Chilkat Valley News - Serving Haines and Klukwan, Alaska since 1966


Governor discusses oil taxes, economy


Alaska Gov. Sean Parnell this week voiced optimism that a billion-dollar oil industry tax break he pushed through last year would bring returns to Haines equivalent to the funding that is building projects like the McRae-Soboleff Veterans Village.

Parnell said his trip to Haines Tuesday was “to better understand the concerns of the community and meet those challenges together in Juneau.” He said he spoke to residents about the local economy, fisheries, the harbor project, and a domestic violence shelter.

Parnell acknowledged that his tax plan for the oil industry would be giving up a large amount of money in the coming year – he said the amount wasn’t $2 billion annually as it’s been described.

“The issue really is, are you looking for the long term or the short term. I’m looking for the long term. We have savings right now to manage our way to an (oil) production increase, rather than sticking with guaranteed decline. The bottom line is for the next four years we have a budget plan that will maintain the current level of funding using our budget reserves. We’ve seen a dramatic increase in activity on the North Slope with drilling rigs coming, and new commitments to bring drilling rigs, which means new production will follow. That notion of the $2 billion (loss) is a short-term perspective and it relies on the belief there will be no new production and the price forecast will remain where it is.”

“Those companies don’t bring new drilling rigs into those fields unless they know the oil is there. We will see new production. There is no question in my mind, which means more revenue, long-term for the state. We have a way to manage our way through the next couple of years at the level of spending where we’re at.”

Are you saying we’re going to have money for things like replacing sidewalks?

“I’m saying we spent $6.8 billion this year. That was a reduction. We have the ability to stay at that level the next several years. The difference is, with the system we had, before SB 21 was passed, we had guaranteed decline because we were guaranteed declining production. With More Alaska Production Act, we have a reasonable shot at new production which benefits Alaskans for the long term. The choice was to hold on to decline, which meant declining revenues over time and a lost future for our kids and grandkids when it comes to that revenue source remaining locked in the ground, or change now while we have savings to manage our way through the early years to new production.”

Is there a fallback plan if this doesn’t come out as planned?

“What I have is the experience of other jurisdictions. I think about Aberdeen, Scotland in the North Sea. They in the past five years have seen a dramatic increase in (oil) production and a dramatic increase in investment. Aberdeen has less than 1 percent unemployment…in part because of the more favorable tax environment for investment.

If you have $100 you want to put in the bank, are you going to take it to the bank that pays 1 percent interest or the bank that lets you earn 2 percent? If Alaska has higher taxes, they will earn less return on their investment, therefore (oil companies) will take their investment somewhere else.”

Do you have an overall plan for these small, rural communities like ours that have been losing population with decline in the resource industries?

“Of course the state has a role in that, but a lot of that is community driven, as well. Communities that come together around a plan for economic growth can work that plan together towards growth, but from the state perspective, one of the things we can do is make lower energy costs through things like the hydro project over in Skagway that would benefit Haines as well. Through the renewable energy funds. And obviously by making sure we have funding for education, so our young people can move into their productive capacity in the workforce.”

Do you sense that people have lost their faith in government solutions to problems? Is that a problem? How do you restore that? With all respect, people say of you, “He’s just an oil company guy. He worked for the oil companies. Now he’s just doing the oil companies’ bidding.” It seems that there’s a loss of faith there.

“I think that kind of hyperbole is destructive and people don’t want to deal with that. I’ve been in public service for eight years in the legislature. I had my own business for nine years. I have 14 years in a public trust position and I get stuck with that kind of label, where I spent three years working for an oil company…

“Part of it is the destructive discourse both in the media as well as between political candidates and elected officials and the like rather than focusing on solutions to problems. I was raised by a father who was a Democrat and a mom who was a Republican. Our dinnertime conversation was about current events and public service and public service was lifted up as something good and noble to pursue. The notion that we could live our lives to benefit others, that’s been lost, I think. So we see failing structures and institutions. Congress, for example, you don’t even have to be partisan about it to say it’s not working and there’s plenty of blame to go around to both sides…” (Congressional gridlock) is driven in part by this notion that, “They’re all a bunch of crooks, anyway” and some have demonstrated that. That lack of trust.

“Part of my job as governor is to live a life where people can trust me. People disagree with me and that’s part of our give and take. I understand people can view solutions differently. But I’ll always respect somebody’s right to have a different view, see the world differently and work with them toward a mutually agreeable solution. But I refrain – and you’ll find a couple instances where I’ve fallen short of this mark – from impugning people’s motivations. Talk to me about why my ideas won’t work from a policy perspective, then I’m all in that conversation.”

Parnell said his trip made him aware that there wasn’t a domestic abuse shelter here. “That’s something I’ll be able to take and work with your leaders here on how to make something like that happen.”

Parnell said he wasn’t aware of the management issue at Chilkoot River, a popular brown-bear viewing spot that is managed by the state only on a part-time basis, and where close calls between bruins and viewers during the fall feeding season aren’t uncommon.

Parnell said his administration scaled back plans for the Alaska-class ferry because the ferry being designed exceeded the $120 million the Alaska Legislature had appropriated for the work.

Parnell explained why he didn’t support an increase in base student allocation for the state’s school. Under former Gov. Palin, the BSA increased three years, he said. “Legislators and I looked at what happened there and saw record increases and didn’t see better results for our kids. At that point, there was a shift for many legislators, who wanted to know what they were buying with extra money.”

Mayor Stephanie Scott said this week that borough leaders spoke to Parnell about Haines Highway improvements, interception of Haines-bound salmon by other fisheries, and local crab stocks and replacement of ferries. The most important topic, she said, was a municipal match program that would provide most of $2.9 million for Haines sewer plant upgrades.