Alaska lawmakers plan to compel the administration of Gov. Mike Dunleavy to release data on oil taxes through a rare use of the state Legislature’s subpoena power.
It’s the latest development in a long-running dispute between the Legislature and Dunleavy administration over whether the state is getting all the tax revenue it should from its most lucrative natural resource.
Sen. Elvi Gray-Jackson, an Anchorage Democrat who chairs the Legislative Budget and Audit Committee, a joint House-Senate panel overseeing audits of state government, said subpoenas were the next logical step in completing an oil tax audit that’s been ongoing since 2020.
“We want to work with the Department of Revenue, period,” she said. “But the auditor has been trying to get this information for a very, very long time.”
Gray-Jackson’s committee unanimously authorized a $50,000 contract with outside attorneys to draft and send subpoenas to the administration to move the audit forward.
They’re looking for data that shows whether the Dunleavy administration has been properly enforcing the state’s oil tax laws. So far, the legislative auditor – the official the state Constitution puts in charge of examining the state’s books – hasn’t been able to get the data, at least, Gray-Jackson said, not in a format that the auditor can analyze.
“She's trying to get the information she needs to complete her audit, but in the format … that's understandable, in the format that has been done in the past,” Gray-Jackson said.
The most recent audit of that oil tax data was in 2018, and it showed that the Department of Revenue had raised $1.3 billion over six years by identifying underpayments from oil companies.
But more recently, the auditor told legislators at hearings this spring that the Department of Revenue has provided only raw data and contends that the department is not required to compile the data into a summary table similar to what state officials provided in 2018.
“That interpretation overturns longstanding precedent, and it essentially limits the oversight of the Legislature,” auditor Kris Curtis told lawmakers in May. “The fear is that state agencies from here on out will refuse to provide or compile data in any type of format for future legislative audits.”
In a letter to legislators earlier this year, Revenue Commissioner Adam Crum said his department’s Tax Division “has always been transparent” with the Division of Legislative Audit, the organization that the auditor leads, but said that compiling the data in the format requested by legislators would be time-consuming. Crum attached a 2020 letter from former Attorney General Kevin Clarkson outlining the state’s position that certain oil tax records are protected by attorney-client and other legal privileges.
Crum’s letter expressed “concerns” with Senate Bill 183, which would make it a crime for state officials not to provide data in the form or format requested by the legislative auditor.
“I think we're dealing here with hundreds of millions and into the billions of dollars,” Sitka Republican Sen. Bert Stedman said at a committee hearing earlier this year.
The bill ultimately passed by a wide margin, but Dunleavy vetoed it, saying it raised constitutional issues.
Whether the Legislature can override the veto is unclear — not least because Dunleavy called a special session for next month and told some lawmakers to stay away from the Capitol for the first few days to prevent the rest from overriding his vetoes.
Anchorage Democratic Sen. Bill Wielechowski said he thinks the governor’s request to skip the beginning of the session isn’t just about upholding Dunleavy’s veto of $50 million in education funding.
“This is all about protecting billions of dollars in taxes, likely tax evasion, to the oil industry, and it's about benefiting the rich and the privileged at the expense of the rest of Alaskans,” Wielechowski said.
Dunleavy and legislators have traded barbs over the bill and the dispute behind it.
As the bill came to the governor’s desk in late May, the House speaker and Senate president sent a letter to Dunleavy saying Senate Bill 183 had been an “unfortunate but necessary response” to what they called a “persistent pattern of obstruction within the senior ranks of Alaska’s Department of Revenue.”
After vetoing the bill, Dunleavy fired back with a letter of his own, saying claims the administration was acting “illegally or unethically” were “unfounded and unsupported by any evidence.”
Dunleavy said he was open to working with the legislative auditor to get the data lawmakers seek.
Asked Tuesday when the data would be turned over, Dunleavy’s office said the governor’s letter and the revenue commissioner’s earlier statement to legislators were its only response.
Rep. Will Stapp, a Fairbanks Republican, said even if lawmakers get more insight into how the administration has handled oil taxes, there’s no certainty on whether that would result in a windfall for the state.
“It's important that we audit the functions of our executive branch and especially our oil tax structure,” he said. “I would just be very skeptical that they owe us a billion dollars.”
Stapp said he’s planning to be in Juneau for the start of the special session next month, but he said he’s not convinced that the bill would make a difference in resolving the long-running dispute.
