Stoltze: This Legislature is productive

House Finance seeing high-profile energy bills — in-state gas line, oil tax; co-chair says if more time needed, it should be taken

Steve Quinn

For Petroleum News

Just wwhen one of the most substantive energy bills leaves the House Finance Committee, another one arrives. That’s pretty much been Bill Stoltze life in the committee since 2003.

He’s sat through the 2006 change known under the Murkowski administration as PPT or the Petroleum Production Tax.

He was around a year later under the Palin administration and ACES or Alaska’s Clear and Equitable Share.

Now in his third term as co-chair he presided over several proposed changes that went nowhere. That’s likely to change with Senate Bill 21, Gov. Sean Parnell’s proposal, which just landed in House Finance.

It arrived just in time. Stoltze just finished presiding over HB 4, the in-state gas line bill that empowers the Alaska Gasline Development Corp. to move forward with its project.

Stoltze, R-Chugiak, spoke to Petroleum News just after HB4 passed a House floor vote and just as SB 21 was headed to his committee.

Petroleum News: You’ve been around for the debates over major tax changes and debates that produced no change. What is different about the appetite for change?

Stoltze: We have a new Legislature and it’s not a gerrymandered one. I would call it a much more fair reflection of what Alaska’s views were on an apportioned basis. Right now you’re seeing a point of view more accurately presented. The demographic shift that’s happened over the last 10 years has been recognized. The makeup of the Legislature now more accurately reflects what Alaska’s population and demographics are. We had kind of a stunted reflection of what the people’s voice really was. We had a malapportioned Legislature.

It wasn’t as if the public wasn’t treated to a debate on whether or not the tax system was broken or not (in the election). Some of the money spent was enormous. There was a race in the Interior where that was the referendum. There is probably no clearer of a case than Pete Kelly and Joe Paskvan, both very capable people.

I think you’ve seen an evolution where senators in the past said I think taxes ought to be higher. That kind of talk has been left in the wind. There is a general acknowledgement, at least for political consumption, that ACES is broken. Now the difference of opinion is how it needs to be fixed and the methodology.

I’ve sure noted this year that it does need to be changed, and now the debate has moved to the degree and the methodology. I think that is a huge shift. Now there is a universal acknowledgement: I think everybody always knew it; it’s left the political realm and moved to the economic realm. Now we’re debating over what the appropriate approach is. Those are legitimate policy discussions. At least it’s a more honest debate, maybe not honest but a debate that’s more reflective of reality. Saying it’s not honest could be pejorative.

Petroleum News: You’re talking about the degree. What is your job now as finance co-chair on SB 21?

Stoltze: Our job is to take a very thorough and another independent, separate look at the bill with all due respect to the perfect work another committee did. Just like HB 4. We made a number of substantive process changes in the bill. We worked with the administration and made changes the sponsor was able to embrace as positive, constructive changes. That was the due diligence of the House Finance committee members.

As I look at the committee, the Democrats and the Republicans included — there are Democratic members on the committee — represent probably a more diverse view of Alaska and the Legislature than most other committees do, probably because of the size of it. We have the ability to be more reflective. It has experience. It has diversity of population. It has diversity of independent thought.

There are members of the committee, even in the majority, who weren’t supportive of HB 110 last year but who are going to be a constructive part of allowing us to move forward on a bill. All of their points of view are going to be respected. They all might not prevail at every point. Nor will mine prevail at every point. We want the process to work.

This is not a one-man show. I’m not going to pretend I’m the smartest person in the building, and I’m going to put together this tax bill singlehandedly. It’s going to take working with the administration back and forth. They are the sponsors of the bill. It’s our responsibility to ask them tough questions and take an independent look with the consultants we have on contract with Legislative Budget & Audit.

We will take another analytical look with a different set of eyes. That is what the committee process is supposed to do. We are not supposed to rubber stamp either the administration or another committee who has apparently found the Holy Grail.

Petroleum News: You have less than two weeks left. Are you going to feel rushed? Is there enough time?

Stoltze: You know, I have my own personal bills I have sublimated for work on larger projects, just most recently for the due diligence on HB 4. I would like to have been around the building shopping my bills for the floor but when you take on a chairmanship, my responsibility is a laser focus on three major projects right now. Well two, one is almost done: the Fairbanks gas-trucking bill. There is less urgency because it’s already passed the Senate unanimously. Frankly, there was more than a little hostage linkage between that and HB 4.

It wouldn’t have been constructive, even though the gas-trucking bill was virtually ready to move out. We waited until we got HB 4 done. It probably would have ruffled political feathers and it wouldn’t have served a constructive purpose to move the gas-trucking bill out first, even though it was virtually ready.

The next two projects are SB 21 and the capital budget, and the operating budget conference committee with Rep. (Alan) Austerman. Really the operating budget is our only constitutional responsibility.

HB 4 sucked out all the oxygen for the last week. That’s my point. When we have an important issue like that one, we push aside most of the other issues, including my own. I have a responsibility as a chairman to serve the needs of the legislative body first.

Stoltze: Let’s say I would support an extension. If we had 30 days, I’m not sure how constructively we would use it. As we get into the next week and see how far we are, the Legislature can extend itself — by a two-thirds margin can extend by a specific amount of time. I would, and this is just me talking, keep the option of adding five or 10 days, not necessarily to use them all but to make sure we don’t rush something. If a couple extra days of time and deliberation helps, that would be a constructive use of a time-certain extension. I would lead with that as my first option, but leave that open a week from now if we still need just a couple of days. That should be something we look at as an option. If we talk about it now and put it into place now, it would alter our schedule. We just need to keep plugging along.

Petroleum News: Do you like the way the debate has been going thus far with oil taxes?

Stoltze: I think issues are genuinely being debated. There was a lot of drama in the State Senate last year, theatrics and committee hearings for the purposes of the evening news. This year I’ve never seen buckling down as hard. When you’re in a leadership position you always think you’re working hard. It’s been a universal commitment, getting in a lot earlier, working later, more work on weekends. We’re seeing committees working longer. Watching a guy like Sen. Dunleavy, he came down here not to be something but to do something. He’s emblematic of a person who came down to address some big issues. A change like that is one of the bigger changes.

Petroleum News: You guys put a lot of work into HB 4. What do you like about the product?

Stoltze: I think it was improved.

It has better consumer protection with the RCA schedule. It gives them a timeline where it’s not a short shrift process, not as long as the executive wanted in there in their request, but more than the 30 days review of what the sponsors wanted. I think having the governor have responsibility of the board, I wanted it to be a non-political board with some autonomy from the governor, but the governor having responsibility in both sense of the words — taking responsibility and being responsible for it — under our system is pretty important. We have a strong executive. Having it under the Executive Budget Act is important, not to micromanage it. AHFC, which Dan Fauske is the head of (and also president of AGDC), wasn’t under the Executive Budget Act. In the 1990s but were put under it. There was testimony by him in the House Finance Committee back in February 2010, of him talking about how they not only survived but they thrived under it. It wasn’t an impediment. So that was pretty important to me and to the process.

For the rural folks, we were disappointed about the promise to deliver the propane, then when some of the rural committee members asked about it, AGDC was very vague and ambiguous and almost dismissive and that prompted specific members (Alan Austerman and Bryce Edgmon) to put in language about the propane. That was a case where they had been selling something but not really planning on a commitment to deliver it. It was clear to Finance they weren’t excited about it. It was more of sales show than an actual delivery show. We found out through the committee process that we needed to put something specific in there. That was good. These are times when people are a lot more responsive — before they get authorization and money.

There was a lot of discussion about legislative approval (of the project). We didn’t want to have it for the sake of having it and causing a delay. Not fully funding the project so they have to come back for the last small percentage was a compromise. It’s a lot different than having a contract approval. If there is a project ready to go and ready to hand off, why should we wait for the Legislature to begin session and enter a political decision?

My first thought was maybe we should have a look back but my other thought was why throw your way into something that is moving forward. Some people want to just be involved so they have a chance to muck it up. There is a record of that around here.

Petroleum News: You’ve also had a group of permitting bills moving forward. How has that helped resource development?

Stoltze: We probably haven’t seen the last of initiatives from the administration trying to increase the efficiency to bring forth development projects. We don’t want to have a process where you remove all reasonable questions and barriers, but having a process where the answer isn’t designed to be no is important. That’s the way a lot of things seem to be set up.

Petroleum News: So when all is said and done, whether it’s after 90 days or an extension or after a special session?

Stoltze: I think you will have seen more meaningful effort than we’ve seen certainly at least the last six years.

Petroleum News: Do you have any closing thought you’d like to offer?

Stoltze: I would say there is one thing on the oil tax debate. The focus is on supporting government instead of having a tax policy that promotes development and more growth. When we see folks like the public sector unions and the national education association who are opposed to any tax reforms, they lose sight of what funds state government at the end of the day. We don’t just gratuitously want to on the short term reduce revenues but promote longer-term investment. There is something wrong when Alaska is the only province in the world in a politically safe environment and high prices and the oil industry just isn’t jumping with new real meaningful exploration and production. That’s not a good long-term prospect for our economy.

Let me put it this way: If we managed our fish policies the same way, we would just hang gillnets on every river and move from river to river and get the maximum amount, thinking as long as we get as much taxes out of it without caring about the vitality of long term production of that river, we’ll be OK.

Oil is not finite, but there is a lot more than can be developed and produced under the right circumstances and conditions. Government is not going to do it.