The hidden hand of the oil industry and the overthrow of the Alaska House in 1981

Jim Duncan has been in the center of many of Alaska’s major political issues over the past 50 years as a teacher, legislator, state administration commissioner and labor leader.

Duncan has just published his autobiography and I suggest that every member of the Legislature and candidate for state office read it. Duncan has made it easy enough for legislators by sending them free copies of “Making Sausage: From Illinois Farm to a 45-year Career in Public Service in Alaska.”

Many of our current political officials do not know the history of Alaska. Some know little more than the fumes generated by experts on Facebook or the half-truths told in meetings that degrade with each retelling.

The biggest lesson to be drawn from Duncan’s books is that many of the issues facing the Legislature today, from oil taxes and the Permanent Fund to the lack of a stable financial plan for the state, can be traced back decades to battles that never end.

Duncan’s book is not a detached view of his years in public service, but his version of events that have unfolded over the last half-century. I found it most valuable for his behind-the-scenes account of episodes in the Legislature that are instructive about the history of legislative dysfunction.

High on that list of all-time events is the June 12, 1981 legislative coup in which Duncan was toppled as Speaker of the House late in the session, a revolt engineered by Democratic Reps. Al Adams, Russ Meekins, Oral Freeman and others who sided with the Republicans.

Duncan said that he managed to repair relations with Adams and worked together with him for the next 19 years.

But he writes that one of his regrets about the coup is that he never did enough to reveal to the public what he believes was the hidden agenda.

Rep. Vern Hurlbert was quoted as joking that he joined the revolt for “free love and nickel beer.”

“I believe his flippant justification really did reflect, without a doubt, the level of thinking that he and some others had when they voted for the coup,” said Duncan.

The main reasons given in public for removing Duncan were about the length of the session, the lack of money for the Bush and the unhappiness of Meekins with his standing in the organization.

“But I know a major reason behind the coup—one that was mentioned but not immediately understood—was the significant change in oil taxation policy that was first planned and then enacted by the Republican-led coalition,” Duncan wrote.

“It was a change in Alaska’s oil tax policy that would immediately affect oil revenues that the state would receive far into the future,” he said.

The total dollar loss to the state is unknown, but the repeal of so-called “separate accounting” has cost Alaskans many billions. The Democrats favored an approach that required the companies to separate their Alaska operation and pay taxes on what they earned in Alaska.

Duncan writes that Sen. Ed Dankworth, who was friendly to the oil industry, denied in public that he had anything to do with the coup, but “sometimes you protest too much.”

“The Republican-led House coalition didn’t take long to pass legislation that would benefit the oil companies,” he said.

“It doesn’t take a rocket scientist to understand why the oil companies were unhappy and would do whatever was necessary to get rid of separate accounting and return to an apportionment schedule. They wanted stability, but only under system that would greatly benefit them, resulting in the state receiving significantly less tax revenues.”

The oil industry has always denied it had anything to do with Duncan’s removal and he admits there are no documents that prove his case, but he was there and he knew what was going on.

“I saw their lobbyists actively working to be sure the coup occurred,” he said.

One of the disconnects that Duncan identifies in Alaska politics is that many of the people who complain the most about getting lower Permanent Fund Dividends have also long been opposed to increasing oil taxes.

“If the state was receiving its far share of oil tax revenues, there would be plenty of revenues available to fund state services and provide ever-increasing dividends,” he said.

“I often think about how the erosion of oil tax revenues to the state began with the coup of 1981. I wish I could have prevented that, but it was not to be,” Duncan said.

Some things in Alaska never change.

Now that Gov. Mike Dunleavy is proposing an exceptionally modest temporary increase in oil taxes when prices are low, the industry is again clamoring for stability. Or else. Listen to the Alaska Oil and Gas Association, controlled by Outside firms, and you’d think that a $1 increase in taxes will stifle development.

Any increase would “undermine the state’s competitiveness,” according to the oil industry, claiming “moving in this direction risks pushing investment in Alaska the wrong way.”

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