Kodiak’s state senate representative and Sen. President Gary Stevens returned to his hometown from work in Juneau and gave a legislative update to the membership of the Kodiak Chamber of Commerce during their annual meeting Saturday.
Stevens focused his comments on three main topics from the Legislature important to Kodiak residents: The governor’s proposed oil tax break, redrawing the boundaries of Kodiak’s house seat due to the 10 year census, and education spending.
Alaska Gov. Sean Parnell has called for additional oil exploration and development credits and changing the progressive tax on oil production passed in 2007 called Alaska’s Clear and Equitable Share (ACES). The governor has said lower oil tax rates would create a friendlier business climate for oil producers to invest in Alaska, reversing declines in oil flowing through the trans-Alaska pipeline and generating more jobs for Alaskans.
Stevens is taking a critical approach to the proposed tax changes.
“I have real concerns about the oil tax,” he told the chamber members.
With oil taxes accounting for approximately 90 percent of the state’s legislative budget, a decrease in revenue may force the Legislature to tap the state’s savings accounts and cut program spending. The taxes from oil production is also the reason Alaska doesn’t have statewide income or sales taxes.
“That pays for education, that pays for police, it pays for all the things we find so important here,” Stevens said. “So oil is what pays the bill.
“I’m very concerned about that declining.”
Stevens said the governor’s oil tax credits would cost the state $10 billion over the next 7-8 years. He also said Alaska already gives tax advantages to oil companies, totaling between $2-3 billion since 2006.
“That’s a lot of money,” Stevens said. “That’s money that would have come to you, in taxes, that we could have used in this state. But we gave it to Big Oil with the idea that they would explore and develop.”
Stevens said oil companies didn’t use the money to explore and develop. Instead, he said, oil companies used the money for maintenance.
“My concern is if we didn’t get what we want with $2-3 billion, how can we be assured we get what we want with another $10 billion?” Stevens said.
Stevens said he asked oil companies how they could guarantee the money from the tax credits would be used in Alaska — adding more exploration and development to produce more oil for the trans-Alaska pipeline and hiring more Alaskans.
“And they can’t tell us that,” Stevens said. “And the reason they can’t is that these are large corporations and the decisions are made at board level, not here in Alaska, so it’s a real concern.
“We have got to make sure that if we give (oil companies) the credits they want, that we get something out of it.”
Stevens predicted that the oil tax changes wouldn’t fly through the legislature without a great deal of scrutiny. “It’s probably not going to happen real fast,” he said.
“I’m not trying to say we can’t go too far,” Stevens said. “Maybe we are charging too much. We’ve got to find the answer to that. What we have to find out is how we compare to other states and other nations and it’s hard to get that fact.”
Where Stevens and the governor agree is that something needs to be done to reverse the downward trend of oil through the trans-Alaska pipeline. Oil production on the North Slope is declining about 6 percent per year.
“The biggest problem is that we have enough oil in that pipeline to keep it in operation,” Stevens said.
In contrast to oil tax breaks, Stevens hoped other oil resources would come available soon, including the Arctic National Wildlife Refuge (ANWR).
“We’ve had trouble getting that through congress, but there’s been a change in congress,” Stevens said, recounting recent meetings with Republican Speaker of the U.S. House of Representatives John Boehner and U.S. Sen. Lisa Murkowski on opening ANWR.
“We’re going to wake up in this country and realize that we are going to have to stop importing oil (from around the world), especially from places we do not trust and start developing the oil within this country,” Stevens said.
As the senate president, Stevens is one of four people who selects the individuals that form the redistricting commission that will decide the new boundaries for Kodiak’s representative district. District 36 now includes all of the Kodiak Island Borough and parts of the Lake and Peninsula Borough.
Stevens chose Kodiak resident Bob Brodie to sit on this board.
“That is an extremely important commission,” Stevens said. “Every 10 years when we have a census we figure out what our population is and we divide that population by 40 and then we decide what districts we will have in the state of Alaska.”
Alaska has seen a population increase on the whole, but Kodiak Island’s population has remained relatively level. Stevens said the district that includes Kodiak Island will need to be combined with about 4,000 more people.
John Torgerson, chairman of the reapportionment commission, spoke with Stevens about a plan to attach Kodiak to Dutch Harbor.
“That would give us the population,” Stevens said. “In many ways it’s a good idea. Dutch Harbor has common interests with us.”
Stevens said another possibility would be to create a district that combined Kodiak Island and Seldovia.
“In the end rural Alaska, including Kodiak, will see ourselves in a physically bigger district,” Stevens said. “In Anchorage the opposite is true. Anchorage and the Mat-Su, they will have smaller districts so they are going to have more representation than we do and I’m concerned how that turns out. It’s worked out well to this point but we do know with the population moving toward the urban areas there could be some concern in the future.”
Stevens said there are discussions in Juneau to have a small increase in the foundation formula, which funds school districts based on a student enrollment.
“We know that there are a lot of costs that have just accrued and it’s hard for schools to continue if they have to take (money) from other budgets to pay for those costs,” he said.
Before the legislative session, Parnell called for a Governors Performance Scholarship that would use state reserve funds and put $400 million into a high school scholarship plan. Scholarships would be handed out based on a student’s grades.
“That was more than we thought we could afford at the time,” Stevens said. “That’s probably not going to happen.
“But we are going to have a scholarship (plan) that is both needs-based and merits-based. And I think in the end more Alaska students will be able to go to college because of that.”
Mirror writer Wes Hanna can be reached via e-mail at email@example.com.