FOR IMMEDIATE RELEASE

June 10, 2013

Alaska’s Oil, Alaska’s Loss

Democratic Legislators Post Oil Wealth Giveaway Cost to Alaskans in Real Time

 

JUNEAU – Today, the House Democratic Caucus published a real-time counter on its website (http://akdemocrats.org/our-oil-bill/giveaway/) to show Alaskans up-to-the-minute losses from the governor’s oil wealth giveaway, SB21.  While the Governor’s giveaway is extremely generous to corporations in London and Houston, the giveaway will adversely impact individual Alaskans.

 

“It’s important that the public sees just what we’re giving up to multinational oil companies, since it’s really uncertain what we’re getting in return for this ‘crapshoot’,” said House Democratic Whip Chris Tuck (D-Anchorage) who announced his intention to publish a counter at a post-session news conference in April. “The only guarantee in this bill is that Alaska is giving up billions of dollars over the next few years and that Alaskans are going to have to pay for it by depleting our savings and forgoing educational opportunities, road maintenance, and public safety.”

 

This counter shows the amount of money Alaska residents have lost — and the oil companies have gained — since the first part of Governor Parnell’s oil wealth giveaway (SB21) took effect retroactively to January 1, 2013.  The number on the counter is based on the governor’s cost estimates from the fiscal note for the final bill. It takes into account the different times various sections of the bill take effect. Once the full bill is in effect on January 1, 2014, the rate of losses to Alaska will speed up dramatically. The caucus will update this counter over the coming months as more data becomes available for oil price, production levels, and the various deductions and allowances oil companies claim.

 

Democratic legislators offered an alternative oil tax plan that would have increased production, brought new competition to the North Slope, and added balance to Alaska’s tax structure. Neither of those bills was granted a hearing during the 2013 legislative session.

 

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FOR IMMEDIATE RELEASE

May 20, 2013

 

“One Size Fits All Never Fit Alaska”

House Democratic Legislators comment on Alaska’s waiver from No Child Left Behind

 

Today, five Democratic legislators from the Alaska House of Representatives released the following comments on Alaska receiving a waiver from the federal No Child Left Behind Act. In 2012, nine House Democratic legislators sponsored a resolution (HJR 39) calling on the Parnell administration to apply for these waivers to the No Child Left Behind Act of 2001 and to develop a comprehensive plan to ensure student success and school accountability.

 

“The federal government’s decision to grant the state’s No Child Left Behind waiver request is an encouraging step in Alaska’s efforts to maintain local control of our schools and our children’s education,” said House Democratic Leader Beth Kerttula (D-Juneau). “The state is doing its part to develop Alaskan standards, and it’s important that it also give our schools the resources they need to not only meet the standards to but to help every Alaskan student exceed them.”

 

“One-size-fits-all never fit Alaska,” said Representative Scott Kawasaki (D-Fairbanks). “For years these requirements unnecessarily stigmatized Alaska schools, so it’s good that the state finally took the steps to get the waiver so we can develop Alaska-specific standards and maintain local control and resources for our schools.”

 

“Having taught in rural Alaska, I know getting out from under these federal guidelines based on the Lower 48 will be a big win for those students and others across our state,” said Representative Andy Josephson (D-Anchorage).

 

"We need to improve educational achievement, and one-size policies not tailored for Alaska don’t help,” said Representative Les Gara (D-Anchorage). “Nor does the state’s four-year course of educator staff cuts. One victory, more to go."

 

“This has been a long time coming for Alaska,” said Representative Geran Tarr (D-Anchorage). “I look forward to working with my colleagues to implement Alaska-specific standards and accountability measures to help our students succeed.”

 

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MEDIA ADVISORY

April 14, 2013

 

Democratic Legislators to Host Post-Session Press Availability

 

JUNEAU – Today, Senate Democratic Leader Johnny Ellis (D-Anchorage) and House Democratic Leader Beth Kerttula announced their caucuses are hosting a press availability on Monday, April 15, 2013 to discuss the 2013 legislative session.

 

WHAT:                House and Senate Democratic Legislators press availability

 

WHEN:                April 15, 2013, 1:00 p.m.

 

WHERE:              State Capitol, Butrovich Room 203

 

TELECONFERENCE:         From Juneau: 463-5009

                                         Outside Juneau: 855-463-5009

 

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FOR IMMEDIATE RELEASE

April 14, 2013

 

Democratic Legislators Stand Against Historic Giveaway of Alaska’s Oil

Massive giveaway with no commitments is based on trust, not facts

 

JUNEAU – Last night, House Democratic legislators stood up against the governor’s massive giveaway of Alaska’s oil wealth during a debate on the House Floor that lasted well past midnight.

 

“Our history is one of outside industry taking our resources and leaving our state, our Alaska,” said House Democratic Leader Beth Kerttula (D-Juneau). “Throughout Alaska’s history, our furs, gold, copper, and fish have been exploited with the benefits taken Outside. This giveaway is an historic mistake and one we should know better than to repeat.”

 

House Democrats have consistently offered solutions to encourage more oil production by offering tax breaks and other incentives tied to increased production and helping new producers. The governor’s proposals, including the House version passed this morning, reduce the state’s return on its resource without commitments, guarantees, or ties to increased production.

 

“The public elected us to make business decisions on their behalf. We must negotiate from a position of strength to get the best deal for Alaskans, our stockholders,” said House Democratic Whip Chris Tuck (D-Anchorage). “This bill is a no-strings-attached giveaway that sells Alaska short and asks Alaskans to give up our savings, but it doesn’t demand anything in return.”

 

“This vote was a $4.5 billion vote of trust. We've received nary a commitment from the oil industry, and the Alaska Legislature voted to give oil companies $4.5 billion on the basis of trust — really, nothing more than trust — that they will increase production,” said Representative Jonathan Kreiss-Tomkins (D-Southeast). “I am gobsmacked we have indulged in such inexcusable trustfulness. This vote is a tragedy for Alaska."

 

“There’s good tax reform that requires investment in new oil production in Alaska as a condition to get reasonable tax breaks.  And there’s tax reform that creates a fiscal cliff for us to fall off, that lets companies take $1.5 billion and more of Alaska’s oil share and then lets companies spend it anywhere in the world they want,” said Representative Les Gara (D-Anchorage). “Yesterday’s vote will damage Alaska, our ability to find roads and schools, and our ability to truly get more oil production in Alaska.  It will lead to raids on the Permanent Fund, calls for income and sales taxes.  It is a lose-lose bill for Alaskans, and there are much better ways to spark production.”

 

“With this bill, Alaska is running a clearance sale on its oil,” said Representative Geran Tarr (D-Anchorage). “This giveaway lowers the sale price of our oil by billions of dollars over the next few years and the oil companies are committing to nothing in return.”

 

“I cannot support a massive giveaway of our resources with no commitments for more production or more investment in Alaska,” said Representative Scott Kawasaki (D-Fairbanks). “The facts do not support this no-strings-attached approach, and neither can I.”

 

“We’re being told this will increase production, but no one will say how much or by when or even what action this change will generate to get there,” said Representative Andy Josephson (D-Anchorage). “I am concerned this is a very, very expensive test.”

 

“The Legislature is asking for more accountability from our students before funding our schools, but they’re willing to give the oil industry billions with no commitments, no benchmarks for success, and no accountability to Alaskans,” said Representative Harriet Drummond (D-Anchorage). “I cannot accept that.”

 

Representative Max Gruenberg quipped, “This reminds me of Wimpy from Popeye saying ‘I’ll gladly pay you Tuesday for a hamburger today.’ This is a Wimpy bill.”

 

Under Alaska’s current tax structure, Alaska’s return on its oil increases as oil prices and company profits increase. Companies can “buy down” their tax rate by investing in Alaska. Oil companies have made record profits and Alaska has paid off debts and increased savings from $3 billion to $15 billion in the five-and-a-half years since the system became law. North Slope employment has been at record high levels, and there has been a sharp increase in the number of new oil companies operating in Alaska. Still, Democrats acknowledge the tax system could be adjusted to strike a better balance at high oil prices and to encourage the development of new oil fields and have offered a bill (HB111) and a series of amendments to the governor’s proposal to reach those goals.

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FOR IMMEDIATE RELEASE

April 4, 2013

Committee Gives Away More Money, More Power to Oil Companies

Late Night meeting increased size of giveaway, repeats past mistakes

 

JUNEAU – Just after 2:00 a.m. this morning, the House Resources Committee voted to give away more of Alaska’s oil wealth with no guarantee of new production and to make the state rely on oil company statements instead of actual receipts when auditing deductions for tax breaks. The committee also tried to undo hard-won provisions that allow the oil companies that own the Trans Alaska Pipeline (TAPS) to charge the state and other companies for all of their expenses, not just the “reasonable” expenses allowed under current law.

 

“While most of Alaska was asleep, this committee voted to give away billions more of Alaska’s oil wealth and to lock our own auditors out of the information they need to make sure the companies are paying what they owe Alaska. This adds insult to injury, and means the giveaway will be much bigger than anyone expects, just as it was in 2007,” said House Democratic Leader Beth Kerttula (D-Juneau) who watched the hearing until the end. “This puts Alaska back into the situation we had under Governor Murkowski’s plan where we lost $800 million dollars more than we expected because we had to rely on company paperwork instead of actual receipts.”

 

Just after 2:00 a.m., the committee took up amendment number 34, which reduced the maximum tax rate for all oil under the new plan from 35 percent to 33 percent, giving away an additional $300-400 million dollars a year. This rate applies to all oil, whether it is already in production or not.

 

“There is no need to sell Alaska’s oil for less money than it’s worth,” said House Democratic Whip Chris Tuck (D-Anchorage), who sits on the resources committee. “This is just a bigger across-the-board giveaway for nothing in return. This is negotiating against ourselves when as an owner state we should be negotiating from a position of strength.”

 

Amendment number 32, the “trust us” amendment, reinstated the policy that allowed the companies to pay $800 million less than the state expected under Governor Murkowski’s Petroleum Profits Tax (PPT) in 2007. By not requiring actual receipts, the change makes the state’s auditors rely on a company’s own internal summaries of its expenses instead of actual receipts when determining whether expenses qualify for deductions from the profits-based production tax. Department of Revenue auditors testified to the committee that this change will be problematic.

 

“The state has already had to absorb hundreds of millions of dollars in surprise losses when we let this happen before, and even now we’re being asked to make these multi-billion dollar decisions without adequate information,” said Representative Geran Tarr (D-Anchorage) who serves on the Resources Committee. “We were asked to vote without any information from the Department of Revenue. I strongly disagree with this.”

 

In the aftermath of the Exxon Valdez oil spill in 1989, it became known that ExxonMobil was charging the State of Alaska and other oil companies who ship oil through TAPS for their public relations expenses spent. Those expenses and other excessive expenses inflated the amount the TAPS owners charged the State of Alaska and other companies which ship oil through the pipeline, lowering their past tax liability and stifling competition. The State won litigation disputing the tariff in 2008, earning $600 million for just two years of lost taxes and royalties based on the overcharges. While that litigation was still pending, the Legislature passed a provision to require any expenses added to the tariff be “reasonable.”

 

“Alaskans should be appalled that anyone would even think this is a wise idea,” said Rep. Kerttula. “Have we not learned these lessons the hard way already? They’re already allowed ‘reasonable’ expenses, they should never be allowed charge us for anything more than what is ‘reasonable.’”

 

The committee voted not to make the changes to what the TAPS owners can charge in the tariff.

 

The House Resources Committee moved the bill to its next committee around 2:10 a.m. this morning.

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FOR IMMEDIATE RELEASE

April 3, 2013

Democrats Push Permanent Fund Dividend Protection In Light Of Oil Giveaway

 

JUNEAU – Today eight Democratic legislators filed legislation to protect the Permanent Fund Dividend by placing the current dividend formula in the Alaska Constitution.  With GOP leaders pushing an oil giveaway that is likely to cost Alaskans upwards of $1 billion or more a year, future legislators are likely to start cutting the Dividend to fund state revenue.  To protect against attempts to spend the Dividend in tight economic times, former Governor Jay Hammond proposed an initiative in 2002 that would have enshrined the Dividend in the Constitution, but Lt. Governor Loren Leman rejected it as not able to be done by initiative.

 

“Governor Murkowski tried to tap the Permanent Fund in 2003-4 to make up for budget deficits.  The burden of a poorly crafted oil giveaway shouldn’t fall on those who need the Dividend to pay for heat, food, clothing and basic necessities,” said Representative Les Gara (D-Anchorage), prime sponsor of the House Joint Resolution 17.  Rep. Gara opposed the 2003-4 attempt to cap the Dividend.

 

“Alaskans should be able to rest assured that the Permanent Fund Dividend will be there for our kids and grandkids,” said Senator Bill Wielechowski (D-Anchorage), prime sponsor of the companion Senate Joint Resolution.  “The program was established to ensure that all Alaskans share in our natural resource wealth and to help protect the body of the fund from wasteful government spending.  Enshrining the dividend in the constitution will accomplish these goals in perpetuity.” 

 

According to the Department of Revenue, the Legislature is in deficit spending for the current fiscal year.  Long-term deficits are more likely if the state loses roughly $1 billion or more in revenue. 

 

“We’ll keep pushing for smarter oil reform that doesn’t create a fiscal cliff.  But with constant pressure from the governor to give away our oil wealth, it’s time to protect the Dividend by placing it in the Constitution,” said Gara.

 

The House and Senate resolutions would place the current Permanent Fund Dividend statute into the Constitution, and require that future dividends be the same or greater than they would be under current law. If passed by a two-thirds majority in each legislative body, the constitutional amendment would appear on the next statewide election ballot.

 

“The Permanent Fund Dividend in an important economic driver in Alaska, and cutting it to make up for oil revenue the governor gives away would harm the economy,” said Representative Scott Kawasaki (D-Fairbanks), a co-sponsor of the constitutional amendment.

 

According to a 2010 UAA Institute of Social and Economic Research report, “most of the cash from dividends will ultimately find its way into the Alaska economy to increase employment, population and income.  A rough estimate of the total macroeconomic effects of this increase in purchasing power is 10,000 additional jobs…”  The report also concluded that the Dividend generates roughly $1.5 billion in additional personal income” for Alaskans.  

 

The Dividend is also becoming more and more important as a driver for non-profit services in Alaska.  Last year, 26,000 Alaskans pledged a record $2.45 million to Alaska non-profits through the Pick. Click. Give. program. 

 

Democrats have proposed oil reform legislation that targets the production of additional oil, and would take pressure on the Dividend by ensuring a steady flow of revenue for the state. 

 

The Democratic oil tax proposal includes a 7-year tax incentive for oil developed in new fields, incentives for production of Alaska’s vast reserves of heavy oil, and incentives for increased production in existing fields.  Their bills would also reduce tax rates at very high prices, near $150/barrel, to better balance the state and company share of profits at very high prices.  The Democratic oil legislation, House Bill 111 and Senate Bill 50, would not have any immediate impact on state revenue, and would require Alaska investment in order to earn tax breaks.

 

The largest part of the Governor’s bill, and legislative versions of it, gives away most of Alaska’s windfall profits share, a tax surcharge that allows Alaskans to share as oil company profits grow to record and near record levels at very high prices.  There is no requirement that companies spend the money they receive from this rollback in Alaska.

 

House co-sponsors include House Democratic Leader Beth Kerttula (D-Juneau), House Democratic Whip Chris Tuck (D-Anchorage), Representative Harriet Drummond (D-Anchorage), Representative Andy Josephson (D-Anchorage), Representative David Guttenberg (D-Fairbanks), Representative Jonathan Kreiss-Tomkins (D-Southeast), and Representative Geran Tarr (D-Anchorage).

 

Read the ISER report: http://akdemocrats.org/docs/040213_PFD_case_study.pdf

 

ADN on Gov. Murkowski’s 2003-2004 efforts to use the Permanent Fund for government: http://www.apfc.org/_pressroom/2004_6_20_ADN_Fund%20battle%20looms.pdf

 

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FOR IMMEDIATE RELEASE

April 1, 2013

 

House Democrats Offer Series of Improvements to Small Gasline Legislation

Amendments would ensure low-cost gas, add accountability, provide maximum benefit to Alaskans

 

JUNEAU – Tonight, in an effort to add much needed accountability and assurances Alaskans will get low-cost gas and the maximum benefit from a small diameter gasline, Democratic legislators in the Alaska House of Representatives offered a series of amendments to the gasline’s enabling legislation.

 

“We all want to get Alaska gas to Alaskans, but as the governor has noted, this bill lacks accountability and doesn’t do enough to ensure Alaskans get low-cost gas and the maximum benefits from developing our gas resources,” said House Democratic Leader Beth Kerttula (D-Juneau). “Each of our amendments would add accountability and ensure low-cost gas, local hire, and other ways to make sure this project doesn’t just get built, but works for Alaska.”

 

The first amendment would have given the Regulatory Commission of Alaska authority to review and approve contracts between all companies to require just and reasonable gas costs. Without the amendment, the bill deletes that requirement so long as it does not violate anti-trust law.

 

“Alaskans deserve low-cost gas. Instead, this bill strips out our consumer protection against excessive rates,” said Representative Les Gara (D-Anchorage) who offered the amendment. “This amendment would make sure those contracts lead to the cheapest gas and best deal for Alaska.”

 

Amendment number two would have guaranteed that utilities serving Alaskans get first access to gas should an unexpected shortage limit the gas moving through the pipeline.

 

“If the goal is to get Alaska’s gas to Alaskans, then we should make sure Alaskans get that gas first and aren’t left out in the cold if there’s ever an unexpected shortage,” said Representative Geran Tarr (D-Anchorage) who offered the amendment.

 

Rep. Kerttula offered what she called the “Show Me” amendment as amendment number three. It would require that the public be able to weigh in on the project through the legislative process before construction begins.

 

“Once we start construction, we slam the door on everything else, and that should be a decision made at that time, when we know more about the costs of this project, the cost of gas, and the other available options that may be better ways to get low-cost gas to Alaskans,” said Rep. Kerttula. 

 

House Democratic Whip Chris Tuck (D-Anchorage) offered amendment four to ensure Alaskans get the jobs building the pipeline by requiring Project Labor Agreements. Representative Max Gruenberg also added an amendment to give Alaska hire provisions “some real teeth” so more Alaskans can get jobs working on this project.

 

“It’s Alaska’s gas, Alaska’s gasline, and it should be Alaska’s jobs building it,” said Rep. Tuck. “This Alaska-hire provision is in the big gasline law, the voters put it in the gasline initiative in 2002, and it should be in this bill too, so Alaskans can get the training and get the jobs building any pipeline that gets built.”

 

Other amendments ensured Alaskan companies have a fair shot at getting the contracts to build, operate, and manage the pipeline and to allow Alaskans the right to defend their rights to low-cost gas and to have a say in how their resources are developed and brought to market.

 

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