NEWS: Parnell Withholding Important Oil Tax Information, Gara Calls for Public Release

Rep. Les Gara

(907) 465-2647
CONTACT: Rose Foley




March 13, 2013


Parnell Withholding Important Oil Tax Information, Gara Calls for Public Release


JUNEAU – Today, Representative Les Gara (D-Anchorage) called on the governor to release information he has withheld regarding the governor’s oil tax legislation. Two weeks ago Rep. Gara filed a public records request for important oil tax information so that legislators could receive information needed to decide how to address proposals on the subject.  The governor has not yet responded.


“Withholding information that the public has a right to know is wrong, especially when the governor’s asking the Legislature to make historic changes to how we benefit from our most valuable natural resource,” said Gara.


In a letter dated February 6, 2013, Gara sought the following information on oil tax consultants:


Silenced Experts? Two expert oil tax consultants seem to have been silenced by the Parnell administration, as indicated in a phone call Gara placed to their companies in February.  Rick Ruggiero and David George consulted with and provided analysis and various oil tax proposals to the Legislature during the ACES conversation in 2007. The two appear to still be on contract with the Parnell administration, giving the governor control over whether they speak with legislators.  Gara has requested the Legislature have access to these consultants, or a confirmation that they have not been under contract by the administration.


“Hiring world-renowned experts who can help Alaskans analyze oil tax proposals, and gagging them by keeping them on contracts so they can’t consult with legislators would be wrong. We have asked Governor Parnell to reveal whether he has contracts with these gentlemen.  The indication is that the administration does. Legislators and the public have a right to hear from them.”


On February 20, 2013, Gara asked the governor for two other pieces of important information. 


8 of 10 companies thought ACES was just fine or thankful for it: In 2009, the governor said only two companies wanted to see ACES changed. Rep. Gara asked to know which companies the governor was referring to in this conversation with the Petroleum News:


“Parnell also said that he has already discussed ACES with 10 oil companies.  Of those, he said, ‘four to five’ thought the tax system was just fine, while ‘two or three’ thanked the state for the tax credit program and two companies wanted to see ACES changed.”  Petroleum News, 12/20/2009.


That information is key to determining the veracity of company testimony and for analyzing what the two companies claimed was needed in terms of reform. 


Parnell: Eliminating Progressivity Lets Companies Take Alaska profits to “Other Countries”: Rep. Gara asked the governor what had changed him from his position supporting progressivity, the provision allowing the state to share in windfall oil profits, as a way to keep investment in Alaska.  In 2010, the governor stated:


“I’m not interested in changing progressivity so they can take that money and invest it somewhere else.  If they’re willing to invest it here, I’m open to considering it, but I’m standing up for Alaskans in this, not some other country.” Petroleum News, Jan, 24, 2010.


Just a year later, he reversed course and proposed his first major reduction in Alaska’s share of oil returns with no requirements for increased production or new investment in Alaska. Today, he has is proposing to eliminate progressivity all together, giving away, at $120 per barrel, roughly $1 – $1.5 billion per year to companies and allowing them to spend that money in other states and countries. 


Democrats, who agree with the governor’s January 24, 2010 statement, targeted their oil tax proposals (HB111, SB50) to new production so tax breaks will not be spent outside Alaska.  The Democratic proposals include a 10% gross revenue exclusion (GRE) to incentivize new heavy oil production; a 10% GRE for new production in new geological pools of oil in existing fields; a 10% GRE for oil above a producing company’s production 2012 levels; and a seven-year temporary 20% GRE reduction for oil from new units.  Democrats also propose to help companies build new processing facilities needed to put new oil in the pipeline.


The Department of Revenue did deliver a letter on Feb 26, 2013 confirming that the firm Gaffney Cline, which employs oil tax expert David George, is currently under contract with the Parnell administration. Mr. George has not been made available to the Legislature. The department did not provide the contracts as requested or to show whether the second expert, Rich Ruggiero is under contract. Because Baker Hughes, the firm which employs Mr. Ruggiero, owns Gaffney Cline, it is still unclear whether the administration’s current contract with Gaffney Cline, and the contract that extended to Mr. Ruggiero through last year, impacts Mr. Ruggiero’s ability to testify before the Legislature.


The administration has still not responded to the public records request for requested consultant contracts so it can be determined whether only Mr. George, or Mr. Ruggiero as well are being prevented from talking to and consulting with legislators. Nor has it responded to Rep. Gara’s requests for information on the governor’s statements about industry support for ACES or his previous opposition to giving away Alaska’s resource wealth and allowing it to be invested elsewhere.


Read the Dec. 6 letter from Rep. Gara on oil consultants:


Read the Dec. 20 letter from Rep. Gara on the governor’s stance on taking Alaska profits out of state:





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