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Release the Hidden Oil Consultant Reports

Rep. Gara calls on Parnell administration to stop withholding oil information

JUNEAU – Today, Representative Les Gara (D-Anchorage) called on Governor Parnell to release reports on oil taxes done by two internationally recognized oil tax consultants over the last three years before the Legislature votes on current oil tax legislation.  Last week, the Department of Revenue stated it would extend the response date to Rep. Gara’s requests from April 10, 2013 to April 24, 2013, ten days after the end of the regular legislative session.

“The public is entitled to all of the information and analysis on this multi-billion dollar decision before we’re asked to make it,” said Rep. Les Gara. “If the state paid for expert reports, we should see them and hear the rationale behind them. It’s unfair to the public for the administration to run out the clock to withhold this potentially crucial analysis. From prior conversations roughly two years ago when they were allowed in the building, indications were that these consultants would offer valuable insight that could lead to a better bill that would be more effective, and less damaging to the state.”

In 2011, Governor Parnell hired Gaffney Cline and Associates to produce a model of the current oil tax system and any potential changes to it and to produce detailed responses to reports by legislative consultants during the oil tax deliberations in the Legislature. The governor has refused to allow legislators to speak with or consult with these consultants and has not released any of their reports.

These experts have worked with Legislators in the past to help assess effective changes to Alaska’s oil tax system. Rep. Gara has used the Public Records Act to obtain a contract showing the administration hired Richard Ruggiero and Robert George to write a report on Alaska’s oil tax system, and possible sensible changes to it, and that these men are on contract to provide advice.  The document released under the Public records Act shows they are under contract currently and have been since 2011. In addition to requesting the work product from this contract, Rep. Gara requested the administration release how much it has spent on this contract to date.

Rep. Gara asked the governor for that report in a letter dated March 25, 2013.  To date the administration has not released any reports produced under this contract or reported how much it has spent on these consultants.  On February 6, 2013, Rep. Gara asked to make these consultants available to legislators, and to help them analyze oil tax reform options. 

“It’s unclear whether the Governor has used these gentlemen for their know expertise, or whether he is just keeping them on contract so they are conflicted out of working on this oil tax debate,” said Rep. Gara.

At $120/barrel the current version costs Alaskans roughly $1.5 billion a year in lost revenue.  The biggest part of that loss erases he state’s windfall profits share that allows oil tax rates to slightly rise as companies make near record or record profits at high prices.  SB 21 lets companies spend that tax rollback anywhere in the world they wish, something the governor has conceded in the past. In 2010, he said, “I’m not interested in changing progressivity so they can take that money and invest it somewhere else.”

Since the current oil tax passed in 2007, the state has paid off debt and put away over $16 billion in savings and the industry has enjoyed tremendous profits from Alaska. ConocoPhillips, the only company to report its Alaska profits, has earned roughly $2 billion a year in Alaska, sometimes offsetting losses in its Lower 48 operations.  It earned $2.3 billion in Alaska profits in the most recent year.

Gaffney Cline contract:

http://akdemocrats.org/gara/040813_Gaffney_Cline_Associates_contract.pdf

Rep. Gara March 25 letter:

http://akdemocrats.org/gara/032513_Gov_Parnell_re_contractor_reports.pdf

Rep. Gara Feb. 6 letter:

http://akdemocrats.org/gara/020613_letter_to_gov.pdf

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