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Senate District O - Q and A

Posted: August 24, 2012 - 9:17am

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.

 

Peter Micciche: The constitution of our owner state is uniquely configured to ensure that economic benefits from the production of natural resources belong to the people of Alaska. A lease system awards the right to extract to companies successful in a bid process. Since ACES, the oil production tax system currently in place, interest in Alaska has lost significant ground to areas such as North Dakota, which has surpassed Alaska’s production in a relatively short time. Without a “corporate giveaway”, the system must be adjusted to help make Alaska more competitive to ensure increased production and future state revenue. I offer a choice as an experienced representative that understands the specifics of both the state and the producer’s perspective of the tax issue. I commit to maximizing investment opportunities that reduces taxes only after guarantees are delivered by producers to ensure local hire and sustainable production revenue for the people of Alaska.

 

Tom Wagoner: Yes. First, progressivity is too high; it needs to be reduced so companies are willing to increase their activities; the high rate is a disincentive to activity. Second, we must consider the legacy fields. Tax credits for explorers don’t always lead to production. The legacy fields are the producers and we absolutely need to have more oil production for the TAPS line. I introduced SB 85 to work toward that goal and a draft was presented. The draft was the result of the efforts of me and Senator Lesil McGuire, working with AOGA. It’s a Quid Pro Quo approach – when they produce more oil, they will receive more credits. If they don’t exceed their historical production level, they don’t get a credit. Much of the criticism over oil taxes this session was the uncertainty that increased activity would occur. My approach is the reverse – when they produce, they get credits; not before.

 

2. What role should the Legislature play in ensuring the future energy security of Alaska?

 

Micciche: Alaska’s energy security is currently the primary role of the legislature, since many of the citizens of our state are paying more to heat their homes than to pay for them. Clearly missing is a comprehensive, statewide energy plan that divides the state by common segments, quantifies the energy required and identifies the most efficient and cost-effective energy types to best serve each area. Key to providing reliable energy to most of the heavily populated areas of the state is an in-state natural gas pipeline. The legislature has been “discussing” pipeline options since I was 19 years old. I turned 50 this year. It’s time we elect leaders that understand options provided by natural gas, LNG, propane, hydro, wind, diesel and geothermal. There are different answers for each region, and the missing piece is a comprehensive understanding of what’s available and which source best meets the needs of each region.

 

Wagoner: We need to continue to support Governor Parnell’s activities with AGIA (Transcanada, Exxon, BP and ConocoPhillips) to bring the majors together. This is the big, 48 inch line that will provide for lower in-state tariff rates for local consumers. We need to continue to support the in-state line as well; it is the alternative to the big line. Keeping the in-state bullet line active is necessary to keep the pressure on the majors; competition is a good thing. But if the majors can’t come to an agreement, we should cease efforts on the big line, declare AGIA to be finished and develop the in-state line with the larger pipe so local consumers will benefit from lower in-state tariff rates. Legislative goals are for 50 percent energy from renewable and alternative sources by 2025. We need to continue developing our renewable energy projects; Watana dam, ORMAT geothermal, and wind and tidal projects.

 

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?

 

Micciche: Quality education is essential to Alaska’s future success as our next generation take our places to lead our great state. Although additional funding does not necessarily deliver improvement to the quality of education, I feel a primary responsibility of the Senate is to ensure that our young people receive the best education possible to adequately prepare them for life’s challenges. The legislature must focus on key responsibilities such as education and reject funding for such non-essential items such as the 2011 $2.5 Million grant for airfare to the Great Alaska Shootout. Prior to funding peripheral expenses associated with education, the need must be clear and associated funding should include an expiration requiring re-application when/if the specific need continues. I do not support revising the funding formula for peripheral expenses such as transportation and increasing utility costs simply because once the formula is revised, it becomes an expectation in the future.

 

Wagoner: Providing funds through the funding formula assumes that Alaska’s school districts have the same service issues; that we are a one-size-fits-all educational needs state. We are not. Urban areas have distinctly different needs from rural areas, and some districts, like the Kenai Peninsula, are a mix of rural and urban areas. I believe certain needs like transportation should be addressed separately. Comparing the Juneau school district to the Kenai Peninsula school district is a good example of different needs. Juneau’s area is 3,254 square miles while the Kenai Peninsula is 16,013 square miles. The transportation costs in Juneau would be less than ours because they are not as big and sprawled out as we are.

 

4. How should Alaskans vote on Ballot Measure 2, establishment of a Coastal Management Program? Why?

 

Micciche: I will not be supporting Proposition 2, since the initiative leaves many unanswered questions and doesn’t adequately quantify the expected cost of implementation. Ballot Measure 2 represents political torches and pitchforks by an electorate frustrated by the lack of progress and leadership in Juneau. I understand and share their frustration. However, voters provide the performance evaluation for their representatives and should consider not sending the same people to Juneau term after term that seem unable to complete the work of the people. I plan to work toward an acceptable solution to Coastal Zone Management that represents the conservative will of the people of District O. Simply allowing the plan to expire due to a dysfunctional Senate is unacceptable. The lack of leadership, efficiency and time management skills reinforce the public’s lack of confidence in the commitment of elected officials to uphold their oath of office for the people of Alaska.

 

Wagoner: Alaskans should not support Ballot Measure 2. It is a new, untested program with sweeping authority over all of Alaska’s coastline and encroaching into many uplands areas as well. A better solution is to return to the legislation that previously had support by the Senate, the House and the Governor. It is an unfortunate part of the legislative process when a lone elected official keeps taking another bite from the apple and subsequently tanks the entire bill. I support returning to the bill that had that sweeping support and reinstituting the Coastal Management Program.

 

5. What economic challenges does District O face in the next 5 years? How do you see yourself addressing those challenges in the Legislature?

 

Micciche: Replacing one representative at a time with fiscally conservative legislators dedicated to serving the people of Alaska would provide qualified individuals willing to reduce excessive spending in Juneau. Many municipal budgets have remained flat over the past few years while the budget in Juneau has doubled over the same time period. Key issues include sustainable spending, creative solutions that eliminate the need for the growth of state government and a competitive production tax structure. Local economic issues require a Senator that understands our economy and that can work with Legislators from other districts to build support for key Peninsula industries. Examples include bringing North Slope natural gas and propane to market to ensure stable energy supplies and jobs on the Peninsula for the long term, working between commercial and sport fishermen for allocation solutions, and reducing state spending to eliminate the potential for future taxation for Alaskan citizens and businesses.

 

Wagoner: Oil and gas development is on the upswing. Between my jack up rig credits, royalty reduction credits for platforms, and ring-fencing the Cook Inlet so it was NOT subject to the PPT/ACES credits, and other legislation, we’re having a renaissance. But, we need to be prepared. I provided funds for the Economic Development District to accomplish a Cook Inlet Assessment. The Kenai Peninsula Borough and the Federal Government also provided funds and that project is currently underway. Lack of fishing due to low Chinook numbers, is on the front burner. I directed ADF&G to provide a 5 year Plan to address that. All user groups need to consider enhancement, sonar counts, use of barbless hooks, and a multitude of other topics including dip-netting. Some of the solution is through the Governor’s office and some is from the Board of Fish. An effort to expand “tourism” beyond fishing would be very beneficial.

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