Parnell Dismisses Advice to Give Up on Oil Tax Cuts This Year

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By Bill McAllister
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Story Created: Apr 25, 2012 at 10:12 AM AKDT

Story Updated: Apr 25, 2012 at 10:23 AM AKDT

JUNEAU - Governor Sean Parnell says he is standing his ground in the special legislative session, despite criticism - even from allies - that his oil tax cut plan is "half-baked" and has been poorly defended by his administration.

The first week of the special session has been tough on the governor's bill.

His commissioner and deputy commissioner of revenue met a barrage of criticism testifying before a Senate committee, from both Democrats and Republicans.

And today a pro-oil industry blogger said it's time for the governor to give it up.

The governor's proposed one-billion-dollar-plus annual tax cut for North Slope producers was declared dead in the Senate on the first day of this year's regular session.

And senators in the bipartisan majority today seemed as dug in as ever against it.

Said Senator Bill Wielechowski, D-Anchorage: "ConocoPhillips made $616 million in the state of Alaska this past quarter -- $7 million a day -- vs. $254 million in the Lower 48. So I guess we can sit here and try to guess what all things are going to be or we can look at the actual numbers, which show that Alaska is an extremely profitable place to do business."

And blogger Andrew Halcro, a former republican legislator and former independent candidate for governor, called on the governor to give up, saying his team badly mismanaged last week's hearing in the Senate Resources Committee.

But in an interview with CBS 11, the governor rejected that characterization as well as Halcro's advice.

"I will never give trying to create opportunity for Alaskans and that comes in part from new production. I understand the frustration levels are high at this time. I have to tell you, though, the Senate has had my tax proposal for 16 months."

While the Senate has focused on exploration in new fields, Parnell says there are potential compromises that include the so-called legacy fields of Prudhoe Bay and Kuparuk.

"So for example, the idea I'm hearing floating is what if new wells in existing fields were treated like new wells in new fields? Meaning, give them the 10-year tax reduction."

The governor noted the Legislature's own consultant sees problems with the current tax structure.

Janak Mayer of PFC Energy told senators: "What I see when I put all these things together and run economics at different costs through the model is that not only does the overall rate of government take not decrease as costs go up, it either stays flat or slightly increases."

That's enough to keep the governor in the fight.

As for Senator Lesil McGuire's assertion that the governor's bill is "half-baked," Parnell said he talked with her afterward and understands her frustrations with the process so far.

 

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