On Monday, Alaska Gov. Mike Dunleavy vetoed a bill that legislators had hoped would shed light on how his administration is handling oil and gas taxes, renewing concerns that he may be cutting sweetheart deals for companies at the state’s expense.
Senate Bill 183 sought to empower the legislative auditor, one of the few state jobs specifically mentioned in the Alaska Constitution, with the authority to access records on oil and gas tax payments that the Dunleavy administration has stopped sharing publicly. Dunleavy claimed the bill was unconstitutional, but legislators who backed it say they’re worried about what he could be hiding.
At the root of the issue is Alaska’s complicated oil and gas tax system, which taxes companies on their net profits rather than their total profits. That means there is a big, time-intensive, and frequently contentious process for companies to report their expenses and for the state to review them. Those issues can end in settlements, which could be influenced by the governor’s administration.
It’s a process that has historically revealed significant hundred-million-dollar gulfs between what was paid and what was actually owed – companies, after all, like to push the limits of what’s acceptable to bring down their tax rate and maximize profits – but those settlements have nearly evaporated altogether under the industry-friendly Dunleavy administration.
Sen. Elvi Gray-Jackson, the Anchorage Democrat who, as chair of the Legislative Budget and Audit Committee, has been attempting to get to the bottom of the issue for years, said it has been troubling. She expressed deep disappointment with his veto.
“This is just time-consuming,” she said. “I have been trying to get this information for a long time. And they basically ignore that, but she (the state legislative auditor) needs to do her job … The bottom line is it’s about accountability.”
There could be different explanations for the drop-off in tax settlements, said Sen. Bill Wielechowski, an Anchorage Democrat and vocal critic of the oil industry, but it’s unlikely. He said the oil industry has a long track record of pushing the boundaries with its tax expenditures, recalling how they tried to deduct rental cars in London against Alaska’s production taxes, and it’d be unlikely that they suddenly stopped.
“Historically, when you look at the numbers that have resulted from the tax settlements and royalty settlements, what you find is that, yeah, the industry has taken an oil industry-friendly interpretation of the law every time,” he said, noting that settlement payments have fall from hundreds of millions of dollars annually to about $200,000 in the most recent year. “So it raises a question: are they getting sweetheart deals, or all of a sudden, for the first time in state history, are they not taking an oil-friendly interpretation of what our laws are?
Add it to the fact that a former Department of Revenue official has suggested in a social media post that Department of Revenue Commissioner Adam Crum, who has been similarly obstinate to the Legislature’s oversight attempts, had directed the state officials to take a softer approach with oil companies.
Wielechowski said he was familiar with the accusations, but said as long as the Dunleavy administration continues to stonewall the Legislature’s auditor that it’ll be difficult to prove and even harder to bring accountability.
“We all know that there are certain administrations that bend over backwards for the industry, but it seems like Crum has just gone so far over the acceptable limits,” he said. “But you know, how do you prove it?”
Gray-Jackson said she expects the veto and the issue over the oil and gas tax audits to be taken up at the Legislative Budget and Audit Committee’s upcoming hearing on June 30. She said she’s also confident that legislators will override the governor, noting the bill passed with broad bipartisan support. Several Republicans who would typically be deferential to the governor broke with him to support SB 183 on its original passage, noting that they shared many of the same concerns about transparency as everyone else.
She said she just wants answers for the good of the public, particularly at a time that the state’s budget has been pinched to the point that it’s struggling to fund public schools or maintain the size of the dividend.
“Nobody wants to accuse the governor of anything, but what are you hiding?” she said. “They’re making it easy for us to wonder, What is the problem? What is out there that you don’t want us to know?”
Matt Acuña Buxton is a long-time political reporter who has written for the Fairbanks Daily News-Miner and The Midnight Sun political blog. He also authors the daily politics newsletter, The Alaska Memo, and can frequently be found live-tweeting public meetings on Bluesky.
