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Fact check: Did Alaska oil-tax cut trigger engineer hiring boost?

Alex DeMarban

Republican chest-beating over the passage of a massive tax cut for the oil industry continues, with Sen. Cathy Giessel, R-Anchorage, recently proclaiming in a joyous press release that more engineers are moving north to the promised land for work.

“With the recent passage of oil production tax reform, our workforce is already growing! And that includes professional engineers!" shouted Giessel, who represents voters from the Hillside in Anchorage to the Kenai Peninsula.  

But the official numbers raise questions about that argument, and a state licensing administrator said it is likely too early to tell how the tax cut is impacting the number of licensed engineers in Alaska.

The cut, amounting to at least hundreds of millions of dollars a year that will primarily benefit Exxon Mobil Corp., ConocoPhillips and BP, was passed two months ago by Giessel and other lawmakers. It's set to take effect Jan. 1.

Tax-cut supporters have pointed to recent announcements by Conoco and BP that the cut is working. The oil giants have said the tax break improves oil field economics, and will allow them to increase their efforts to produce more oil on the North Slope. Critics have dismissed the oil company's claims, saying the work they're planning would have happened with or without the tax cut.

Giessel said Friday that she's recently heard from companies that can't find enough engineers. She also learned "in passing" a couple of weeks ago that an oilfield services company boosted its engineering workforce from 50 to nearly 100 engineers after the cut passed.   

Giessel, whose husband Richard S. Giessel is a civil engineer who worked for R&M Consultants until March, said she couldn't recall the name of the booming company or the oil field where they are working.

"I can't remember which one or specifically what they were doing, and it may not be directly in the oil field," she said. "Of course, we have a lot of roads and industrial development going on as well."

Giessel said such work indirectly ties back to what's happening in the oil patch in a state that's primarily funded by oil, and the work may be in its design phase rather than the construction phase.  

At any rate, a look at the engineers licensed by the state does not indicate dramatic growth in 2013, at least not through June 1, two days before Giessel sent out her release.

Engineering disciplines generally employed in the oil industry are chemical, civil, electrical, mechanical and petroleum, according to Vern Jones, executive administrator for the state Board of Architects, Engineers and Land Surveyors.

The AELS board oversees the licensing of engineers in Alaska, as well as architects and surveyors.

In the latter half of 2012, the board issued 122 new licenses in those oil-related engineering disciplines. In the first five months in 2013, the board issued 102 new licenses.

Averaged out, that means the board continues to add about 20 licenses a month, as it did in the second half of 2012.

Jones said it is "probably a little soon to tell" just how the oil tax cut is affecting the state's engineering professions. "The only thing I've seen in the papers is Conoco and BP are projecting an increase in the next two to three years with more rigs and projects, but I don't know that there'd be an increase right away."

Giessel is correct in pointing out, as she does in her release, that the number of licensed engineers in Alaska rose last year, along with licensed architects and surveyors. But Parnell had not even proposed the tax break that recently passed, with amendments, until January of this year.  

In fact, the number of licensed engineers, architects and land surveyors have risen fairly steadily the last five years, which some might see as a tribute to the soon-to-be replaced tax law now on the books.

The number of engineering licenses grew from 4,232 in 2008 to 5,649 in 2012. That 2012 figure does not include an additional 34 engineering licenses added because the board expanded the types of engineering disciplines it licenses, adding, for example, more specific fields such as fire-protection engineers. Some engineers hold multiple licenses because they're skilled in various areas.    

Also, there were 539 licensed architects in Alaska in 2008, compared to 615 in 2012. And during that period, licensed land surveyors grew from 478 to 500.

The growth has caused the board to take on extra work in recent years, which led Giessel to sponsor a bill this year to pay for a single full-time investigator. The governor recently signed that bill, which prompted Giessel's press release.

Officials with the board have attributed a big part of the growth in licenses they oversee to the economic recession in the Lower 48, saying companies and professionals have looked north for work in recent years.

Firms that employ engineers, surveyors and architects, as well as individuals skilled in those professions, have been getting licensed here in order to compete and work on private and public projects.

Meanwhile, Alaska largely escaped the recession. Supporters of the outgoing tax system have said that's in part because that tax system produced a huge windfall of state revenue, and because the large credits it offered spurred investment in the North Slope oil fields, leading to record employment there.

The state squirreled away billions of dollars of that windfall. It also plowed billions into capital projects throughout the state, creating more employment opportunities for engineers, architects and surveyors.

Asked if such growth indicated that the outgoing tax has not been so bad, Giessel said the growth came because the state was "spending money like drunken sailors" and creating jobs after getting nearly all its tax revenue off the backs of oil producers.

Contact Alex DeMarban at alex(at)alaskadispatch.com

Correction: This story originally said that Richard S. Giessel currently worked for R&M consultants. He resigned from the company in March after working there many years.