A Citizen’s Guide

JUNEAU—They played the waiting game in Juneau on Thursday.

The Senate continuously postponed its floor session to debate the oil tax reform bill passed out of committee late Wednesday.

The Senate eventually convened at 7:10 p.m. Thursday to consider Gov. Sarah Palin’s call for an oil tax hike.

With the tax revenue issues already worked out in committee — a tax hike from 22.5 percent to 25 percent — the Senate discussed other issues such as deductions and auditing tax returns.

One longstanding issue surrounding deductions covers a company’s ability to get tax breaks for repairs or equipment replacement that are the product of negligence.

The issue doesn’t identify any specific North Slope producer, but BP PLC’s pipeline corrosion related shutdown last August at Prudhoe Bay — the nation’s largest oil field — has long been a sore topic for lawmakers.

During the special session BP pleaded guilty to a misdemeanor violation of the federal Clean Water Act for a crude spill on Alaska’s oil-rich North Slope.

One amendment backed by Democratic Sens. Hollis French of Anchorage and Kim Elton of Juneau would prevent deductions for “violation of law, or failure to comply with an obligation under a lease, permit, or license issued by the state or federal government.”

“If you’re breaking the law, if you’re violating the permits, then you don’t get the deductions,” French said. “It’s as if you were driving the car down the road, speeding, stopped for a speeding ticket, you’ve broken the law and now you want to deduct the cost of your speeding ticket from your income taxes. No go. No go.”

The bill mirrors much of what was in the House bill passed Sunday, and Senate leaders were brushing off criticism they were trying to stall the bill throughout the week.

Senate President Lyda Green, a Wasilla Republican, said the delays simply lie with drafting amendments and the bill and making sure the language is precise.

No one seemed concerned about the Thursday postponements or the prospects of not meeting the midnight Friday deadline for adjournment. Any changes between the Senate and House bill must be approved by House members or sent to a conference committee to work out differences.

A turning point toward getting a bill on time came Wednesday night when the Senate Finance Committee agreed to back Palin and the House on a tax hike from 22.5 percent to 25 percent.

Just hours earlier, the committee formally proposed keeping the current rate of 22.5, causing lawmakers to worry whether a resolution would come.

Palin had already said she would call for a second consecutive special session on oil tax reform if she did not have a bill.

Green said there was no external pressure from either Palin or the House to change the 22.5 percent rate many Republicans sought. Instead, it was members in her coalition who had the votes to up the tax rate.

“It was more from the members of the Senate; there were enough people who wanted it to change,” Green said. “And of course, the Republican minority has been very vocal about it.”

Green heads a majority coalition made up of six Republicans and nine Democrats, leaving five Republicans in the minority.

The group formed after last year’s election, giving some Democrats influential committee positions they might not have had otherwise.

Coalition critics first called the agreement a marriage of convenience that could lead a selling out of votes on key issues such as this one.

Democrats who held out for the higher rate say the oil tax debate results proves they are not beholden to anyone.

“It’s especially gratifying when you’re in a caucus and people on either side of those vast chasms say, ‘I disagree and am going to vote the way I feel,’” Elton said.

“I think we are proving to ourselves we can do it, and there are no consequences for doing it,” he said.

Last year the Senate majority was made up of all Republicans whose ideological similarities still couldn’t prevent bickering or mounting hard feelings among the group.

This year, the philosophical differences between Republicans and Democrats in the Senate majority have helped, said Sen. Bert Stedman, R-Sitka.

“The internal working dynamics are easier, a little more pleasant,” Stedman said. “Everybody recognizes there are diverse philosophical opinions.

“We are forced to work toward the middle for a consensus. That’s why you saw a movement from the 22.5 and 25 on the base rate.”