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Working for youAlaskans should get fair share for oil

ADN COMPASS Editorial January 9th, 2010

In 2008, Exxon rode staggering oil prices to the highest profits ever earned by any company in the history of the world -- for the second year in a row. Between 2006 and 2008 Conoco earned almost $7 billion in profits from its Alaska operations -- as much as it earned on all its Lower 48 operations combined.

Despite such healthy company profits, it looks like the 2010 legislative session may bring a call by oil industry members and some legislators to reduce the share Alaskans receive for our oil from such companies as Exxon, British Petroleum and Conoco.

Last month, 15 members of the State House's Republican-led majority wrote the governor calling for a review of whether we should rewrite our 2007 oil tax reform law (known as ACES) and roll back the oil revenue the state receives for our resources. If that debate proceeds, it's important for Alaskans to understand some of the generous investment incentives in Alaska's current law, which have spurred new North Slope development, but are rarely mentioned by those seeking tax breaks.

Any discussion on oil policy should start with the counsel of former Gov. Jay Hammond. Hammond joined our early calls for oil tax reform in 2004, when Alaska had a broken tax law riddled with loopholes. Then, most fields were fully exempted from Alaska's oil production tax, no matter how much profit they generated. Hammond reminded us that under the Alaska Constitution, oil on state lands belongs to all Alaskans. And it requires us to "develop" our oil resource for "the maximum benefit of (our) people."

With the passage of a landmark oil tax reform law in 2007, we believe Alaskans finally honored his advice. The 2007 law wisely provides that as oil prices rise and create greater oil company profits, Alaska's share of this oil rises too. In fairness to industry, the tax rate falls as prices fall.

And ACES provides generous development incentives. At current oil prices, companies can write off over 50 percent of their capital costs for exploration and development. By finally retaining Alaska's fair share, we've been able to generate needed revenue to protect our future, growing Alaska's savings accounts to nearly $9 billion.

So, what about industry claims that Alaska's law isn't fair?

Well, these claims always sidestep Alaska's generous "royalty relief" law, which is actually great for business.

Under royalty relief, a producer is entitled to a waiver of Alaska's 12.5 percent royalty whenever production "would not otherwise be economically feasible." The law values the truth over public relations. Oil companies get tax reductions if they demonstrate, rather than just claim, they need a tax reduction to make a project profitable. Since the passage of ACES, this provision has incentivized North Slope developments at Ooogaruk, and at Nikiachuk, which is nearing production.

It's telling that companies rarely seek royalty relief -- less than half a dozen times in the past decade. They'd line up for this break if paying less money to the state would really turn unprofitable fields profitable. But the truth is that field geology and world economics have more to do with investment decisions than Alaska's tax rules.

And what about claims that ACES is stifling investment? In 2006, before our reform law took effect, North Slope investment sat at $3.9 billion. By 2008, with ACES, it had risen to $4.9 billion. Investment will continue to be influenced by the shifting economic conditions. But it will be stalled if legislators keep telling companies to wait for new tax law changes.

As Prudhoe Bay and Kuparuk continue to decline, we face challenges. We do need to look for ways to increase production. Advances in technology are increasing the viscous "heavy oil" we can produce from these fields. And, we need to come together on a gas pipeline. Economies of scale will allow us to produce oil from new fields that we'll also be developing for gas production.

Looking for solutions is always smart. But granting oil companies more profit, at the expense of Alaska's ownership share in our oil, isn't likely the solution we need.

By REPS. LES GARA and BERTA GARDNER


Vote yes on Ballot Measure 3

Letter to the Editor, Anchorage Daily News July 14, 2008

On July 10, the ongoing and painful saga of Alaska's corruption probe showed itself again. Three former legislators are currently serving time for corruption, while another has been awaiting trial. Now, another Alaska legislator has been indicted on federal corruption charges, which include bribery and conspiracy to commit bribery. While it is painful to watch these indictments and convictions unfold, it also serves as a reminder of where our priorities should be. The newest indictment quotes the conspirators saying on two separate occasions that the only leverage they had to change votes on the 20/20 PPT oil tax legislation was "through campaign contributions and by hosting fundraisers." Without concluding that every legislator is corrupt (and having served two terms in the state House, I know the majority of my colleagues are honorable people), we can conclude that the current campaign funding system makes us vulnerable to repeated corruption. I hope that Alaskans will seriously consider this and will vote yes on Ballot Measure 3, the Clean Election Initiative or Public Financing in Campaigns, on the Aug. 26 primary ballot. This is a critical step in fighting for good government in the best interest of Alaskans. -- Rep. Berta Gardner


Growing our Economy Through Education

Compass Editorial on UA Workforce Development Mon. Apr. 9, 2007

Our state is coming face to face with a crisis in the labor market. Over the past few years, awareness of impending worker shortages has been growing within a wide array of Alaskan industries and professions. We've already heard a lot about the dire outlook for doctors, nurses and dentists, but the list doesn't stop there. A variety of state and industry task forces have identified which occupations will likely suffer the most acute job vacancies. Besides the health care providers that have received so much press, shortfalls are already showing up in such diverse occupations as computer technicians and programmers, accountants, welders, carpenters, construction managers, heavy equipment operators, engineers, architects, teachers and social service providers. While these current shortages are already disconcerting enough, it is sobering to contemplate the consequences they imply for a project such as the potential gas pipeline. The problem is bound to grow more critical as Alaska's baby boomers, comprising the bulk of our workforce, soon begin to retire in significant numbers. At the same time, many of our children and grandchildren head south for their education, where job offers, friends and spouses keep them from returning. It is a well-documented phenomenon that students tend to wind up working and settling where they attend college. In the face of these alarming trends, there has been an encouraging broad-based response within Alaska by industry groups, secondary schools, the university system and state government, often working cooperatively to promote workforce development for the jobs in high demand. Examples are easy to find. The building industry has collaborated with school districts to sponsor Construction Academies where students combine traditional high school academics with practical construction skills. Trade unions such as the Operating Engineers have beefed up apprenticeship programs to turn out more skilled workers. At the university level, the response has been even more pronounced. Here in Anchorage, UAA has initiated a phenomenally successful program to attract Alaskan Natives to the fields of science and engineering. The nationally acclaimed nursing program at UAA has launched a recent expansion to help fill the critical shortages already widespread in this profession. Even the legislature has gotten into the act, providing funds to construct UAA's Integrated Science Center and appropriating an extra $4.2 million last year directed at the University's workforce development programs. And this year the House has already passed a bill that would at least double the slots for Alaskan medical students at WWAMI, UAA's multi-state cooperative medical school. Many of these new programs are still ramping up and just now beginning to produce dividends in the form of skilled graduates entering our workforce. One of the most critical elements for the eventual success of these programs will be to sustain their funding in the face of intense pressure to cut the state's budget. While we certainly need to find ways to be fiscally responsible, pennywise cuts in these funds would really be pound foolish over the long run, since our state's future revenues depend on growing a healthy economy today. All the elements are lining up for another significant economic expansion in Alaska, but the benefits will be lasting only if long-term residents are the ones getting the good jobs. Alaskans who consider this state home and really want to pursue successful careers here are the ones who will make long-term investments in homes, families, businesses and institutions, investments that will provide steady economic growth over the years to come. That growth, in turn, will be a source of workers to fill the additional jobs created by an expanding economy. Development along this path represents a marked shift from our traditional role as supplier of natural resources, to a more mature, diversified and healthy economy. We can influence which path we take by making the right choices today on where we invest our oil revenues. The University has identified labor needs and has proposed programs directed at filling the forecasted labor shortages with Alaskan workers. It is up to the legislature to make the hard choices and fund the appropriate programs. --Representative Berta Gardner


Alaskans deserve full disclosure new bill would provide

COMPASS: Points of view from the community Wed. Apr. 26, 2006

Alaskans want to believe that those serving in the Legislature do not attempt to influence the process for their own benefit. I feel confident that the vast majority of individuals who enter into public service do so to serve the public good and would never use their positions for private gain. I know I bristle when I hear people say that legislators are corrupt or when they speak of politicians with scorn. Alaska statutes require legislators and legislative employees to "conduct the public's business in a manner that preserves the integrity of the legislative process and avoids conflicts of interest or even the appearances of conflicts of interest." So the fact is, when we make the choice to serve in public office, we have to open up our lives to a high degree of scrutiny. What was once our personal and private business has to become public information. Disclosure of our financial relationships is important not just because the law requires it but also because for government to be truly effective, it must have the trust and respect of those it serves. Transparency, openness and honesty are the hallmarks of a good government and of its servants. The public has to have the tools to evaluate how we make decisions and where our allegiances lie. Over the past few years, our own state has mirrored a disturbing national trend, with a number of high profile cases of questionable ethical conduct, some of which involved only perceived conflicts of interests and potential improprieties. These cases in particular have highlighted the need for refinement of Alaska's ethics code. Perception is a powerful force. Even when there is no technical conflict of interest, the very perception of one casts a shadow on the whole of government and those in its service. Whenever we have the opportunity to prevent a conflict of interest or the perception of one, I believe we should do so. This is why I have introduced House Bill 461. It is a simple bill designed to strengthen our current ethics statutes by clearing up what has been called a loophole in current disclosure requirements. Under current legislative ethics statutes, a public official must disclose any compensation greater than $5,000. A simple one- or two-word description such as "consulting" or "business services" is, by current law, sufficient to explain even a $100,000 contract. These bare bones descriptions are not enough to completely avoid the "appearance of conflicts of interest" as our state law suggests. In fact, because they lack the necessary explanatory details, disclosures have been raising more suspicions than they assuage. HB 461 addresses this problem. It adds language requiring filers to provide enough information about the compensation they receive so the general public can understand what specific services were performed for it, as well as the approximate number of hours spent doing so. This requirement would apply to all legislators and is not intended to single out individuals. Supplying this additional information simply provides the public with the level of disclosure they have repeatedly asked for and should have from their public officials. By honoring this request, we, as public officials, can encourage the public's trust, respect and confidence in their government.

Paid For by Berta Gardner for State Senate, 1405 Matterhorn Way, Anchorage AK 99508

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