AJOC EDITORIAL: No sauce for the gander at House Resources

As Ron Burgundy may say, “That escalated quickly.”

Things went sideways not long after House Resources Committee Co-Chair Garen Tarr, D-Anchorage, began a Feb. 22 hearing that was, in her words, to hear from the state’s “industry partners” about the oil tax increases proposed in House Bill 111 introduced by her and her fellow Democrats on the body.

Less than six minutes later, Tarr put the smack down on the lead representative of the state’s partners, Alaska Oil and Gas Association President Kara Moriarty.

Moriarty was in the middle of responding to the presentation two days earlier by the Legislature’s latest oil and gas consultant, Rich Ruggiero, who’d asserted that tax policy changes were a constant around the world and Alaska shouldn’t feel bad about tinkering with its system for the seventh time in the last 12 years.

Backing up that claim, Ruggiero used a slide from IHS CERA plotting the changes by regimes around the world from 2001 to 2011.

Former Resources Chair Rep. Dave Talerico, R-Healy, asked Ruggiero if he had updated information from 2012 to the present that would show how regimes have responded to the price crash that accelerated in late 2015 and early 2016.

“You had mentioned ‘if you had the rest of the years,’” Talerico said. “Is there any chance you might be able to finish this out to 2016 and maybe provide that information to the co-chairs?”

In response, Ruggiero said this: “That would be quite an extensive effort, and I’m not sure what it would inform. Which is why I stated on the slide titled ‘forward’ that some of these slides are dated. The message they’re telling is that Alaska should not be embarrassed or feel bad that it is changing its fiscal system because the regimes around the world where most of the money is being spent are changing their regimes as often or even more often than Alaska is.”

Ruggiero, by the way, is being paid $35,000.

Talerico looked a bit bemused.

“I guess that means no,” he said. “I would like to see even North America if possible.”

At that point Tarr asked Ruggiero to see what he could provide and he said he’d see what he could come up with before coming to Alaska the following week.

The committee didn’t have to wait that long, because Moriarty found the updated slide from IHS in a report to by the Oil and Gas Competitiveness Review Board from May 2016 that is hosted on the state Revenue Department website. She also got IHS to email it to her.

Not much of an “extensive effort” and quite a bargain considering the Legislature isn’t paying Moriarty anything, let alone $35,000.

What the slide shows is that in January 2016 while prices bottomed out at about $26 per barrel, every regime that changed its policy offered incentives, not tax increases such as those proposed by Tarr and her fellow Democrats.

Before getting into what riled up Tarr against Moriarty, it’s important to know what Ruggiero said on Feb. 20.

On his very first slide, he stated: “Working from a common understanding will help everyone better understand the input that will be received from various respondents putting forth self-serving opinions.”

Then a couple slides later he went into the “detractor themes” guaranteed to be deployed by the oil industry in response to increasing government take, namely stability, competition and jobs.

The next bullet point stated: “In their world there is no concept of the operator earning too much and a government earning too little.”

Later he said of the companies, “they’re not charities,” which is a bit rich from a guy who is hardly working pro bono himself.

He’d probably have an interesting opinion on a bill that would tax consultant income at a rate of 65 percent, which is roughly the government take on oil revenue between federal, state and local taxes. He might even have a thought about whether anyone would work for the Legislature if they were going to be taxed at such a rate.

Ruggiero portrayed the industry representatives as robotically repeating the same thing over and over no matter the circumstance.

“Part of what you have to do is decipher from that message is what’s really critical or will chill industry or negatively hurt the state versus their natural inclination, that they have to come out and say whatever takes money out of their pocket is a bad thing,” he said.

All this time as Ruggiero told the committee to tune out the oil companies as speaking from an agenda, Tarr never interrupted and never cautioned him not to question the motives of the industry partners she would later be calling to testify.

So after Moriarty explained how easily she found the updated information, she said, “Having your consultant share older data from other consultants may demonstrate that he either didn’t take enough time for his presentation, or he is possibly using the data to drive an agenda —”

At this point Tarr cut her off.

“Miss Moriarty, we’re not going to make statements like that in this committee,” Tarr said. “So you’re not going to impugn the motives of that individual. If you want to respond to anything that was said, that’s fine. But we’re not going to do that.”

Tarr’s anger should have been directed at Ruggiero, who’s being paid not a small amount of money to present outdated information and act as though getting new information is going to be an “extensive effort.”

It should also probably be directed at him for, to his credit, repeatedly stating that governments typically lower taxes and increase incentives in a low price environment, which is the exact opposite of what Tarr’s bill would do.

Moriarty further corrected Tarr on her statement Feb. 20 that the industry requested “half” of the six tax changes in the last 12 years. Moriarty noted that the oil business supported the current tax policy because of the elimination of progressivity at high prices even though it was concerned about the 35 percent base tax rate.

She pointed out that industry supported the Cook Inlet Recovery Act in 2010, but that bill didn’t originate at its request. It came out of the Legislature in response to looming natural gas shortages for the state’s population center.

“We supported two out of seven if you count the one before you,” Moriarty said.

If Tarr wants witnesses to stick to the facts and not make unfounded accusations against others she’s going to need to start with herself.

Andrew Jensen can be reached at andrew.jensen@alaskajournal.com.

Updated: 
03/02/2017 - 7:41am

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