Alaska’s future needs work; yet the Legislature is AWOL.
“Just in time” Senate Bill 21 “credits” arrive like the popular TV show “American Greed.” Low oil prices really hurt, cash paybacks hurt more. The “credits” presently are likely worth multiples more than projected net revenue under a possible personal income tax.
The law was created by an Alaska Senate controlled by the oil industry. ConocoPhillips employees provided the majority on the original 11-9 vote for SB 21; one employee’s job is Investment Recovery Coordinator (it’s called a “cruel irony”).
On the Senate floor, the two senators who had direct financial interests with ConocoPhillips requested recusal. Under legislative “rules” members must vote if there is an objection; some legislators objected. “Forced” to vote. Both senators could have walked out so as not to vote, but they didn’t. What a public charade.
Alaska Legislators can vote with direct financial conflicts. The Legislative Ethics Committee OK’d comments which were the typical insider drivel.
ExxonMobil burns drilling cash by paying full shareholder dividends. ConocoPhillips did lower its dividend. Alaskans get Permanent Fund Dividend cuts while giving SB 21 cash back? Did you vote for that?
This crony capitalism law was courtesy of former Gov. Sean Parnell, then-Commissioner Dan Sullivan and an industry legislative leadership. Sullivan also “negotiated” a sweet settlement on Point Thompson leases with ExxonMobil.
Now a senator, Sullivan writes about “military investments should help Alaska weather economic challenges.” There are public money investments, but military funding is pure federal expenditures. So the $2-plus trillion eventual military cost, all debt, for the Iraq-Afghanistan war, was an “investment”?
An Alaska party official implores us to “proceed with caution overhauling oil and gas tax credits” on a “young” SB 21 tax system. Were the youthful bad behavior consequences written in?
For many years prior to the oil price collapse, world oil production zoomed, especially in the U.S. Yet worldwide demand was clearly static at the same time. The industry had to know what happens when drowning new supply ultimately meets little demand increase. The collapse was logically inevitable and it has happened before.
Yes, SB 21 has some more revenue at lower “normalized” prices, but gives progressivity to industry, with big cash credits that just happened to kick in. There are no coincidences when it comes to big money politics.
The Saudis have magnified the oil price crisis purposely. One of their key partners is ExxonMobil. After competitors have been crushed, ExxonMobil will nicely survive.
Exxon also created 40-year-old climate data it is fighting not to release; like the tobacco companies withholding cancer knowledge. Business as usual.
Industry/business shills and some politicians demand more public cuts — before fixing a bad resource revenue law right now.
It is another “cruel irony” that the Anchorage-Wasilla-Palmer-Kenai area will really be the most net affected by PFD cuts because their interconnected economies are dependent on a large regional average lower-end wage base population, which the PFD greatly supplements.
There is always a better revenue approach similar to Norway. The state collects its rightful full Owner State share up front, then all Alaskans benefit to weather inevitable fiscal storms. Not our corporate socialist welfare approach enacted by elected officials.
The end product price is sold as if the taxes were there. Even if they paid all the original taxes and royalties to Alaska, all that would be built into the price of the end product so the industry doesn’t actually pay royalties or taxes, imposed or not. But they can generate free no-cost capital.
For the Referendum vote, industry outspent the opposition by 30-1. A mere $14.1 million in oil slick schlock propaganda for billions in future paybacks. Only 39 percent of the public came to vote. The Legislature is supposed to protect the public interests, right?
One cannot have a fair long-term fiscal plan for Alaska without some glaring oil tax fixes. The majority of the public won’t buy in otherwise.
Yes, with 50 years of experience (since 18), I know that’s really a childish fairy tale civics lesson still taught — that the public comes first. But at least all legislators should make a believable pretence about who is owed their loyalty — the public.
• Anselm Staack is a CPA and an attorney, who has been an Alaska resident for over 42 years. He was the Treasury Comptroller for Alaska under Gov. Jay Hammond and worked directly on the creation of the Alaska Permanent Fund Corporation. He has instructed fraud and forensic investigation for the University of Alaska.
