Neither candidate for Senate District Q, which includes Wrangell, says they support Governor Sean Parnell’s oil tax structure reform plan.
During a forum Wednesday night, Republican Senator Bert Stedman and Democratic Senator Albert Kookesh fielded questions from potential constituents throughout the newly-drawn Southeast district. A question came up over the governor’s tax reform plans, which his administration said would provide new tax incentives for oil companies with existing operations as well as development for new fields.
Parnell withdrew his plan during a special session this past spring after state lawmakers failed to agree on a plan. Senators, especially those in the bipartisan working group, preferred incentives only for new discovery, while the House wanted to follow the governor’s proposal.
At the time, Parnell suggested the reforms would draw more investment into the state. But Stedman said he and other lawmakers contended the governor’s administration didn’t provide enough details to make that case.
“You don’t hear people talking about the incentives we have imbedded in our tax structure. All they want to do is lower the rate and keep the incentives. And quite frankly, if we would have adopted the governor’s bill, again, I think it was a breach of his fiduciary duties as governor of the state of Alaska to put forward a bill that egregious. And then to defend it, that’s even worse,” he said.
He said Alaska can’t give too many incentives to the oil companies because it would hurt the state, but he sees the need for some other type of adjustment to the oil tax regime.
Currently, oil tax rates increase at higher oil prices, and lawmakers were told the proposed cuts would have cost the state around two-billion dollars in lost revenue at likely prices and production amounts. Senator Kookesh said he is concerned about the amount of money pumped into campaigns promoting candidates who are pro-reform.
“If we want to fill the pipeline, if we want to do the work the governor essentially wants us to get to, we can’t do it just by changing the oil taxes. There’s a lot more to it than that. I like the idea of giving incentives to new fields and I think that’s important. Or new technology that will get us to the point of getting new or more oil in the oil pipeline. But at the same time, it really comes down to this: I don’t want to do anything that’s going to benefit the oil companies only. Alaska has to benefit from it. It can’t be just a one-way street,” Kookesh said.
He also pointed out the oil companies in Alaska made what he called “record profits” last year. Kookesh said that didn’t give him an incentive to do those companies any favors. Stedman said it is important to protect the state’s most valuable commodity.
“Prudhoe Bay is one of the top 10 most prolific oil fields in the world. This is not some backyard, Jed-Clampett-found little oil well. And we need to be very careful with this asset. And when the hydrocarbon is gone, it’s gone forever. We can’t pull it back up the pipe and sell it again,” he said.
Questions about investment in hydro-power also came up during the forum. Kookesh said he has always been in favor of those projects.
“I don’t think there’s a hydro project that I don’t like. I think everyone in Southeast Alaska has to be on a hydro system eventually, if they have a hydro potential near them. So I’m supportive of that. I don’t know why we would not be supportive of any hydro system in Southeast Alaska,” he said.
Stedman agreed and said certain areas of Southeast, such as Haines or Prince of Wales need to be examined closely because energy costs there are skyrocketing.
“I am concerned that the cost of electricity in Haines at roughly at mid-20s, 23 cents or so a kilowatt and $4 oil, that same rate is sitting in Fairbanks 23 cents and they heat their homes with oil and that town’s dying. So, Prince of Wales is similar in rate structure to Haines, and I’m concerned with both the entire Prince of Wales Island and Haines if we’re going to get economic development and keep our population from imploding,” he said.
The candidates admitted there are actually few points they differ on. Redistricting turned the incumbent Senators into competitors and voters will decide Nov. 6 who best will represent Senate District Q.