taxes left the committee Wednesday. Thursday I began reorganizing six full binders of information to pass on to colleagues on the next committee of referral--Senate finance. Sifting through binders full of graphs and written presentations was like flipping through Richard Nixon's autobiography--some of the reminders bring smiles that are leavened with some frowns. Some of the info is profound and some is profoundly misleading.
I decided to share a few snippets from my binders as part of this week's column. It may give a window into one of the most important decisions that I and other legislators will make on Alaskans' behalf. Our decision on oil taxes and the billions of dollars collected or not collected will determine the shape of our schools, how we protect Alaskans from crime, and how much other taxpayers pay to support government services. The decision also will affect future investment by multi-national taxpayers in existing and new oil and gas fields.
Most important advice
"Among your considerations, there is only one certainty--your numbers are wrong, but not necessarily bad." (Jim Eason, former director of the division of oil and gas, on March 5, 2006.)
Our committee OD'd on numbers--numbers that set tax rates or credit sizes, or numbers to define non-legacy fields, or numbers that limit past costs that can be taken against future tax liabilities, or numbers quantifying how long the tail is on one graph's X axis, or numbers comparing economic returns from North Sea fields to North Slope fields, or numbers that purport to predict future investment under different proposed rates, or numbers predicting oil production in 10 years, or numbers establishing the cross over point where a new, more progressive tax means less revenue for the state than the existing, more regressive tax. Each set of the seemingly endless number of numbers, of course, was the set that put the best spin on each stakeholder's position.
But really, future production levels, future oil prices, future investment decisions in a global search for oil and gas are no better than semi-refined guesses. Anybody who says "trust me, I know these numbers" cannot be trusted. As Mr. Eason suggests, starting from the premise the numbers are wrong encourages the use of a well-informed band of numbers that provide some basic guidance.
Most frustrating advice
 "Keep your eye on the prize." (Revenue Commissioner Bill Corbus, et al, early and often and as recently as March 29, 2006.)
The prize, says the administration, is a potential gas pipeline. It's pretty disingenuous for the commissioner and others in the administration to advise us to keep an eye on the prize--they won't show the prize. They know what the prize is or isn't. So do a few multi-national oil company honchos. Not a single legislator has seen the prize.
What oil execs and the commissioner were not saying, but really meant, is: "keep your eye on the pea." Then their hands were a blur as they moved the shells around in support of the 'prize'.
Most outrageous advice
To ensure investment that secures future production of oil and gas in Alaska, Alaskans need to cut today's oil and gas taxes instead of increasing them to either the governor's level, the House level, or the Senate level. (Angus Walker, BP commercial vice president, March 15, 2006.)
Mr. Walker told legislators Alaska needs $2-$3 billion of new investment in Alaska's fields annually. When I pointed out that our very generous current severance tax only attracted about $1 billion annually, he acknowledged that and suggested we needed to let even more wealth slip through our fingers (not my description of the existing tax structure--these are the words of the governor's chief oil and gas consultant Dr. Pedro van Meurs).
Every consultant hired by the state, either by the governor or by the legislature, said the state is not getting a fair share of revenue from oil and gas we own and that tax hikes in the magnitude suggested by the governor or legislature would not affect future investments in Alaska.
Numbers not presented
Mr. Walker's multi-national (BP) netted $22 billion in profits last year. Exxon, another of the three majors on the North Slope, made over $36 billion last year. ConocoPhillips, the other North Slope major made over $13 billion.
If an Alaskan spent $5,000 a day it would take him or her nearly 20,000 years to spend Exxon's kitty, over 12,000 years to spend BP's 2005 bag of moolah, and nearly 7,500 years to spend ConocoPhillips's 2005 lucre. Hey, if you were lucky enough to have last year's total net profit from all three of these multi-nationals, an Alaska would have had to start spending $5,000 each day for 38,500 years. That's about 23,000 years before there were Alaskans. In fact, 38,500 years ago was before the Stone Age--back when saber-toothed tigers were chasing Cro-Magnon man.
Outside the Capitol oil tax discussions
 An industry group reports BP and ConocoPhillips began their anti-tax advertising campaigns last week. In addition, they note one industry support group will run three print ads for three consecutive weeks in Anchorage, Fairbanks and Kenai. That group also will do a targeted mail campaign. It's also reported a second industry support group will run print ads in statewide newspapers until the end of the session and conduct a two or three week television ad campaign.
Sure wish kids had that kind of pocket change so they could have a comprehensive, multi-media campaign to advocate for smaller class sizes.
Finally, advice I wasn't afraid of
Over five weeks, I was especially impressed by the depth of knowledge and homework done by all members of the committee--especially by committee-member Sen. Bert Stedman (R-Sitka) and committee Chair Sen. Tom Wagoner (R-Kenai). Of invaluable assistance also was Legislative Council Chair Sen. Gene Therriault (R-North Pole). We didn't always reach the same conclusions but I always knew their positions were based on a broad understanding of the data instead of a narrow philosophical mind set.
They worked in a bi-partisan manner throughout the five weeks we had the bill in the resources committee.
Phone: (907) 465-4947
Fax: (907) 465-2108
Mail: Sen. Kim Elton, State Capitol
Juneau, AK 99801
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Capitol Undercurrents
Oh no, Elmo--A week ago Sesame Street's Elmo was pictured on the front page of the Empire with Gov.  Murkowski. It was hard to say who's grin was bigger. Today, Elmo, a public TV icon, has to feel like one of those Canadian seal pups chased by men with clubs. The Senate budget subcommittee for the Department of Administration cut all state support for public television. The governor had recommended chipping in state funds to match member contributions, private sector funds, and federal dollars. So did the House. The Senate's budget subcommittee, though, turned public television off.
Check the bill--On the floor of the House this week, the majority adopted a $3 million amendment to the fast track supplemental budget bill that gave an Oregon PR firm carte blanche to, among other unspecified things, lobby in the home districts of congress people who vote against ANWR. The proposal was a complete surprise. It had not surfaced  in any committee hearing on the Senate side or the House side. Perhaps, if it had, there could have been a discussion about whether our nation's legislators would resent having state dollars spent in their districts to influence their votes. It's not as if they don't already look askance at Alaska. A former head of ASMI, familiar with the ways of PR firms pointed out another PR reality in a strong letter today to legislators: "Public Relations/Marketing companies do not 'care' about anything but making a great deal of money. I saw PR guys dab away tears in their eyes talking about Alaska fishermen and then bill us for the Kleenex."
 Memory like an elephant--Rep. Kurt Olson (a GOPer from Soldotna who's proud of his party's pachyderm mascot) this week told us about trodding back up the hill toward the Capitol with Juneau's Rep. Beth Kerttula a while back. During the slog, Kurt mentioned to Beth he'd had a dream about her. He said in this dream she was a young girl and she'd lost something very dear to her--a flute. Startled, Beth told him she'd played the oboe but her sister had indeed lost a flute when she was a young girl. Kurt went on, describing the flute with details only family members had known. Amazed at the details of his dream, she could hardly believe his powers. That's when Kurt admitted he had, in fact, been the insurance adjuster on her father's claim when her dad reported the flute stolen oh, so many years ago.
Bought and sold--A couple of months ago, the governor's chief of staff called me the Maytag man.  He meant it as a criticism of my criticism of the governor's jet. A friend dropped off an AP story this week that noted federal regulators approved Maytag's acquisition by Whirlpool for $1.8 billion. Regulators reviewed the deal because "the existence of strong rivals" benefits consumers. I agree with the regulators. Certainly, strong political rivals, when it comes to the jet or any other decision made by elected officials, benefits Alaskans.
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