Mulder unhappy about less favorable tax break for campaign contributor

Bill amendment leads to threat to kill fiscal plan

Posted: Sunday, April 28, 2002

JUNEAU -- Fairbanks Rep. Jim Whitaker says the powerful co-chair of the House Finance Committee threatened to kill a state fiscal plan and punish Fairbanks because of Whitaker's push to transform a bill that offers tax breaks for a natural gas pipeline.

Whitaker, a Republican who represents downtown Fairbanks, won committee approval of an amendment designed to make the oil companies eventually negotiate repayment of hundreds of millions in proposed tax breaks to help spur construction of a gas pipeline.

Whitaker said that Anchorage Republican Rep. Eldon Mulder issued the threats in a private conversation held shortly before the Finance Committee voted Friday to pass his amendment.

''He took me aside and said that 'if this amendment passes you can forget a fiscal plan, and I don't care if Fairbanks ever gets gas,''' Whitaker said in an interview after the committee adjourned.

Mulder wanted to simply grant the estimated $760 million state and local ''tax holiday'' and not require repayment. He did not respond to phone requests for comment on Whitaker's statement.

But after the amendment passed the committee on a 6-4 vote Mulder walked up to Juneau Republican Rep. Bill Hudson, who is an outspoken advocate for a long-range fiscal plan that includes taxes to help fill the state's projected billion-dollar budget hole.

Mulder told Hudson within earshot of reporters that he would not attend a meeting scheduled for Saturday morning in which the pair were to join 10 other representatives and Gov. Tony Knowles in talks designed to dislodge the stalled fiscal plan. Mulder did not attend Saturday's meeting. He could not be reached for comment.

The bill that Whitaker amended is House Bill 519, which lawmakers say is sponsored by Eagle River Republican Pete Kott at the request of Anchorage oilfield services company VECO.

VECO launched a major lobbying push for the bill at the Capitol in the past couple of weeks. VECO is an influential company and a large contributor to state political campaigns.

Mulder received about $9,000 in contributions from people affiliated with VECO be-tween Decem-ber 1999 and December 2001, according to the state's campaign disclosure reports.

After Whit-aker's amendment passed, Mulder was visibly upset and decided to hold the formerly fast-track bill in his committee.

''With the amendment, this bill does nothing to enhance or bring forward a gas pipeline project,'' Mulder said.

But both Whitaker and the other Fairbanksan on the House Finance Committee, Democratic Rep. John Davies, strongly disagreed with Mulder's characterization of the Whitaker amendment.

The amendment would, like the original bill, exempt a natural gas pipeline from all local and state property taxes during construction and the first two years of operation.

But Whitaker's amendment changed the bill to require eventual negotiation on terms of possible repayment of the tax breaks. The idea is that once the profits started coming in from the line, the state and local governments could recoup lost tax revenue.

The three major oil companies on the North Slope -- BP, Phillips Petroleum, and Exxon Mobil -- have so far said a $15 to $20 billion Alaska gas line would not assure them enough profit to justify the risk of construction. The companies have said the proposed state and local tax breaks would not make the pipeline feasible, but that they would be a step forward.

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