By Jenny Neyman
Drivers with their windows rolled down Saturday afternoon at the “Y” intersection of the Kenai Spur and Sterling highways would have heard a chant of “It’s Our Oil” from demonstrators on the corners. It’s unlikely they were widely heard, given the still-wintery weather causing a prioritization of heat over fresh air among most the passing vehicles.
But it’s unlikely they were missed, either, with a copse of large signs and sprinkling of neon attire. They were there to raise awareness of issues before the Legislature as it nears the end of its session April 14.
“Local people are not really aware of what’s happening. Complacency, everybody has their own lives to live, they’ve got their jobs to do, they’ve got their kids to take care of. They don’t have time to take a look at what’s happening. All of a sudden they’re going to wake up one morning and realize that, ‘Hey, where’s the money we saved? It’s gone.’ That’s what everybody is coming out for,” said Dick Waisanen, of Soldotna.
Proposed changes to the state’s oil tax structure and legislation regarding education were the most predominant signs, and several demonstrators voiced concern over the trimmed state budget making its way through the Legislature. Cuts are being made to important services, said Mary Toutonghi, of Soldotna. She lays blame squarely with the oil tax legislation.
“The oil giveaway is causing all sorts of reductions in services,” she said.
Mental health, early childhood education, health care “have been cut because we can’t afford it, and they’re going to have to dip into the state savings account, and I think the permanent fund is in danger. They’re all services to people, and it’s the people’s oil and it should serve them,” Toutonghi said.
Legislators, in trimming state spending, have warned of more austere times to come as oil production continues to decline in the state. Oil is declining, Waisanen agrees, but that shouldn’t mean taxes on oil companies should be reduced — as Senate Bill 21 proposes to do.
“We’ll have less money for education, less money for roads. We need to take a look at the fact that it’s our money. Leave the money in the ground if we have to, but let’s not give it away. That’s what Senate Bill 21 does is gives away our oil,” he said.
Chief among the changes to the state’s current oil tax structure — Alaska’s Clear and Equitable Share, passed in 2007 — would be a lowering of the base tax rate (currently to 33 percent), eliminating the progressivity of the tax rate under ACES, where oil companies pay more in taxes when oil prices are up and they make more in revenue.
The idea for the new structure is to create a more competitive investment climate in Alaska so that businesses will be motivated to expand activity, thus offsetting the decline in tax revenue with increased production. Gov. Sean Parnell’s administration’s latest fiscal note on the bill estimates the state would lose about $1 billion a year through 2016, and more past 2017. Oil company executives testifying to the Alaska House Finance Committee on Monday said SB 121 would change the state’s investment climate and make it more attractive to invest more money here.
But they wouldn’t go so far as to commit to any level of new production or investment, and SB 121 doesn’t require any guarantees. “Lower it and they will spend” is too risky a gamble with state money, demonstrators said.
“There’s nothing to make oil companies meet any requirements for the state,” Toutonghi said. No requirement of a financial audit to gauge whether the new tax structure is working and resulting in increased activity, no requirement that oil company profits be reinvested in the state and no requirement for Alaska hire, she said.
Company executives said the bill would align Alaska’s oil tax climate more with other areas of the world in which they do business. Whether Alaska likes it or not, it’s a global marketplace, and companies aren’t likely to expand their current operations here if it’s more financially beneficial to do so elsewhere, they said.
But is SB 121 the right approach? Demonstrators on Saturday didn’t think so, citing the lower tax rate and the lack of guarantees of increased production.
“There’s nothing, it’s just a plain giveaway,” Toutonghi said.
Demonstrators also took issue with legislators who work for oil companies voting on the oil tax bill, including the Kenai Peninsula’s Sen. Peter Micciche, R-District O, who is manager of the ConocoPhillips plant in Nikiski. He and Sen. Kevin Meyer, R-District L, also a ConocoPhillips employee, have taken the most heat in the issue.
Meyer sought an ethics opinion in 2008 over his voting on oil issues, which cleared him of a conflict of interest because he wasn’t a decision-maker or negotiator for the company. Micciche sought an opinion from the Select Committee on Legislative Ethics, which was issued March 28 and likewise cleared him from a conflict in voting.
“I took the time and went through the effort to have the ethics committee review all of the methods in which my family earns a living, which include commercial fishing, the natural gas industry, residential rentals and investments. I went through the exercise to be able to determine to myself, my family and the public that the due diligence to define if any sideboards exist in my legislative service,” he said.
Still, when the vote on SB 121 came up, Micciche asked to recuse himself, citing a conflict or the perception of a conflict of interest due to his employment in the oil and gas industry.
“I will continue to be completely transparent on issues where a conflict can be perceived or if there is ever a case where I have an actual conflict in accordance with the ethics act. According to the bipartisan Legislative Ethics Committee, there was not an actual conflict in the case of SB 21, but I can understand where the perception of a conflict could exist for folks unfamiliar with the act,” he said.
But a recusal must be unanimously approved by the rest of the members, and Micciche’s request to abstain from the vote garnered an objection.
“I asked to be excused, but was not excused by the body. Therefore, I was required to vote,” he said.
Not good enough, demonstrators said.
“The Legislature is doing things to meet the letter of the law but there is no substance,” Toutonghi said.
Waisanen said he’d rather that oil company employees, or those with spouses employed by oil companies, recuse themselves from votes on issues with direct financial impact on such companies, even if that meant his homer district was unrepresented in votes.
“But I think if you take an honest look at yourself and the biases you have, you have to recuse yourself. I can contact other legislators and give my opinion and hopefully persuade them. With this delegation we have here we’re pretty beholden to the oil companies, unfortunately,” Waisanen said. “It’s a sad day for the state but we’re here anyway because we want to let people know, ‘Hey, some people are paying attention.’”