1. Are there problems with the state’s current oil tax structure? If so, what is the best approach to fix them? If not, please explain how and why the status quo is working.
Liz Diament: The current ACES formula instituted by the State Legislature is fair and working. Tax structures are always open to changing and I will work with both parties to ensure that we maintain fairness. Governor Parnell’s recent proposals to reduce the share oil companies pay to the people of Alaska without any assurances from them on an increase in production is not in our best interest.
Jon Faulkner: Alaska’s oil tax structure is largely working but requires minor adjustment in order to reverse declining production. Alaska needs a stable tax environment for both sides that incentivizes and rewards private investment for the risks associated with arctic exploration. If we fail to act, Alaskans will suffer. ACES has increased revenue to Alaskans, but unless adjusted it could jeopardize the careful balance between investment risk and reward. With production declining 6-8% a year, Alaskans cannot risk the status quo, or the “Tax INCREASE” policies of my opponent (See HB328). We must stimulate more exploration and production. I support easing the upper progressivity brackets of ACES, in exchange for reasonable investment guarantees in heavy-oil extraction technology and more aggressive exploration. Finally, let’s demand an approach that relies less on politicians and hired outside consultants than on trusted Alaskans with proven expertise, integrity, and conflict-free decision-making ability when developing oil tax policy.
Paul Seaton: There are some problems with the ACES tax structure but radical change is not prudent or needed. ACES has produced more North Slope explorers and drilling than ever before. A reform bill should include a reduction in the max tax rate from 75% to 60%. It should also include a reduction in progressivity at $60 profit from the 0.4%per dollar to 0.35% up to the cap. We should also make the corporate income tax apply only to profits from Alaska which would allow us to lower the rate by 3% while collecting the same amount. Currently our income tax allows reduction in Alaskan tax to offset for the lower worldwide profits. We can increase our worldwide competitiveness by 3% simply by getting rid of this ‘smoke and mirrors’ accounting. We need to incentivize Alaskan investment, not reduce Alaska taxes to promote overseas investment in less profitable projects.
2. What role should the Legislature play in ensuring the future energy security of Alaska?
Diament: The legislature plays a role in ensuring that energy is available and affordable to Alaskans and that those who export our energy resources are giving us a fair price for doing so. In this role, the legislature can make sure that gas reserves in the State are reserved for in-State consumption through efforts such as financing gas distribution trunks to population centers as is currently being done on the Kenai Peninsula. The legislature also plays a role in leveling the playing field for competition in the energy industry. Gasoline costs are high in Alaska in part because a few gasoline marketers hold a near monopoly. The legislature can incentivize competition in this arena, lowering the cost of filling our gas tanks. Alaska does not have a secure energy future without development of alternative sources of energy. While today’s economy is powered by Alaskan oil, tomorrow’s will be powered by renewable sources of energy.
Faulkner: The Legislature should encourage energy projects that meet the Governor Hammond Test: Is it supported by the majority of Alaskans? Is it environmentally sound? Does it maximize use of the resource and pay for itself? In their zeal to create economic activity, politicians often overlook fundamental economics, such as encouraging competition. Energy security is best achieved by encouraging innovation through entrepreneurialism and free-market competition conducted on a level playing field. If freed up from burdensome regulations, Alaska’s next generation of young engineers will find improved ways to enhance home-based energy-production; to develop environmentally sound tidal, wind and solar generation plants; to explore thermal, coal gasification, hydro-electric and other energy technologies. As we seek energy security, we must find a better way to overcome the impasse between environmentalism and natural resource extraction. The uncertainty of litigation is our greatest challenge. Go to www.votejonfaulkner.com for one possible solution: Alaska Natural Resource Trust.
Seaton: Stable and secure energy supplies and prices are vital for both Alaska businesses and residents. I worked hard to get natural gas available to the residents on the lower Peninsula and we need to continue finding stable and secure energy in any form for the breadth of our state. Alaska should be willing to help with initial construction to make energy competitive of projects such as Bradley Lake hydro and Mt. Spur geothermal but not ongoing subsidy. I have supported the use of efficient wood burning boilers and the stable local jobs these projects can produce, whether the energy source is timber, barley, or willow ‘farms’. I am helping Homer to establish a Tidal Energy Incubator at the deep water dock so that Alaskan entrepreneurs can test their technologies without having to spend time developing anchoring and monitoring systems.
3. Last session, there was a debate on whether to address rising costs to school districts with an increase in the funding formula, or through appropriations to address specific needs. Where do you stand on this issue?
Diament: I believe that funding for education should be done on a strategic, long-term basis, with locked in increases to the funding formula over at least a five year period. It is wrong to think that any organization, let alone a school, can undertake improvement plans without knowing what resources it will have available to meet problems. The legislature has a propensity of using one time appropriations for improvement of our schools. While these appropriations have a place in project oriented improvements, the actual business of improving our education is best accomplished through rational funding formulas. Some legislators and our governor seem tied to measuring success through the federal ‘no child left behind’ testing of our students. I believe better measures of success of our schools need to be determined and Alaska should seek waivers to the testing provisions of no child left behind.
Faulkner: How do we introduce greater accountability to the public for education spending and academic achievement? I believe it starts with the Legislature, using both these tools. Once the funding formula is set, the Legislature loses control and accountability over how those funds are spent at the District level. Alaska’s diversity requires local discretion and control. Increasingly, however, parents want to understand how an increase in the funding formula will translate to their child’s mastery of the basics. Initiatives that justify increases to the funding formula include: forward funding that will help administrators control costs and increase the quality of instruction; weaning Alaska’s school system from Federal control; and keeping pace with inflation. However, there are other budgetary controls that justify greater oversight and accountability from legislators. Examples are: academic assessment and testing; AASA related sports or music programs; supporting parental choice; health and retirement benefits; and funding for special-needs students.
Seaton: I have been actively engaged in school funding through 10 years membership on the House Education Committee (two years as chairman), membership on the Legislative Taskforce on School Funding where we adopted the phase-in of the full ISER geographic cost differential, and as chair of the House Commission charged with reviewing the foundation funding formula. My position is that allocation of funds within the districts should be made at the local level to most effectively address the meaningful education of each student. “Specific cost allocation” conflicts with the concept of a formula that incorporates geographic differences, so I support the formula increase mechanism with rare emergency exceptions. “Appropriations to address specific needs” become politically driven, though pilot projects to get better data are appropriate.
4. How should Alaskans vote on Ballot Measure 2, establishment of a Coastal Management Program? Why?
Diament: Alaskans should vote Yes on this proposition. The proposed law would allow Coastal communities to have input into decision by the Federal Government on resource development of our land. Rejecting this measure limits Alaskan input into coastal management to our Governor’s office. The oil and mining industries are very excited about this prospect and are out in force opposing this effort—so much so that the average donation for defeating the measure is $17,400. When Alaska Miners put $160,000 and Shell puts $150,000 into such an effort we need to ask ourselves why big business would sink so much to limit our voices. I’m a firm believer that Alaskans should have input over our local resources. Therefore, I am voting Yes on Ballot Measure 2.
Faulkner: Alaskans should vote “NO.” In 2012, the House passed a reauthorization bill for Coastal Zone Management, showing an ability to act legislatively. However, Prop. 2 is vastly different from that bill and expands the scope and cost of government. It invites another layer of Federal oversight far inland from our coast and creates vague permitting standards. Proponents tout local control, but fail to acknowledge that Prop. 2 disenfranchises the majority of Alaskans. Those who argue that this is the ONLY program that protects our coastline are dismissing the work of state agencies and municipalities who are mandated to perform these duties. Proponents insist that Prop 2 is the only program that forces the Federal Government to listen to and heed Alaskans. If the goal is to limit encroachment of the Feds, or to increase Alaska’s influence over Federal policy, the legislature is the appropriate body to guarantee this really happens.
Seaton: Alaskans should vote YES on the Coastal management issue to preserve the significant local voice on coastal projects in their region. Without the local coastal plan to address the physical differences between the regions, big government agencies make all the decisions on the one-size-fits-all basis of either nationwide or statewide standards, which by definition, does not deal with the regional differences. A huge concern for Alaska is the Offshore Aquaculture Act which will establish federal fish farms in the 3 to 200 mile federal zone. Since that federal law specifically does not supersede the Coastal Zone Management Act, the best way to keep fish farms which are banned in Alaska from developing off our shores is to reinstate the program to the Jay Hammond form. The initiative reestablishes the policy board, the coastal districts, and adopts the previous plans which had all received federal and state approval.
5. What economic challenges does District 30 face in the next 5 years? How do you see yourself addressing those challenges in the Legislature?
Diament: I decided to run for the legislature in part because when I looked at the legislature, I didn’t see people like me representing me. I work two to three jobs, season to season in order to get by. I want someone who knows how that feels representing our interests, especially when I consider the impacts on our livelihood. We depend on a thriving Alaskan environment. Fishing quotas will hamper commercial and charter operators. We need to get the best minds in fisheries to determine a solution for this problem before we lose our livelihoods. I will work in the legislature to create new and creative sources of jobs. Working to bring jobs being done at a distance such as financial services and health diagnostics back to our communities could create great paying, long-term jobs. We need to invest in creating a technology and alternative energy infrastructure that would allow us to create jobs.
Faulkner: The economic challenges faced by this District are as severe as I have witnessed in 24 years. Virtually every industry except government has experienced recent decline: commercial and recreational fishing, timber, tourism, retail, and until 2012, oil and gas. These declines are hurting Kenai Peninsula residents and small businesses. They are NOT the result of uncontrollable outside forces, but rather the direct result of many years of LOCAL neglect and poor leadership by our Representative. This District needs someone who knows how to create jobs and get our local economies moving again! As a Legislator, I will draw on my business experience to help build opportunities for residents of this District in the same manner I have my entire life: by building upon the strengths of our communities, by encouraging private sector job-growth and entrepreneurial investment, by unleashing the passion, energy, and innovation that has made Alaska a great state!
Seaton: A challenge is high energy costs. I will work to follow the Norway model of a small tanker or trucked LNG serving Seldovia and remote communities. I will work to secure access to gas in other areas such as Funny River, with a bore underneath the river from Sterling. Highway fuel natural gas should be incentivized to drastically lower transportation costs. Our fisheries need non-political management and enhancement. A drastic reduction in bycatch wastage of king salmon by offshore trawl fleets is imperative. The weak stock salmon management mindset this last year must not be repeated in the coming years. If the legislature were to approve a big oil tax reduction strategy (HB110) sending us into perpetual deficit spending, severe cuts to everything including revenue sharing should be anticipated. That would also curtail infrastructure improvement to roads, ports, and public buildings. I will work with our communities for solutions.