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Marquez: State can contract taxing power Attorney general says constitution’s framers allowed incentives to develop resources; legislators object to length of guarantee The Associated Press
Alaska’s attorney general told legislators May 15 that the Alaska Constitution allows the state to temporarily give up its taxing powers.
State Attorney General David Marquez discussed the governor’s contact with the oil companies to build a natural gas pipeline from the North Slope. Legislators are holding a special session on the issue.
The state is negotiating with ConocoPhillips, Exxon Mobil and BP to build the pipeline, which would deliver North Slope natural gas to markets in Alberta and Chicago.
Marquez said the framers of the Alaska Constitution added a clause allowing the state to offer incentives for developing Alaska’s resources.
“The contract will be binding on future legislatures who seek to impair the contract, unless the impairment is justified by an important public purpose,” Marquez said.
Subsequent legislative action would not be allowed to adjust the contract, according to the Juneau Empire.
Marquez said the U.S. Supreme Court in similar cases has favored a federal clause that enforces such contracts that states sign with industries.
Gov. Frank Murkowski supports locking in tax rates for decades in exchange for the producers agreeing to build the 3,600-mile pipeline, which is expected to cost $20 billion or more.
“When you look at the risk in the size of the project, what does it take to get it done?” said Murkowski, who stopped by Centennial Hall on May 15 to hear a portion of the administration’s contract overview.
Legislators object to length of time House Speaker John Harris said Murkowski’s push for fiscal certainty on the project is creating political uncertainty.
“The biggest issue is still going to come down to does the Legislature want to give up its authority to be able to look at taxation and change in taxation for 35 to 45 years?” Harris said.
He said when he considers that question now, the answer is clear.
“It’s a no, a pretty resounding no,” he said.
While the presentation focused on the legality of locking in tax rates, Sen. Kim Elton, D-Juneau, said the administration was not addressing it as a policy call.
“I think that was to maybe avoid a discussion of whether it’s right or wrong, instead of what’s constitutional or not constitutional,” Elton said.
During his 12 years in the Legislature, Elton said, taxes have been approved for the fishing and oil industries, but with a certain understanding.
“We’ve done that in the knowledge that if we make a mistake, we can fix it next year. This goes a step further,” he said.
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