A Citizen’s Guide

With the special legislative session half over, state lawmakers are still debating major components of Gov. Sarah Palin’s oil tax proposal.

Thursday, Local lawmakers said there seemed to be support for the general tax structure and administrative provisions in Palin’s bill, Alaska’s Clear and Equitable Share.

But they said there was still disagreement among lawmakers over the tax rate and provisions to adjust that rate when oil prices are low or high.

The 30-day special session kicked off Oct. 18, and legislative committees have been meeting seven days a week to review the proposal.

Early opposition to the structure of the tax, which is based on net oil company profits rather than gross oil production, is fading, lawmakers said Thursday.

Rep. David Guttenberg, D-Fairbanks, said he was still convinced a gross-based tax was best and added that he and other House Democrats were working on a proposal.

“Other than that, we’re just giving the farm away,” he said.

But Guttenberg acknowledged time was running out for a new proposal that would require vetting by legislators and consultants, and other lawmakers said Palin’s administration has made a convincing argument for why a gross tax won’t work.

Those studying it closely have generally agreed a profits-based tax is the best option, said Sen. Joe Thomas, D-Fairbanks.

As for the tax rate, lawmakers are still debating.

Palin initially proposed increasing the base tax rate from 22.5 percent to 25 percent, but limiting how fast that rate increased as prices went up. She also proposed adding a gross-based tax floor that would kick in when prices were low.

Interior lawmakers generally expressed support for the 25 percent tax rate, but said they expected others to push for a lower rate. The low-price tax floor will probably get cut, but provisions for high oil prices could be bolstered, they said.

Revenue Commission Pat Galvin said he thought lawmakers would approve the 25 percent rate but remove the tax floor, focusing instead on getting more revenue at high prices. “The Legislature seems to be looking more for the upside than worrying about the downside,” he said.

Galvin and lawmakers both said they expected a provision blocking tax deductions on poorly maintained infrastructure to stay in the bill.

Sen. Gene Therriault, R-North Pole; Rep. Mike Kelly, R-Fairbanks; Rep. John Coghill, R-North Pole; and Thomas all expressed support for the main provisions in Palin’s bill.

Getting the bill passed in the next two weeks could be a challenge, said Coghill, who added that a conference committee would most likely be needed to sort out differences between the House and Senate versions of the bill.

“We’re going to work like crazy,” he said.

Kelly said passing a new tax plan was important for restoring the public’s trust in government, and added that a tax plan people are happy with would also improve fiscal stability.

“I think the governor’s on the right track,” he said.

Palin’s bill has passed through the Senate Resources Committee and the House Special Committee on Oil and Gas. It is now before the Senate Judiciary Committee and the House Resources Committee.

Contact staff writer Stefan Milkowski at 459-7577.