Newly minted Sen. Rob Yundt of Wasilla surprised his fellow Republicans when he submitted his first bill, and it was a tax increase.
The Yundt tax, Senate Bill 92, is designed to enact a specific 9.2% tax on Hilcorp, the company that runs Prudhoe Bay, having taken over for BP Alaska when it exited the state.
Hilcorp is an S corporation, and currently those are not taxed in Alaska. But the bill opens up the door to taxing all S corporations, large and small, and business owners will want to pay heed.
Yundt’s bill threatens to destabilize the oil industry in Alaska. Many conservatives are “livid,” according to Must Read Alaska sources, that Yundt effectively sandbagged his Republican colleagues by not having a conversation with them first. But Democrat Sen. Bill Wielechowski was pleased, saying that good ideas can come from all sides. Wielechowski has been trying to increase taxes on oil companies his entire career. He’s known in circles as “Bill Will Tax.”
SB 92 is similar to a bill offered in 2023, SB 114, which was act “establishing an income tax on certain entities producing or transporting oil or gas in the state; relating to the oil and gas production tax.”
Yundt’s bill has nearly the same language as Wielechowski’s : “An Act establishing an income tax on certain entities producing or transporting oil or gas in the state.”
The tax is supposed to close what some say is a loophole. The S-Corp tax category bypasses income taxes on the company, enabling tax liability to “pass through” and apply to earnings of the company’s shareholders.
In 1980 Alaska repealed its personal income tax, so the shareholders in Alaska do not pay an income tax on their gains.
The statement from the Senate Republican Caucus said the Republican minority was measured, but pointed: They said they are “a non-binding caucus, meaning our members are free to pursue policy proposals that align with their constituent goals and personal values. While Senator Yundt is a valued and respected member of our team, the entirety of the caucus does not align with the proposed legislation SB 92.”
In the House, the Republicans were equally surprised as the Republican minority in the Senate. No one was brought into the discussion before Yundt introduced the bill on Monday.
Although the House and Senate are controlled by pro-tax Democrats, Yundt will still have to appear in front of the respective Resource committees and testify, and he may not be able to answer detailed questions about his own legislation. Oil and gas tax is an extremely specialized and complicated subject that takes years to master.
Some in Juneau have suggested that Yundt is being used by Democrats to find a way to fund their big-spending items, such as returning massive pensions to state and city employees in Alaska through the defined benefits package, and enacting a major spending increase for Alaska’s woefully mismanaged schools. If the tax increase is tied to either of these spending programs, it may improve its chance of passing.
In the past, Gov. Mike Dunleavy has threatened to veto similar legislation.
Who put Yundt up to it as a freshman legislator who has only been in office for less than a month and who never mentioned oil taxes during his campaign against Sen. David Wilson? That’s the burning question among Republicans in the Capitol this week.
Rep Yundt …
Hey Dude(!), we don’t have a “Revenue” problem that needs to be solved at the Sate and Muni level, we specifically have a “SPENDING” problem that needs to be solved!!!
That’s the crux of the budget “problem”.
Hey Rob, How about we continue to cut spending on the dividend? That would save us a whole bunch of money. A family of four has already lost $60,000 in lower dividends thanks to Alaska giving away our oil.
I bet you don’t even like getting a dividend. Your dividend money is better off going to the Texas oil guys, right?
M,
The money that the dividend comes from hasn’t changed, it’s where the money for the dividend is spent that has changed. If that family of four that you speak of cared about where the $60,000 went they’d stop electing the very people who take it from them.
Steve, lets cure your ignorance. The biggest source of unrestricted funding now comes from the Permanent Fund. This is because of SB-21. Because of SB-21 we give away our oil for a song. With billions less in oil revenue, cuts have been made to dividends.
Money doesn’t grow on trees, Steve. With less money, dividends got whacked.
What part of this basic equation do you not comprehend????
M,
You didn’t provide an equation, but I will provide one for you. The amount of revenue the state receives directly from oil, as you know is subject to the amount of oil produced and the price of oil. Last time I checked the state is still receiving more at the price of oil now than they would have under previous taxing regimes. Lower prices and less oil production equates with less revenue for the oil companies and the state, you understand that basic equation right?
And of course you are aware that the corpus of the Permanent Fund is derived from oil revenues.
Steve, no. What you assert is not correct. TAPS throughput has remained fairly steady for many years. You may recall we were promised one million barrels per day, and more jobs, if SB-21 was passed. Neither happened. In fact, jobs were cut. Just a few examples of the many lies we were told.
Your “equation” is both incomplete, and wrong.
Just the $8 dollar per barrel welfare credit (which is totally uneeded) costs Alaska $1.4 billion per year. Where’s that in your “equation”?
Prices have also been fairly stready, for many years.
I don’t follow valley politics. Was the guy perceived to be a conservative during the campaign?
He pretended to be a conservative, but his time in the Matsu Assembly showed him to be a selfish developer well practiced in cronyism. He continually pursed legislation directly contrary to his constituents. He’s a big part of the problem with land use development in the Valley.
See, the Alaskan GOP is dead and the democrats are running it. Who said you’re vote matters? Not in Alaska.
Got to give it to Sen. Yundt, he knows how to spur economic development.
Just think of all the advertising dollars that will circulate through the economy to defeat his deceitful RINO rear end.
Please tell me we don’t have another Murkowski!
Yes Kenai. I live in the valley and voted for the other guy. Looks like we got LISA’ d.We got rid of Wilson, and a replacement for him is this jerk. Like Kelly in Eagle River, or Geisel in Anchorage. Maybe we should demand our candidates take a lie detector tests.
Cathy Giessel.
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The Weasel.
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Why do the dirty work yourself?
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Much easier to get a dumb freshman legislator to obey, with future promises of promotion.
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Wasilla….you got screwed.
Problem is it isn’t just Wasilla that got screwed.
Yep. Giessel eventually screws everyone through her dumb surrogates.
Traitor much?
We tax enough in this state.
I’m shocked – I’ve known you in a business.
No effort to examine spending or an Alaska DOGE effort.
First thing you can do is try and raise taxes.
You will be a one termer sir!
It isn’t hard to figure it out. The sooner this guy can help kill gas production, the better his odds of selling the carbon capture plant with some electrical generation attached for his Chinese and Canadian investors. Remember, a few years ago Yundt, out of the blue, introduced a carbon capture resolution to the Matsu Borough. He ran from that so fast his mullet fell off!
I’m for the tax on Hilcorp!
More stupidity.
We have Federal Judge Sharon Gleason who shut down Hilcorp’s drilling for OUR source of gas to heat homes for MORE EPA studies, and Enstar suing Hilcorp for the result of that: Lack of gas to deliver to Alaskans, and now THIS?
Do I really need to run for office?
I left the oil industry 25 years ago. The mantra then was that Alaska had a less stable tax regime than Azerbaijan or Venezuela. It remains true today. Hey, Yundt, how’s about cutting spending? There are plenty of opportunities. Basic economics says that the more you tax something, the less you get of it. Want to choke the life out of the Alaska oil industry, just keep doing what you’re doing, you dipstick.
Here we go again with the same old song & dance; the ‘Juneau 2-Step’: One step forward, 2 steps back, spin your constituents with a line of smack.
A reading of Mr. Yundt’s election web site & under the heading “Robs Policy Positions” I found the following dated March 25th 2024, (for the liberals reading this (I know, oxymoron) that means not quite a year old) I found the following: “Fostering Alaska Prosperity: a case against state taxes”. Under this heading Mr. Yundt stated the following,
“History teaches us that over taxing residents often yields unintended consequences like stifling economic growth & burdening residents. Instead, Alaska’s focus should be on reducing or at the very least capping state spending while at the same time nurturing economic expansion through responsible resource development, technological innovation & reducing the many bureaucratic hurdles slowing private enterprises.”
Well, well, well, sounds pretty conservative(ish) to me… yet if you dig a little deeper into the same policy statement, you find that Mr. Yundt specifically mentions mining & timber but deliberately does not mention oil & gas. Not once. Yet when speaking of timber harvests he states; “sustainable timber harvests not only contribute to the economy but also promote environmental stewardship.” (Liberal code word alert).
I believe this approach to policy statements is called ‘riding-the-fence’. For all the years I’ve lived in the valley I really didn’t run across too many other matsu residents who prided themselves on ‘riding-the-fence’.
There is however a positive side to this. On the same web site under the heading of “Policy Achievements”, the number one policy achievement articulated by Mr. Yundt is; “Sponsored lifetime term limit legislation for Mayor & Assembly (no more career politicians).
Perhaps the best thing we can do as voters is to take Mr. Yundt’s advice and make sure he doesnt become one of those dreaded “career politicians” by making sure he is rewarded with a “term limit” the next time we see his name on the ballot.
So you prefer income taxes, sales taxes, and PFD cuts? Seems smart
There is nothing liberal about creating a level playing field for oil and gas producers.
I’ve totally changed my mind about this guy and forgive him for building in his pond.
Is not Mr. Yundt best friends with Jesse Sumner? Think I told people I had reservations concerning him. Remember when he considered running against Lynne Gattis. I spoke to him at that time and just felt he was very moderate to say the least. I believe he was also pro-choice.
Alaska had many smaller oil companies leave Alaska because of the uncertainty of our oil taxes up and down. Now that we have a pro-oil President in office there could not be a more awful time to do this. Mr. Yundt joined the minority and heard he didn’t even discuss with them but instead worked with and took advice from Democrats.
Perhaps people need to listen to some of us that have been around for awhile when we say…..look a little closer. Knew he was just pretending to be conservative!
Now is the time to change the name of GOP and its mascot. To the Lynx Party. this is more represents the current make of republics nationwide. One of the traits of Lynx in the wild is. They are widely know to be cannibalistic, they we will eat their own. Lets bring in the Lynx Party!
The best democrats in Alaska are Republicans.
AK Republicans are beyond useless.
$60,000.00
$60,000 dollars is how much an Alaskan family of four has now lost due to SB-21 because we pay $1.4 billion per year in corporate welfare, and get the lowest severance tax in the world for our oil.
Because we pay so much in corporate welfare we haven’t had enough to properly fund the dividend at the level set by the statutory formula.
Republicans used to stand up for Alaska. Thank God we have a Republican with some balls. Thank you Sen. Yundt.
M,
You don’t pay any corporate welfare to any oil company, nor do I. If you don’t mind please share the source for your claim that Alaska has the lowest oil taxes in the world, I can’t find that information anywhere and I would in now way be surprised to find out it’s because it doesn’t exist. As far as the $60,000 you keep going on about, you should address the actual issue which is the legislature reducing the Permanent Fund Dividend amount so they can spend it elsewhere.
Alaska still taxes oil companies, the vast majority of state spending is based upon the fact that oil companies have and continue to pay taxes.
Steve, you can’t just make stuff up for your argeuments. The biggest source of unrestricted funding comes not from oil, but the Alaska Permanent Fund.
Because of SB-21 we don’t have the income to fund our obligations- so the Alaska Permanent Fund Dividends have been whacked- to the tune of $60,000 for a family of four. This is the deviation from the statutory formula to what was actually paid since they started reducing dividends.
The sharpest oil and gas attorney in Alaska, Robin Brena, offers these facts from May, 2020:
“Lowest royalties: Let’s be honest about royalties. Alaskans receive the lowest royalties of any state or private owner with major oil resources in the United States. In the past five years, Alaska has received 12.5% of the $57.4 billion in oil produced, or about $7.2 billion in royalty oil. While Alaska gets a 12.5% royalty, major resource owners today typically get a 25% royalty. Texas has gotten a 25% royalty for more than 30 years. Private land owners with major reserves throughout the United States have gotten a 25% royalty for more than a decade.
Despite considerable efforts to confuse the two, royalties are not oil taxes. Instead, royalties are the part of the oil production the state keeps as rent for the leases and sells either “in-value” to the producers or “in-kind” to third-party refiners.
Lowest oil taxes: Turning to oil taxes, the major international oil producers realized $50.2 billion from their sale of our non-royalty oil in the past five years. They paid two oil taxes on these revenues — production taxes and corporate income taxes.
Let’s be honest about production taxes. Under SB 21, Alaskans have received the lowest production taxes in our history and the lowest production taxes of any state or nation with major oil resources in the world.”
So, Steve, money doesn’t grow on trees. Review the revenue source book for Alaska-educate yourself so you can make useful comments. You have the brains to do so.
M,
Why are you quoting the “sharpest oil and gas attorney in Alaska” when he talks about royalties and trying to confuse them with taxes? If the guy you are using as your source of information on the subject has trouble confusing the two and you are simply taking his word for it, you might want to access the actual information for yourself instead of repeating claims that also do not have any information to support them. When did Brena say the quote you provided, and do you have any information to support his view that you can share?
The reason the state has recieved a lower production tax than it has historically is because lower oil prices and less oil production equates with less revenue for the oil companies and the state.
And of course you are aware that the corpus of the Permanent Fund is derived from oil revenues.
Steve, many oil companies hire Brena because he’s an expert. And he routinely wins cases. He may be the brightest attorney in Alaska.
You don’t understand what a royalty is. Go back and re- read Robin’s explanation- and note we get half the royalty many other jurisdictions do.
You need to take into consideration that Alaska is not only one of the most physically challenging pllaces to explore and produce in America, it is certainly the most challenging to permit. then we hve no guarantee that taxes will be stable. This all factors in. Some places like Norway are so smart that they do the exploration, get the permits, and offer to partner. No wonder their royalties are so high as there is almost no risk. We should take a lesson.
A “burning question” that could be probed more easily, if they moved the statehouse back to civilization (ie Anchorage).
We need to take a moment and listen to what he has to say. I think we owe him that much respect.
Now that David Eastman is gone, there is not a single genuine Republican left in the legislature
Man, “genuine Republicans” really suck at persuading voters to support them, huh? It is a pity that even with a guy like Mike Dunleavy in charge of our elections (via Nancy Dahlstrom) “genuine Republicans” managed to secure 0 out of 60 seats in our legislature.
Either “genuine Republican” voters are a vanishingly rare breed; or perhaps “genuine Republican” voters are just reliably too dumb to figure out which candidate will advocate for their political beliefs. A real mystery.
You can hear David Wilson laughing all the way from Big Lake. Hearing Yundt on the radio talking last year you knew it had to be to good to be true.
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