Sarah Palin was presiding over a legislature in open warfare in 2007 over what would become her singular lawmaking legacy—a substantial boost in the petroleum profits tax that would force oil companies to share billions of dollars more of their profits with the state.
Palin had initially proposed a modest hike, coupled with a crucial new “progressivity” component that jacked up the rate when oil prices rose above normal market levels. But her Democratic allies in the Legislature saw the chance to do more and raised it to 25%, with Palin’s enthusiastic support.
The result was a showdown in Juneau between Palin and her mainly Democratic allies and old-guard Republicans who protested that the stiff new taxes under Palin’s bill, dubbed Alaska’s Clear and Equitable Share (ACES), would discourage the oil companies in making new investments in the North Slope’s already declining oil fields. It passed, barely, and by 2009 the production tax brought in $3 billion to the state’s coffers.
It was a tense, bruising fight, though, as the Palin administration’s newly released emails show. Palin was trying to pick off Republicans one-by-one to her side, with her staff urging her to make personal contacts. Republican opponents fought back fiercely, accusing Palin of threatening to campaign against them if they balked, and even of promising to approve capital spending projects in the districts of legislators who voted her way on the production tax.
Palin appeared stunned by the accusations. “Don’t know how these rumors of me ‘pressuring’ lawmakers—especially rural leggies started, and don’t know why they’re continuing, but I’ve met with them many times and communicated with lawmakers on the phone at your request and upon your advice,” she wrote to her staffers. “Now, if it’s doing more harm than good to talk to any lawmaker (and I’ve never threatened, bribed or anything else), please don’t keep setting up these opportunities to work with them.”
She added: “Please do what you can do about the situation, because we’re better off not giving our critics more opportunity to lie about the situation, meaning no more meetings between me and lawmakers…?”
Joe Balash, Palin’s inter-governmental coordinator, reassured the boss: “The people spreading these ‘rumors’ are the people opposed to making a change. The likely reason this accusation is being made is because your meetings are having an effect. Your opponents want you to stop,” he wrote.
“The rumor that you are going to campaign against those who vote against ACES is patently false,” he said. “The notion that you ‘offered’ capital budget items to the rural legislators is coming from the same vein.”
Once Palin left office, her lieutenant governor, Sean Parnell, who succeeded her, this year led a major campaign to roll back the production tax hike.
It stalled in the Senate, but is expected to come up again in January. Many of the Republicans whom Palin had dragged into her camp were bailing this spring in the face of oil company claims that they weren’t going to invest in Alaskan enterprises at such an escalated tax rate.
Flow through the trans-Alaska pipeline, once at 2.1 million barrels a day, is now often down to just 640,000 barrels a day, thanks largely to declining flow from the aging oil fields and difficulty accessing new ones.
“I’m sad that I voted for ACES. I apologize that I voted for ACES,” state Sen. Lesil McGuire, R-Anchorage, said at a rally on the measure organized by Parnell in March.
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