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Alaska oil tax debate revs up, with Parnell noticeably absent

Alex DeMarban
Aaron Jansen illustration

In a prelude to the Feb. 25 "Broil Over Oil" that will pit a former gubernatorial candidate against a fresh-faced contender, Sen. Bill "Baby-Face" Wielechowski took to the stage at an Anchorage middle school on Saturday in what he called a self-debate against cutting oil taxes because Gov. Sean Parnell refused to duel.

For the most part, Wielechowski revisited arguments he's made in recent years in Juneau, using studies and statements from administration officials to buttress his claim that the current oil tax system works well but could be improved with tweaks.

In short, Alaska's oil field taxes are competitive with other oil provinces, they've helped produce record revenue for both the oil companies and the state, and they've launched unprecedented oilfield investments that will lead to new production, he said.

On the other hand, if the governor's bill passes, Alaska will lose billions that could help pay for stronger schools, new roads, jobs and more investment in the oil patch, while giving it to global oil giants who might not reinvest it in the 49th state, he said. 

Jotting down notes in the audience was the ever-savvy Andrew "The Dapper Destroyer" Halcro, president of the Anchorage Chamber of Commerce, who at high noon on Feb. 25 will do the job Parnell won't do and take on Wielechowski in a debate on Halcro's home turf at the chamber.

It promises to be a worthy fight. Halcro, a car-rental-business owner and former muckraking blogger, won over audiences with scathing witticisms and shrewd retorts when he lost the governor's race to Sarah Palin in 2006. 

On Saturday at the Begich Middle School cafeteria, Wielechowski told more than 120 folks who'd gathered on a sun-drenched day that the recent kerfluffle started when the governor Tweeted last month that Democrat opponents of his bill (Wielechowski is one) are "extreme."

Wielechowski said he wanted to get past the name calling, so he Tweeted back the governor this ballsy rebuttal: "What do you say you and I debate this issue on statewide TV?"

Parnell retreated, saying through his spokeswoman the discussion should take place in the Legislature, even though a radio talk show host offered up his program as a venue. The idea was that a frank debate could help illuminate a topic usually driven by numbing facts, hard-to-follow charts and droll testimony in Juneau far from most Alaskans.

Thanks to Halcro, who recently emailed Wielechowski requesting a showdown, the brawl is on. Speaking with reporters at the middle school Saturday, Halcro said he's tired of the "half truths" and "scare tactics" told by opponents of major tax reform, such as that Alaska's economy will shrivel if oil taxes drop. 

Wielechowski is right the North Slope is experiencing record employment and an "explosion" of new explorers, but there's more to the story, Halcro said.

"So when we talk about the growth in employment on the North Slope, a majority of the people are doing maintenance, basically fixing a 35-year-old pipeline," Halcro said. "And you have these new explorers that are bringing in lots of people and drilling holes but they are costing the state hundreds of millions in tax credits and they have yet to produce any oil."

Wielechowski, by the way, said it's not true that most of the work is maintenance. He produced a 2010 Revenue Department statement saying the "majority of growth in capital expenditures since 2007 is attributable" to production-related activities.

At any rate, Halcro said the new explorers and other oil field companies all agree that tax reform will be needed before they can afford to produce new oil. Continue the status quo, Halcro warned, and Alaska is a on a crash course over a fiscal cliff as state revenue shrinks.

But just how to revamp the tax system to spark new production? Halcro has concerns about Parnell's attempt to remove the progressivity portion entirely, and leave just a 25 percent base rate.

"Progressivity is absolutely something that needs to be fixed," Halcro said. "The question is: What works?"   

Wielechowski, who calmly cruised through dozens of Power Point slides during his talk, said the governor's bill amounts to more than a 50 percent tax cut for oil companies. It will cost the state more than a billion dollars annually in lost revenue, and blast a massive deficit into the budget that could lead to potentially higher individual taxes for Alaskans.

"The governor says his bill is fair to Alaskans. Well how is it fair to give away billions of dollars and get nothing in return? That's not fair to Alaskans," Wielechowski said. 

Wielechowski, whose been studying the oil-tax issue for six years in the Senate, said he'll take his one-man show on the road because the issue could have huge implication for Alaskans. He plans appearances in the coming days in Juneau and Fairbanks, in addition to the one at the chamber.

As for that upcoming "Feud Over Crude," Wielechowski called Halcro a smart man and a great debater. Both contenders said they were eager to help educate Alaskans -- and get it on.

"The facts are the facts," Wielechowski said after his show, referring to the upcoming faceoff.

Contact Alex DeMarban at alex(at)alaskadispatch.com