Lawmakers talk oil taxes, budget issues at forum

House Speaker Mike Chenault said he could justify Senate Bill 21 — a North Slope oil tax overhaul recently approved by state lawmakers — by referencing just one slide he saw while working in Juneau this legislative session.


That slide showed that Alaska was the only oil-producing state during the last few years that had declining levels of oil production.

“That should tell Alaskans something when we took on the task of modifying the ACES program is that Alaska was the only state in the union that saw a decline in production and you can relate that right back to investment,” the Nikiski Republican said. “If that investment is not happening in this state, we’ll continue to see that decline.”

Oil taxes were the main topic of conversation at a Wednesday gathering of lawmakers from around the Kenai Peninsula hosted at the Soldotna Sports Center. In attendance at the joint Kenai and Soldotna Chambers of Commerce luncheon were Chenault, Rep. Paul Seaton, R-Homer, Sen. Peter Micciche, R-Soldotna and Sen. Cathy Giessel, R-Anchorage.

The four legislators talked about the legislation they had sent to Gov. Sean Parnell for a decision and touched briefly on a smattering of subjects like derelict vessels, education funding, health, mining, corporate income taxes and the operating budget.

Micciche said the keystone piece of legislation that passed this session was SB21, which he said will move the state forward.

“I think you should be comforted in knowing that it is not the slash we talked about in the past,” he said. “It is sort of a gentler reduction that we evaluated carefully and brought us to a point where we believe that we are competitive with other producing areas.”

Giessel echoed that sentiment — Alaska can’t stop declining production of oil without a more competitive oil tax structure. She said lawmakers were able to pass SB21 based on the difference made by one election, a fact she said she marveled at this year.

“Those two years, 2010 and 2011, were the years of ‘no,’” she said. “Everything — no, no, no. This year was the year of yes. It’s time to do it. In fact this Senate majority had a slogan: time to act.”

She said ballot referendum efforts in the works to let voters decide whether or not to overturn SB21 were a “big hairy deal.”

“It’s a group of people pushing back and saying, no, again, just when the legislature finally moved Alaska forward,” she said. “So here’s the question — do we want a strong economic future for us and for our children or grandchildren? Or do we want to continue as the Speaker (Chenault) said, to ride the decline down?”

Seaton, who didn’t speak to the subject during the luncheon but commented by phone later Wednesday, said he initially voted against SB21, but then voted in favor of it on reconsideration.

He said he offered a number of amendments to the bill, which asked for performance requirements, that eventually failed. He said he wished such requirements made the final version of SB21 considering the degree of difficulty and amount of time it takes to change oil taxes in the state if they aren’t working.

“If students in schools have performance standards and teachers have standards and state agencies have performance standards, why can’t we have performance standards for the biggest multinational corporations as well?” he said. “That was the biggest thing I had problems with the bill about.”

Lawmakers also talked about the state’s operating budget, which Giessel said is “spiraling upward” and that it would be a “big job” to rein in that spending.

She said the legislature started that process this year, but cautioned that it would be a slow process.

“You run a home budget, you know how it is when you are starting to run over what you should be spending,” she said. “It takes a while to adjust back, but we have started to do that. Yes, we got some great funding for the Peninsula, but we focused on certain key things — infrastructure, health and safety, police, fire.”

Chenault agreed and said the operating budget is the “elephant in the room.”

He said the recently-passed House Bill 30 will bring auditors in to each state department over several years to “dig all the way to the bottom” and come up with recommendations on how legislators can get control of the state’s cost of operations.

“We have programs in some of these state departments that might be five years, 10 years, they might be 30 years old, but we don’t know how effective they are,” he said. “And we as legislators ... have 90 days to go through a $12 billion budget — (that) is pretty tough.”


Brian Smith can be reached at


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