Alaska Dispatch

 

The Democratic gubernatorial primary race is becoming less of a political lovefest these days. Some local Dems are annoyed with former lawmaker and gubernatorial contender Ethan Berkowitz for suggesting the state should think about replacing the ACES oil tax structure with a different method.

 

The dustup began about a week ago with an Anchorage Daily News article airing the views of both Berkowitz and state Sen. Hollis French, another Democrat in the primary race, on how to get the most bang for the buck out of oil taxes. Berkowitz, in the story as well as in commentary recently published in various media outlets, suggested replacing the tax law known as Alaska's Clear and Equitable Share with a field-by-field royalty structure.

Since then, local progressive bloggers and others have cried foul, basically accusing Berkowitz of selling out his Democratic colleagues who had fought hard for and helped pass the controversial legislation in 2007.

And on Wednesday, a handful of local Democratic lawmakers stood shoulder-to-shoulder with French in a press conference at French's campaign headquarters to blast Berkowitz for his abdication of what they see as a key Democratic victory.

French reminded the small gathering of reporters that ACES stemmed from an effort to reform the "corrupt" taxing system that had afforded at least one major North Slope field a nearly-zero tax rate. ACES, which increased the tax rate particularly in years when oil process are high, also includes tax credits for exploration.

French and other Democrats said under ACES the state has been able to sock away more than $5 billion in budget reserves while paying for roads and schools, among other things, that might not have been funded before. They contend the tax structure actually stimulated North Slope employment, although oil companies dispute that contention.

"In my view, this is the single biggest issue in the state," French said.

Rep. Les Gara, an Anchorage Democrat who is supporting French in the primary, criticized Berkowitz for taking on ACES, which has been so important to Democrats. "I was surprised to see this become an issue in the Democratic primary," he said. "This was a great Democratic achievement ... Virtually every Democrat has supported this."

"Now is not the time to dismantle ACES," Gara added.

For his part, Berkowitz says he was just trying to start a discussion on how to do things differently -- and maybe better -- when it comes to getting Alaska on better financial footing.

In an interview earlier this week, Berkowitz waved off a discussion of details of a field-by-field royalty plan. "The principle is what's important," he said. "The focus should be on principles, not particulars."

He thinks the state could do better, especially in terms of saving income from non-renewable resources like oil and gas production, if the state's take came from royalties and saved in the Permanent Fund.

He dismissed the angst of his Democratic colleagues as unwillingness to talk about something new. "People hear what they want to hear when this is a new idea," he said.

Whether the party line breakdown over ACES results in political blowback for either French or Berkowitz in the primary and even the general remains to be seen.

French calls it an honest debate over an important public policy.

Gara, however, cautions that there may be some consequences for Berkowitz if he wins the primary and moves to the general as the anointed Democrat at the top of the ticket:

"I'll support either Hollis or Ethan, whoever wins the primary. But we're not happy to have the biggest thing we've worked on and succeeded on dismantled."

Contact Patti Epler at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .