The Mat-Su Borough Assembly, without once consulting with the resource development business community or tax experts, is considering a resolution that supports a tax singling out one American-owned oil company: Hilcorp, the company that is pouring millions of dollars in investment into the North Slope.
The Yundt Tax, a new approach to Alaska tax policy that targets one business, is the brainchild of Democrat Sen. Bill Wielechowski, but is being sponsored by Wasilla Republican Sen. Rob Yundt. It is at attempt to ratchet up the income tax on the company that took over BP’s operations on the North Slope at a time when BP was struggling to make Prudhoe Bay investments profitable. Since taking over, Hilcorp has remitted taxes that far exceeded state projections for Prudhoe Bay per-barrel tax and royalties:
The MatSu Borough Assembly has many ties to Sen. Yundt, who served on the Assembly until leaving for Juneau.
Maxwell Sumner, who took Yundt’s place on the Assembly after Yundt went to the Senate, is the brother of former Rep. Jesse Sumner, who is believed to be supporting the Yundt Tax. Sumner and Yundt are close friends.
Dee McKee, who has served on the Assembly for years, is the mother of Yundt’s chief of staff, Ryan McKee. She will likely have to recuse herself from voting on the matter when she returns from medical leave.
Stephanie Nowers, who recused herself on Tuesday because her husband’s company works with the company she said would be impacted, also serves on the Assembly.
The matter was sneaked onto the Assembly’s consent agenda, but Assemblyman Bill Gamble asked that it be pulled from the agenda because he felt he needs to study the matter further, since oil tax law is complicated. Some members were not in attendance, including Assemblywoman McKee.
Consent agenda items are supposed to be for noncontroversial items. But there’s little legislation in front of the Legislature this year that is more controversial than the Yundt Tax.
Assemblyman Ron Bernier read from notes that appeared to have been provided him by Sen. Yundt’s office, advocating for the tax, and what he read had significant misinformation contained in it. He proceeded to argue for the resolution, even though the actual motion on the table was to simply move the item to the March 18 regular agenda.
Bernier said Hilcorp pays no tax to the state, when it, in fact, pays hefty production tax and royalties, just not income tax. Then Bernier got some more notes sent to him and started reading them, continuing his argument, and the notes claimed that in 2021 the governor supported similar legislation, which he did not disclose was part of a separate major tax restructuring with multiple facets to it. He was falsely asserting that Hilcorp pays no taxes to the state. That is true, and 11,000 other S corporations do not pay income tax. It’s not a loophole — it’s the law.
In the end, the controversial resolution was pulled from the consent agenda and is now on the March 18 agenda.
Watch what happened in this video clip:
In the MatSu Borough, both House District 28 Republicans and the Valley Republican Women of Alaska have passed resolutions opposing the Yundt Tax.
Yundt is supported by legislative Democrats led by Sen. Wielechowski, who has been trying to get higher taxes on oil companies for his entire legislative career.
It’s unclear how much the extra tax on Hilcorp might gain for the state — or whether it could actually cost the state. The analysis has not been done. It may be that if the tax is enacted, Hilcorp will then ask for certain benefits in its Cook Inlet leases, which it now does not get but that other companies do get. The company could use the same equity argument that Sen. Yundt is offering, which says that all companies are the same and must be treated equally.
Yundt represents the district in Alaska that had the highest no vote on the last ballot initiative to raise taxes on oil companies. In 2020, his district voted 74% against the oil tax ginned up by Democrats and lawyer Robin Brena.
What the he// is happening in the valley? The liberals moving in and polluting our great borough? Everyone needs to call their assembly persons and explain to them that now is not the time to tax our energy businesses.
You know what would be really nice? If Rob Yundt would instead of beating up oil companies start to work on some domestic violence legislation so that those who are arrested for fourth degree assault don’t just get to wear an ankle monitor. That would be really nice.