A Citizen’s Guide

Gov. Frank Murkowski has managed to make himself the least popular governor in the country with a disapproval rating of 79 percent. This is quite a feat when one considers that when President Nixon resigned in disgrace his disapproval rating was only 66 percent. That a governor so out of step with Alaskans can call for a special session to continue to push for his giveaway of Alaska’s resources deserves special scrutiny.

Among the top questions that our representatives in Juneau should be asked as they return to special session: If, at current prices and production values, about $22 billion worth of our oil leaves Alaska annually, how is it constitutional for Alaska to be getting about $3.5 billion for that oil? Incredibly, that’s all the oil industry currently pays if you add all the taxes they pay–severance, income, property and royalty.

Or a better question: If we are giving away our oil at fire-sale prices, and you agree that a revision of our oil taxes is long overdue, why aren’t you demanding that the effective date of this revision be Jan. 1, 2006, instead of April 1, 2006? The difference in those dates is worth hundreds of millions of dollars to our state. A vote for an April 1, 2006 effective date means the oil sold during the first several months of this year was sold in violation of Article VIII of the Alaska Constitution, as it did not bring maximum benefit to Alaska.

The Legislature hired a world expert, Daniel Johnston, to evaluate the tax rate Alaska should charge–and he was quite comfortable with a 25 percent rate. So why is the Legislature ignoring the advice of its expert by voting for a lower rate? I posed that question to Rep. Jay Ramras while he was on KFAR, and he said he voted for a lower tax rate because Johnston lives in New Hampshire, not Alaska. Huh?

Despite all evidence that it is a bad idea, Murkowski continues to advocate a net profits taxation scheme. Alaska has likely lost billions over the last 30 years in litigation settlements with the oil industry over complicated tax questions. Why should we give this industry yet another opportunity to engage Alaska in more litigation? Does the state even have the expertise to enforce a net profits taxation scheme?

No, according to Revenue Commissioner Bill Corbus, who was sitting next to me when I posed that question to the Interior delegation at a recent hearing in Fairbanks. Sen. Ralph Seekins asked Corbus to respond. Corbus plainly stated that the Department of Revenue would need additional funding from the Legislature to hire the folks who would administer Alaska’s most important tax law.

Newly hired revenue employees, who are wet behind the ears, being asked to administer this complicated tax law against the world’s biggest corporations inspires absolutely no confidence. These corporations litigate and may play fast and loose with the law. Exxon still litigates the 1989 Exxon Valdez oil spill wherein the thousands of Alaskans harmed still wait for their share of the $5 billion jury award, and British Petroleum recently made headlines for their alleged price fixing of propane.

Gov. Murkowski is also asking the Legislature to amend the Stranded Gas Development Act, presumably so that the gas contract negotiations of his administration may be retroactively brought into compliance with the law. It was late last year when Commissioner Tom Irwin was fired for raising this issue. One question, of the eight Irwin asked in his famous memo, was whether he could sign-off on a best-interest finding when he found that the terms of the proposed gas contract runs counter to the best data within possession of the administration.

The Alaska Gasline Port Authority has an earnest gas line proposal that does not ask for a giveaway of Alaska’s oil, and it must be properly vetted.

Toward that goal, I asked the administration’s Roger Marks if he would debate the Port Authority so that the public could be better informed about the merits of the Port Authority’s proposal versus the deal Murkowski proposes. Marks OK’d the idea with Jim Clark, and said the debate would happen.

That was about two months ago, but the Murkowski administration has never been able to find the 90 minutes of time needed for a debate. The Port Authority had enough confidence to be ready, willing, and able to engage in a debate. The Stranded Gas Development Act must not be amended until all gas line proposals are fairly compared and debated.

Merrick Peirce lives in Fairbanks.