Special Session Planned on the Petroleum Tax

By Sabra Ayres, Anchorage Daily News, Alaska

May 18–JUNEAU — Gov. Sarah Palin said Thursday she intends to call state lawmakers into a special session this fall to revisit the Petroleum Production Tax and would be looking to save money by holding the meeting somewhere other than Juneau.

In declaring her plans less than 12 hours after the regular legislative session ended for the year, Palin did not specify another venue, but hinted Anchorage would be a contender because of the city’s proximity to a large percentage of lawmakers.

“We’re not moving the Legislature, and we’re not moving the capital,” the governor said. “But we’ll be looking for somewhere to meet that will be less expensive.”

Palin said the previous Legislature spent an “outrageous” $2.1 million on special sessions. The government must pick up the bill for legislators’ travel costs to a special gathering and for housing costs while House and Senate members are in session. State lawmakers went through three special sessions last year and one in 2005.

Juneau has been the capital of the state since territorial times. The prospect of moving state government elsewhere has been raised several times in the state’s history and always creates heated resistance in the Southeast Alaska city.

“We do get concerned when the Legislature contemplates meeting in a place other than Juneau,” Juneau Mayor Bruce Botelho said Thursday.

Botelho, who served as state attorney general from 1994 to 2002, said, “But Palin has been clear that Juneau is the capital, and I don’t think this is a situation that should trigger a three-alarm fire.”

Proponents of moving the capital say Juneau is too isolated from the rest of the state, making it difficult for voters to access their state government. With no roads in or out of the city, Juneau can be reached only by plane or ferry. Lawmakers whose planes have been delayed because of bad weather say they have had to miss critical session days.

Palin said the recent guilty pleas from two Veco Corp. executives who admitted to bribing legislators during last year’s approval of the PPT was evidence enough that a thorough review of the tax law was warranted.

“Our oil tax formula was changed under a dark cloud of suspicion,” she said Thursday.

When the PPT was created, it fundamentally changed the way the state taxes oil producers, and supporters of the tax structure were hopeful it would bring more revenue into state coffers. But first receipts last month came in $137 million short of projections.

LOOPHOLE ALSO ON AGENDA

Bill Allen and Rick Smith of Veco have pleaded guilty to charges they paid off lawmakers in exchange for their influence during the PPT debate in the Legislature. One current and two former lawmakers face related bribery and extortion charges.

Palin announced after the indictments earlier this month that her administration would begin examining how effectively the tax was working.

The governor said she would ask lawmakers during the special session to take up a bill dealing with a loophole in oil tax expenditures left hanging after Wednesday night’s late adjournment.

The bill, which more than half the members of the Legislature endorsed, would keep oil companies from deducting for pipeline repairs in cases of “improper maintenance.”

House Minority Leader Beth Kerttula, a Democrat who represents Juneau, said she was happy to hear the governor intended to ask the Legislature to take up the tax again.

She stressed that she was not worried that Palin, a Wasilla native, was trying to move the capital.

Holding public hearing and testimony in another Alaska city to involve more of the public would benefit the entire state, particularly on a tax law debate that “didn’t go right the first time,” Kerttula said.

“This is a pragmatic governor,” she said. “I’m sure she will be willing to work this out with us. I’m not concerned she meant anything more than that.”

If it came down to drafting new tax legislation and voting on it, lawmakers would need to be in Juneau to access the expertise of the Legislature’s legal and finance offices located in the capital, said Rep. Kurt Olson, R-Soldotna.

“We can’t do it without them, and it would be too expensive to move anywhere else,” he said.

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Daily News reporter Sabra Ayres can be reached at sayres@adn.com or 1-907-586-1531.

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Copyright (c) 2007, Anchorage Daily News, Alaska

Distributed by McClatchy-Tribune Information Services.

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