Dunleavy administration is blocking billion-dollar audit of oil tax disputes, legislators say
The Alaska Legislature is moving rapidly to pass a bill that would force Gov. Mike Dunleavy's administration to disclose reports that could show the state settling oil tax disputes for significantly less than what is owed.
'This bill shouldn't be necessary, but here we are today,' said Sen. Elvi Gray-Jackson, D-Anchorage and chair of the Legislative Budget and Audit Committee, in a Thursday hearing by the House Rules Committee.
'Either the Department of Revenue has already compiled the information requested in the special audit for its own use and is deliberately withholding it from the legislative auditor, or it has failed to do the basic work of calculating the tax, interest, and penalties assessed for each audit cycle,' she said. 'Frankly, I'm not sure which of those scenarios would be more troubling.'
The Senate passed Senate Bill 183 on a 19-0 vote Monday. The House of Representatives could vote on it as soon as Friday.
Dunleavy could veto it, allow it to pass into law without his signature, or sign it.
If enacted, it would require the executive branch to disclose information 'in the form or format requested' by legislative auditors.
Under the Alaska Constitution, the Legislature is responsible for overseeing executive branch operations, but since 2019, the legislative auditor has been unable to properly examine the part of the Department of Revenue that audits tax payments by oil and gas companies.
'In the past, the Department of Revenue provided the Legislature with organized summaries showing the total amount of additional tax, interest and penalties assessed for each annual tax cycle,' Gray-Jackson said. 'However, the department now claims it is only required to provide access to raw data, not to compile or categorize information in a usable format, as it had done previously.'
Though legislators can examine raw data, they don't have the resources to process them. The change makes analyzing the executive branch's actions impossible, Gray-Jackson said.
Legislators have written letters and asked for access, to no avail.
'Unfortunately, the issue remains unresolved, and the auditor still cannot complete this important audit, which concerns the oversight of billions of dollars in state oil and gas revenue,' she said.
Until 2019, the first year of Dunleavy's administration, Department of Revenue tax auditors regularly published a memo summarizing total tax and interest assessed after its annual audit cycle.
By combining that information with the amount paid in settlements, lawmakers and the public could see what share of assessed taxes and interest were being paid.
Without the tax and interest information, it's not clear how oil companies' settlement payments compare with the original state assessments.
Under the Alaska Constitution, the Legislature is responsible for overseeing executive branch operations, and the memo was part of that oversight.
When the memos stopped, legislative auditors asked for them and were told that they were now confidential.
At the time, members of the Legislative Budget and Audit Committee were so concerned that they commissioned a special audit of the executive branch's auditors.
For five years, they've been unsuccessful. Members of the executive branch say they're not required to turn over compiled reports, only raw data.
'That interpretation overturns long-standing precedent,' said legislative auditor Kris Curtis, 'and it essentially limits the oversight by the Legislature. The fear is that state agencies from here on out will refuse to provide or compile data in any type format for future legislative audits.'
Destin Greeley, an audit supervisor for the Department of Revenue, testified Thursday that providing what Curtis requested 'is creating this new work product that is very time-consuming and trying to put a square peg in a round hole for us.'
Rep. Louise Stutes, R-Kodiak, said she doesn't understand why that suddenly became difficult for the Department of Revenue to do.
'I am not buying your story, and this is a huge red flag for me,' she said.
'When you've got hundreds of millions of dollars involved, I'm worried,' Stutes said.
Legislative attorney Emily Nauman said she believes the new bill will resolve the ongoing dispute 'if the department complies with the law.'
If not, she said, the topic could head to the courts.
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