Despite resistance from Senate President Lyda Green, Palin's nemesis, on the 30th and final day of the session the Legislature increased the base tax rate to 25 percent and put the progressivity feature on steroids. In December, Palin signed the bill, which was partially retroactive.

These five years later, state spending has increased dramatically and the Legislature has at least $16 billion in savings, not including the permanent fund. But Parnell and the industry say the result has been diminished prospects for oil production. Although North Slope investment and employment are at or near record levels, the producers say this is based upon the need to maintain the facilities originally constructed in the 1970s. They say they're not exploring for new oil.

ACES has generous credits – too generous, some say – and this has drawn in explorers, such as Repsol, Great Bear and Armstrong. But critics of the tax policy say that those companies are going to want to see a break in production taxes when they're actually ready to produce. The other side counters that the majors have enormous profits even after the taxes, and enjoy political stability in Alaska, where their facilities are unlikely to be seized at gunpoint, which is a danger in a few other parts of the world.

Although this is the main issue in both House and Senate races, the Senate is getting the focus because of the coalition. Parnell, GOP State Chair Randy Ruedrich and the industry have made it their primary goal to break up the coalition.

Two Republican members of the coalition were defeated in the primary – Linda Menard of Wasilla and Tom Wagoner of Kenai – and their victorious opponents have spoken against the coalition. Two others, Anchorage Republicans Kevin Meyer and Lesil McGuire, have publicly disavowed the coalition. So there is incredible pressure on the remaining members to hold their seats.

Top Senate races

Senator Hollis French (D) vs. Bob Bell (R) in West Anchorage (Senate District J)

French is considered the father of the progressivity feature. Bell's engineering firm has done work with the producers for decades. Bell was fined $390 by the Alaska Public Offices Commission (APOC) for initially failing to disclose his firm's clients and the amounts they paid. He blames confusion over a rule change in December 2011, which put CEOs under the same obligations as owners of companies. Meanwhile, a Republican operative has filed a complaint against French with APOC, saying he coordinated with an independent group that was running ads on his behalf. Such coordination would be illegal. French says despite an overlap of personnel among his campaign and the independent group, Putting Alaskans First, there was no discussion of advertising strategies between them. French was touting an Alaska Dispatch story saying that Bell broke state game laws in 2010 by keeping horns from a subsistence musk ox hunt. Bell denied that he removed the horns from the game management unit, which would be illegal unless the trophy value was first destroyed by cutting them. (The issue is that the state doesn't want meat wasted in subsistence hunts by trophy hunters.) Since then, the online-only Alaska Dispatch hammered away at Bell, until troopers clarified Bell had not broken the law. By all indications, this is a close race.