November 12, 2007
Monday AM

Here we are, approaching the end of this special session, almost ready to drive a late model '07 off the lot after trading in our low-value '06 PPT Cruiser.

I'll confess, as I write about our prospective '07 model, that I have no more than a notion about how it will perform or what all the standard features may be. There's still a bit of tire kicking going on until this weekend but its Friday, time to publish this newsletter, so I'll try and describe what I think the Senate might drive away.

Generally, the new oil tax (that's what we're really talking about here--not a car model) won't go fast enough for some, won't be sporty enough for others, and won't get the highway mileage many of us desire. Given that, here's what I think it will look like:

We'll drive away in a net model (too many, including the governor, have decided a net tax will be more nimble on the curves ahead than a gross tax);

The net model will have a lot more knobs and gears and options than the simpler, stick-shift gross model (the net tax needs far more adjustments to provide clarity, audit integrity, and incentives to meet the twin goals of "fair share" revenues and ensuring future investment);

Our '07 vehicle will have a 225 horse power plant instead of a 250 horse engine (the governor and some legislators want a base tax rate of 25.0 on the net profits while other legislators want a 22.5 base tax rate);

The '07 model will get a lot more from a tank of gas than the '06 model did and will also get more than the model the governor spotted when she cruised the car lot in September (we'll get more oomph out of the tax on a higher value barrel of oil because the progressivity tax rate levied is substantially higher than the progressivity rate set in '06 and the rate suggested by the governor);

The '07 model we drive away in will ride comfortably at high speeds but the ride will be rougher at low speeds (the much higher progressivity rate will do better as the net value of a barrel of oil accelerates through the $35 to $40 range and much better when the range is as high as it's been the last few months but, if the value of a barrel of oil drops below $30 net, we'll sputter along with a lower government share because the tax floor has been taken out and the base rate is 22.5 instead of 25.0); and, finally,

The tachometer, speedometer, oil pressure gauge, and engine temperature gauge will be far better than the sticky, rudimentary gauges in the older model (in the new tax, we require much better information from oil industry tax payers so we can keep from being 'gamed' on the net taxes they pay).

If this all plays out the way I've outlined, I'd say the car won't go fast enough, won't get the mileage I want, and the ride won't be quite smooth enough. But it may have enough seating to let enough legislators in to drive off the lot in a far better ride than what we now have.

I could continue torturing the auto lot analogy but I'm scrambling between meetings and the newsletter deadline really is looming. I'll just end with my fervent wish--whatever tax rate we finally drive away with, let's hope we are able to keep it on the road for a far longer period of time than the '06 lemon we're trading in. Both industry and Alaskans are better served with a make and model that's both durable and reliable over time.

About: Sen. Kim Elton is a member of the Alaska State Legislature representing Juneau.

Received November 09, 2007 - Published November 12, 2007

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