A Citizen’s Guide

JUNEAU — Alaska lawmakers late Thursday took one more step toward taking a quarter of the net profits that oil companies make off resources taken in Alaska.

The state Senate passed a bill 14-5 hiking the oil tax rate from 22.5 percent to 25 percent. The House has already passed a similar version and was to meet Friday to consider the Senate’s version once it is sent over after the Senate puts the bill through a reconsideration procedure. If House members don’t approve it, the bills go to a conference committee to hash out any differences.

The bill must gain final approval before the special sessions ends at midnight Friday.

Senate passage ended four days filled with lengthy delays in the Senate Finance Committee while its members wrestled with the tax rate. They initially backed the current tax of 22.5 percent.

The delays worried some lawmakers about a timely adjournment especially after Gov. Sarah Palin — who long supported the higher tax rate — pledged to call a second consecutive session, probably as early as Saturday.

But once they tax rate issues was settled late Wednesday, concerns eased.

There was little angst even as the Senate continuously postponed its floor session Thursday as the bill was being written.

The Senate eventually convened Thursday evening, and spent hours debating amendments to its bill, covering such issues 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.

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.”