Alaska Senate OKs massive tax cut for oil industry

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JUNEAU, Alaska — The Alaska state Senate voted Wednesday night by the barest of margins to approve a massive tax cut for the oil industry in the hope that it would lead to more oil production in Alaska.

The vote on Senate Bill 21 was 11-9, with only Republicans supporting the measure. Two other Republicans, Gary Stevens of Kodiak and Bert Stedman of Sitka, joined the Senate's seven Democrats in voting against the bill. With rural areas so dependent on state spending, two Democrats with large rural constituencies who are otherwise part of the Republican majority caucus, Donny Olson of Golovin and Dennis Egan of Juneau, voted against the bill.

The vote showed that the 2012 election, where redistricting helped knock off three Democratic state senators, played a decisive role in changing the outcome on oil taxes. An oil tax bill pushed by Gov. Sean Parnell failed to make it through the Senate last year.

The vote was taken at 8:59 p.m. after hours of impassioned debate rarely heard in the Alaska Legislature. But the outcome had been all but sealed once an 11-9 vote along identical lines approved an amendment earlier in the day to slightly increase the tax on industry. That brought in the main holdout, state Sen. Click Bishop, R-Fairbanks.

A video recording by KTUU Channel 2 of the votes going up on the tally board shows Bishop casting the 11th vote in favor of the bill.

The bill will cost the state treasury billions of dollars over the next decade, but supporters say it eventually will lead to greater oil production. Opponents say it's nothing more than a giveaway to the industry, which told the Legislature it would reduce its efforts here if it didn't get tax breaks even as it told stock analysts the opposite.

The bill throws out the five-year-old tax system known as ACES, for Alaska's Clear and Equitable Share. It became law through a coalition of Democrats, Republicans and Gov. Sarah Palin -- in her populist phase -- as a way to undo the previous pro-industry tax regime that passed in 2006 under a cloud of corruption.

The measure will come up for reconsideration Thursday. Opponents said after the vote that they will continue to talk to Bishop in hopes of getting him to change his mind and force a do-over with a different result. In a 10-10 tie, the bill fails.