Bradners'
Alaska Legislative Digest
October 30, 2007
Oil and Gas Bulletin
Comments? E-mail: timbradner@pobox.alaska.net
New House version of PPT would hike oil tax at higher oil price
A new version of Gov. Sarah Palin’s oil tax legislation adopted by the House Oil and Gas Committee would increase taxes on the oil industry by about $600 million over the current Petroleum Profits Tax (PPT), according to estimates by a consultant to the Legislature. The House Oil and Gas Committee did not change the tax rate in the PPT but adopted a new version of a “progressivity” tax surcharge that would bring in more money at higher oil prices than the formula in either Palin’s proposed bill or the current tax. The House committee bill, which is now in the House Resources Committee, would net the state $4.6 billion a year at $87 per barrel oil prices compared with $4.5 billion in Palin’s bill and $4 billion brought in under the current tax.
Meanwhile, the House Resources Committee got down to work on the tax bill yesterday, as did the Senate Judiciary Committe where the topics of auditor hiring and job classification got a close review among other topics. Senate Judiciary Chairman Hollis French (D-Anch.) noted the Wednesday session will feature “something of a smackdown between the two theories” of taxation on gross and net revenues. Rather than designate a specific hearing for public testimony Senate Judiciary is allowing time for public comment at the end of each day 9 a.m. to 5 p.m. session, French added.
Labor challenges administration claims on auditor hiring
State employee unions are challenging the Palin administration’s proposal to classify oil and gas auditors as “exempt” employees subject to hiring and firing by the governor. Jim Duncan, business manager for Alaska State Employees Association Local 52 said the administration never brought any recruitment or retention issues to the bargaining table during contract talks completed in the fall.
Duncan showed the committee an Oct. 2 organizational chart for the Tax Division showing one vacancy among seven “auditor IV” positions, the state’s highest job classification for auditors. Four “auditor III” or “auditor II” positions from a total of nine in the division’s oil production audit group were open “pending recruitment,” which Duncan said means the state has not yet tried to fill the posts. Duncan said the unions would be willing to add new “auditor V” classifications at premium salary ranges that would go only to accountants with the specialized skill needed to monitor net profit tax returns. Unions would also be willing to negotiate hiring bonuses, student loan forgiveness and other terms to match private sector perks to increase auditor pays to a competitive level, he said.
Kevin Brooks, deputy commissioner of the Dept. of Administration, said he had not analyzed the audit group’s vacancies and could say only that six of 23 positions are currently vacant. Duncan also challenged the $1.02 million estimate in the Senate Resources SB 2001 fiscal note cost to hire three “exempt” auditors. The fiscal note says auditors work 40 hours a week each for four years at an average rate of $100 per hour. Contracting exempt auditors perpetuates but does not solve the vacancy problem because state pay consistently lags the private sector which means the state trains auditors who later take their experience to better-paying jobs in the private sector, Duncan added.
Consultant hiring finished except for a “rocks guy”
Hiring of legislative consultants for the special session has been completed with the possible exception of an expert in petroleum geology to provide a one-time assessment of oil and gas bearing prospects that remain on state lands, Legislative Budget and Audit Committee Chairman Ralph Samuels (R-Anch.) said Friday. Samuels was waiting for confirmation of the availability of the geologist before releasing a name. He described the job as answering the “how good the rocks are question.” He noted that both Finance Committees have their own budgets and could hire new consultants but added that he had not heard of any plans.
Contracted consultants for the session include Econ One Research, Inc., the California firm that has been working for the Legislature since last year; Steve Porter, who was deputy revenue commissioner during the Murkowski administration; and Dan Dickinson, Murkowski administration Tax Division director and a contract consultant for the administration during the 2006 PPT debate. Dickinson is being paid $180 per hour. Porter is $250 per hour, plus transportation and room and board expenses while in Juneau. Both of their contracts are capped at $25,000 and expire at the end of the special session. The Econ One contract is capped at $25,000, with hourly billing rates ranging from $185 to $350 (for consultant Barry Pulliam) depending on the Econ One personnel involved. It expires at the end of the 2008 regular session.
Consultants Daniel Johnston and Pedro Van Meurs, who were legislative and administration consultants, respectively, last year, spent the first day of the special session providing their general overviews of the oil tax debate. Van Meurs received a flat fee of $17,000 for the day, including all expenses. Johnston was paid $400 per hour, plus expenses. The LB&A committee has not yet received his bill, but committee staffer Linda Hay said it was expected to include fewer than eight hours and only for time at meeting or with legislators.
Tuesday’s schedule
- 9 a.m. House Resources Committee: administration presentations.
- 9 a.m. Senate Judiciary Committee: testimony on actual vs. reasonable costs, credit buyback fund, appropriation authority, corrosion.
Legislative Digest is a paid-for private subscription service. Our special session Bulletin is distributed free as a public service, and is supported by special grants from a group of subscribers. Editors: Mike and Tim Bradner. Contributing writer: Bob Tkacz. Interested in getting the regular Legislative Digest and Alaska Economic Report? Contact: mbradner@GCI.net or fax at: (907) 522-1761.
