The Mudflats

Ethan Berkowitz served in the Alaska House of Representatives from 1996 to 2006 as a Democrat. Eight of those years he served as the House Minority Leader. He ran for Lt. Governor with Tony Knowles in 2006, and for the U.S. House of Representatives in 2008. As a state legislator he won national recognition for his distinguished service to Alaska, and championed many issues including fiscal responsibility and energy policy. He is currently an Alaskan Democratic gubernatorial candidate.

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How We Can Eliminate Oil Taxes and Stimulate Production: The 100% Solution

by Ethan Berkowitz

Debate about Alaska’s oil and gas revenues has been too much about short-term gain and not enough about long-term interests. The result is a system that fails to optimize outcomes for either the state or industry. Alaska can do better – we can have a system that reduces development risk, increases production and jobs, gives Alaska a fair share for our oil, enforces budget discipline in Juneau, strengthens the Permanent Fund, and takes the politics out of the state’s relationship with the oil industry. Doing better, however, requires a new approach.
Alaska receives oil revenue from two main sources – royalty (generally, the state’s 12.5% share from an oil field) and severance (the selling price for the oil “severed” from the state). Historically, debate has focused only on severance.

When the old severance method, ELF (Economic Limit Factor), faltered, Frank Murkowski replaced it with PPT (Production Profit Tax), followed quickly by Sarah Palin’s ACES (Alaska’s Clear and Equitable Share). Both PPT and ACES are essentially corporate income taxes, built around “net profits”, and both captured revenue for the state during this recent time of high oil prices. But long-term, revenue depends on production as well as price, and we need a system that does a better job encouraging production.

That’s why it’s worth examining a “no severance, royalty-only” solution: Eliminate ACES entirely and replace it with a field-by-field royalty structure.

Every broadly written tax code, including ACES, shoehorns all taxpayers and all ventures into a “one size fits all” tax system. A customized system recognizes the unique costs and challenges of developing individual leases. It provides the flexibility needed to accommodate the range of economics confronting various Alaskan oil and gas projects, spanning from heavy oil to natural gas, and from Cook Inlet to the North Slope. That flexibility will spur investment and development.

A 100% royalty solution more closely aligns the state’s interest in revenue and industry’s interest in production, and also features several significant attributes:

• Fiscal certainty for industry — royalty rates are contractual, negotiated between the state and the leaseholder, which insulates rates from legislative changes. A good contract protects both parties by containing “reopener clauses” to address changed circumstances in the future. In addition, by reflecting field specific incentives, ramp-ups, and individual field economics, a contract minimizes risk, increasing potential for development.

• Fiscal stability for the state – declining oil production seriously threatens the revenue stream needed to sustain state budgets, and the jobs and businesses that depend on development. And moving away from severance-based revenue gets state government away from boom-and-bust budgeting, and institutionalizes fiscal discipline.

• Grows and protects the Permanent Fund – the Constitution requires that 25% of all royalty (by statute, 50% for new fields) be deposited into the principal of the Permanent Fund. Under an all-royalty system, a portion of the money that now goes into the general fund would go to the Permanent Fund.

It is also important to depoliticize implementation and management of the oil revenue system. That’s why a specifically designated, independent commission, one beyond the control of the governor and the legislature, should have responsibility for negotiating new leases, renegotiating existing leases and handling operations of the 100% Solution. As Alaskans know through our experience with entities like the Permanent Fund or the Board of Fisheries, elected officials should set policy, but in matters involving complex issues, the people of the state are better served when experts and professionals, not politicians, implement those policies.

Oil is so central to the state’s economy that basic responsibility compels on-going review of our revenue sources. Standing still in a changing world is a recipe for falling behind. Doing what we have been doing – relying on a net profit tax — is, at best, standing still and does not adequately advance Alaska’s competitiveness. In a post-recession economy, facing a rising global tide of demand for energy, it is not “more of the same”, but bold innovation that will lead to a secure, independent future for Alaska.

No, not even a blizzard could keep me away from the Bartlett Democratic Club luncheon today.  Diane Benson was going to be “announcing her intentions,” which means she decided to run for something, or not run for something, and I wanted to be there to see which it was.  She ran against Don Young 2 terms ago, and got 40% of the vote with a lot less money, and a lot less name recognition.  It was incredibly impressive.  Last time she tried again, but couldn’t defeat Ethan Berkowitz in the primary.  And Berkowitz couldn’t defeat Young.  So there he still is, stripped of plum committee assignments, looming indictments, $2 million in payments to his lawyers, and crooked as a dog’s hind leg… daring the next contender to knock him off.  Rep. Harry Crawford threw his hat in the ring and will be giving it a shot in November.  Harry’s a good egg, a hard worker, a bridge builder and a great guy.  I have high hopes.

Would Diane go for a third attempt at Young?  Or maybe something else…  I left work very early so I wouldn’t miss it, which was a good thing since I had to drive about 15 miles an hour the whole way and could barely see the car in front of me.  I drove past two major accidents, and a couple cars that slid off into the ditch, but finally – Denny’s – the home of the Bartlett Democratic Club’s weekly luncheon!

I had a nice chat with Rep. Pete Petersen who faces a challenge this November from a “Kodiak Karpetbagger” named Gabrielle LeDoux.  She’s well funded, and will be a legally qualified resident of district 19 with 10 days to spare.  Timing is everything.  Pete had a fundraiser recently, and could really use some of your support before the session starts.  He can’t take donations after January 15th, so if you want to throw a few coins in Pete’s stocking this Christmas, we’ll ALL be grateful.  He can take in-state and out-of-state donations.  Pete is a really decent guy, and a great progressive who I actually knew “in real life” before I started blogging and before he ever ran for office. He’s one of those people you actually want to be in government.  So, even if he’s not in your district (or your state for that matter), you’ll be adding to the net sum good of the whole process.  I just did, and I liked it!

But back to Diane Benson.  She started off witha a great talk about women in politics in Alaska.  She noted that despite the fact that Alaskan women lead the nation in rates of professional jobs, we elect few women to executive positions and we have never elected a progressive woman to statewide office.  We lack a Women’s Commission in the state, and we have no women’s caucus in the state legislature.

She also spoke at length about her own experience after getting dissed by the Alaska Ear on Sunday.  She talked about her experience as a mother, managing a home, directing and overseeing a large number of events for the Arctic Winter Games, a NOW conference, and a huge amount of volunteer work.  She has been an outspoken advocate on the issue of violence against women, and has been involved in advocacy, teaching, public speaking, holding workshops and being featured in several publications.  She’s taught upper division courses at UAA about Native women surviving violence, and women and social action.  She served two terms in the Alaska Native Sisterhood, and served on the board of Healing Racism in Anchorage.  She also was featured prominently in the PBS documentary “For the Rights of All” where she played the role (brilliantly) of Alaska Native civil rights pioneer Elizabethe Peratrovich.

I know I’ve missed a lot because my fingers were flying trying to keep up with her many accomplishments.  She summed it up well by saying, “Leadership comes from many places.”

~Benson getting the mic from KTUU

She talked about Governor Sean Parnell’s recent moves toward addressing the issue of violence against women in the state, and noted that it was well past time that this became a political issue that got some attention.    She noted that Parnell’s plan fails to address the cause. “We don’t just need more arrests and more shelters,” she said.  “We need it to stop.”  This happens through education, addressing the issues in the open and talking about it, supporting drug and alcohol treatment, addressing wage equity, affordable child care, and good mental health treatment.  She also suggested that forming a Women’s Commission is in order.  What is good for women is good for society as a whole and everyone benefits.

She talked about our former Commissioner of Public Safety Walt Monegan and his great idea about having teams of judges and law enforcement that work together on sexual assault issues.  Restructuring into localized teams improves response times and gets help to victims more quickly.

Then she shared a fact that stunned the room.  Anchorage right now has forensic rape kits that it has not tested.  Victims do all the things they are supposed to do, samples are taken and they are sitting there unlooked at, untested.  The city doesn’t even know how many of these untested kits have been set aside.  Why are they not being tested?  Lack of funds.  What does that say about our priorities?

Palin chose to charge the victims of rape to have their evidence examined and their rape kits tested.  We don’t charge the families of murder victims for forensic tests.  “How is it just to charge a victim, or to just disregard evidence altogether?  Do only those with money have justice?  If protection of our citizens is not a fundamental priority, then what is?” Benson asked.

In the 2008 election, she was advised not to talk about these things because she’d be considered a “one issue candidate.”  The election cycle before, she was accused of being a “one issue candidate” about veterans’ issues.  She was accused of being a “one issue candidate” about the war.  All of these are important issues and we need to talk about them.

She talked about how progressives need to really get out there and support women candidates.  More than just weighing resumes, we need to find and support sensible, intelligent, thinking women to run for office.

As we neared the end of our time, she confessed, “I wanted Don’s seat so bad, and I still do.  I wanted to win that more than anything, and we had a chance.  We came close.”  But at this point, she noted, she doesn’t have the personal wealth it takes to survive the lengthy campaigning for office for that position. “As much as it pains me, I won’t be seeking to unseat Don Young in 2010.”  She noted that Don Young has called her several times since the 2008 election.  She also told about how she and Young’s late-wife Lu had become friends.  He would say, “Uh-oh.  My wife and Diane Benson are friends. Should I be worried?”  Then she told us that Don Young had said to her that if she had won the primary, she might very well be sitting in his seat today.

And then, the moment we’d all been waiting for. “I’ve given this a lot of thought,” she said. “People have been saying I’m ‘too green’ in every sense of the word.” With a twinkle in her eye she said, “They think I’m one of those Native women who cares too much about the land and the people.”  Then she asked the question, “Would anyone be interested in seeing me as the Lieutenant Governor?  Are you willing to step up and put money on the table to see me there?”

The room erupted in applause, and everyone stood.  She got almost a full minute of enthusiastic clapping.  “I’ll take that as a yes,” she said, smiling.

Welcome to the ring, Diane Benson!

~Diane Benson (D) Candidate for Lt. Governor and Bob Poe (D) Candidate for Governor.  If these two end up in office together, we will totally win the “Battle of the Teeth” competition with Governos and Lt. Governors of other states.  OK, well… we should start one.

Security was tight to say the least.  I’d actually never been on Elmendorf Air Force Base before, so I wasn’t quite sure what to expect.  ID, insurance and registration at the gate.  “Please pop the hood, ma’am,” I was asked, after I pulled over as instructed.   My car is fairly new.  Well… new to me.  So new, in fact, that I have never actually popped the hood myself.  And so after looking around for a little while and not immediately seeing the little hood release thing, I started getting a little flustered.  “Ma’am, please pop the hood,” I was asked again.  Then I realized I’d been called “ma’am” which is always a little disconcerting for me anyway.  I was “Miss” for most of my life, and then I hit that grey area where nobody knew quite what to call me.  So, I’m still kind of a new “ma’am.”  And I started thinking about that instead of my hood, and finally he said, “It’s that little lever right there.”  And so it was.  The one right in front of me, with the picture of the little car with the hood open.  I smiled, a sort of “yes, I’m pathetic” smile and popped the hood.  That would not be the only time today I felt like a total dork.

Then off we were shuffled, into a little heated hut with a couple other bloggers and media types, while mysterious things happened in and around “the vehicle” that we were not allowed to see.  By the time the guy came back to tell us we were all good to go, we were having quite a fun time in the hut, chatting about this and that.  “We want to stay in the hut!” we said, and he laughed.  We were then escorted to a parking lot and driven to the hangar where the President would be arriving a couple hours later.  Another security line, where bags were searched.  My camera was examined and a picture was taken to make sure it was really a camera.  At least that’s what I imagine.  I don’t think it was for any kind of artistic purpose, because this is the shot he took.

It was after that that a perplexed security guy pulled a small vinyl moose out of my camera bag, set it on the table and looked at it, and then looked (with everyone else in line) at me.  That would be the second time I felt like a dork, but this time it resulted in a prize at the end – a White House Press Pool badge!  Nice.  There were lots of people milling around already, most in uniform.  The event was closed to the public.  There was a media section and I worked my way in and got settled.

I saw Senator Mark Begich who had arrived early.  He walked around shaking lots of hands.  I don’t know how many pictures he was asked to pose for, but it seemed like every time I looked at him he was getting his picture taken with smiling people in uniform.   He has been very supportive of Anchorage’s military community even in his days as Mayor, and has been doing lots of work on their behalf in the Senate, as a member of the Senate Armed Services Committee and the Veterans Affairs Committee.

I also ran in to gubernatorial candidate Ethan Berkowitz and his wife Mara.  He got his VIP tickets courtesy of his former nemesis, and the man that defeated him in last year’s congressional race, Don Young.  A nice gesture, I thought.  There, I said it.

All of a sudden, it was like I had seen a rare exotic bird!  Could it be?  (flipping through my political field guide)  Why, yes!  A creature common to the state, yet strangely absent from this area today… a “Republican!”   It’s Rep. Nancy Dahlstrom!

No Senator Lisa Murkowski (in Kotzebue), no Rep. Don Young (in D.C.), no Governor Sean Parnell (errr…. down the road 2 miles away speaking to a General Contractor’s luncheon he just couldn’t reschedule), and almost no Mayor Dan Sullivan, although he managed to worm his way in to the event after originally saying “thanks but no thanks on those tickets from the White House.”

I also ran into AFL-CIO President Vince Beltrami.  I’d just seen him at the taping of Shannyn Moore’s new TV show Moore Up North the night before.  He was quick to jokingly point out the sociological barrier that separated the sweaty media masses from the VIPs!  I talked to Vince for a while across the blue ”Berlin Wall.”

And speaking of Shannyn Moore, there she was with cameraman extraordinaire Dave Turnbull.

The Air Force Band of the Pacific played to help us pass the time, and boy were they amazing. 

And finally the moment arrived.  There was a prayer, a rousing rendition of the Star Spangled Banner, and finally the Commander In Chief.

I was very focused on taking pictures, and it took a minute before it sank in that I was actually standing in the same room as the President.  It was a strange feeling to be there with the actual person who I’ve heard speak so much, written so much about, and (like many) worked so hard to get elected. I had never been in the presence of a sitting President before, and I thought this was a great way to start.  He said how pleased he was to be able to stop in Alaska, and how much he had appreciated speaking with those members of the military he’d just talked to behind the scenes. 

He thanked Mark Begich, and I was reminded yet again how our Governor, Sean Parnell had snubbed the president and the troops and was a mere 2 miles down the road delivering a really “important” speech to the Association of General Contractors at a luncheon in the middle of a three-day conference.  I was irritated to the extreme.  Some day I’d like to have a governor who doesn’t embarrass me.  This is my wish.  But in the meantime, the President was gracious and appreciateive.  He talked about all the reasons he is grateful to the military, and acknowledged their sacrifices.  He named Alaskans who had been lost, including Marine Cpl. Greg Fleurry who was killed in Afghanistan just a couple weeks ago.  And he talked about the tragedy of Ft. Hood. 

He told the crowd that he would not hesitate to use military might when it was necessary (some cheering from the audience), but then he said that he promised also to never ask the men and women of the military to put their lives on the line unless it was absolutely necessary.  That line got the biggest cheer of the speech.  He also talked about specific things he had done to support members of the military, which met with more cheering and warm applause.

It was nice to see so many smiling faces who did look really pleased that the President had taken time out of his schedule to meet with them and talk with them.  The speech was not long, but it was well-received, and when the President started shaking hands, he was just about mobbed. 

I stood up on the risers to get a good angle for pictures, and even when my eye lost him in the crowd, all I had to do was look out over the sea of people and I was able to tell where he was.  All arms were held out, holding cameras with glowing screens, pointed at him from every direction.  The effect was almost like the tentacles of a sea urchin, or a  great glowing starfish that moved slowly around the room, following his every move.

There were lots of smiles, and hand shaking, and the president looked genuinely happy to be there meeting people. 

After he left, there was a lot of residual smiling and an air of excitement that lingered. 

It was only when President Obama was over the Pacific Ocean winging his way to Japah, and as I drove through the gates on my way off base that I realized I forgot to get the coveted shot of Brian the Mudflats moose in the same frame as the President!  I was really excited to be able to get that fun shot to add to the gallery, but I was so moved by what he was saying and the surreal feeling of being there, that it completely slipped my mind. 

But, even though I didn’t end up with that particular souvenir of the event, I did get to keep my cool hexagonal White House Press Pool pass.

and got yet another unique and lasting memory of the day – the apparently indelible paw prints of a bomb-sniffing dog on the upholstery of my back seat!  Hey, it’s something!

~(L-R)  EthaBerkowitz, Hollis French, Bob Poe

I listened yesterday to Bob Poe on “Studio 1080″ on KUDO 1080am, and then I listened to Ethan Berkowitz on Dan Fagan’s show on KFQD 750am. Then Sean Parnell announced his plan for a huge scholarship program. Then Rob Rosenfeld stepped out of the race. I’m getting all kinds of lovely invitations to attend fundraisers for the candidates. So, I’ve been thinking a lot about the governor’s race lately.

Each one of the three major Democratic candidates has pros and cons. That’s always the case. And each of us have issues that are “deal breakers.” We may like someone, but a particular position will nudge us to vote a different way. We may choose to vote based on electability, or based on personal contact, or a multitude of different things. Getting elected is both a science and an art.

So, I’ve been thinking about asking some questions of our gubernatorial candidates. But my questions may not be your questions, and my issues may not be your issues. So, I’d like to ask you what YOU would ask our candidates if you had their undivided attention? Then, I’ll go through your questions, and my questions, put together a list, and see what our candidates have to say. They may answer them and they may not, but I’ll let you know either way. And if they do answer, I’ll print their answers over the coming months so everyone can see them.

I don’t know how this election will go, but I do know this. The last time we voted for governor, a lot of us were either not paying attention, or voting based on things other than the content of the answers that were given to important questions. And that didn’t work out so well.

So, what would you ask? You can put questions in the comments section here, or you can send them to me via email to akmuckraker(at)yahoo(dot)com.