With Alaska governor’s veto, oil tax records stay concealed from legislators who want an audit

Gov. Mike Dunleavy has vetoed a bill that would have increased the transparency of the state’s tax-audit process, citing legal concerns.

As written, Senate Bill 183 would have required the executive branch to provide reports to the Legislature’s auditors “in the form or format requested” requested by legislators.

That bit of arcane statutory work was required, legislators said, because the Alaska Department of Revenue under Dunleavy has stopped providing reports that illuminate the work of Revenue auditors who deal with disputes over oil and gas taxes.

“They cooperated in the past,” said Sen. Elvi Gray-Jackson, D-Anchorage and chair of the Legislative Budget and Audit Committee. “Before Gov. Dunleavy, they have cooperated. It’s just crazy, and the issue matters because there could be billions of dollars in potential oil and gas tax revenue that we aren’t getting, that we should be getting.” 

Sen. Bill Wielechowski, D-Anchorage, is chair of the powerful Senate Rules Committee, which sponsored SB 183. 

“The real question is, what is he hiding?” Wielechowski said of the governor. 

“Why is he going to such lengths to hide information from the people of Alaska? That is the real question that needs to be answered here and I hope that we’re able to get to the bottom of this, because this is potentially hundreds of millions of dollars that we have lost,” Wielechowski said.

Gray-Jackson had similar comments on Monday.

“Accountability suffers when we, the Legislature — and by extension, the public that we represent — cannot see clearly how state revenues are tracked and how they’re assessed or collected,” she said. “Come on now, Governor.”

The leaders of the House and Senate viewed SB 183 as so important that they wrote a letter to the governor, asking him to not veto it. 

“This letter accompanies the bill not as a routine legislative communication, but as a reflection of the extraordinary nature of the circumstances we face,” it read. “The ongoing obstructions by the DOR must not be allowed to become a precedent for future administrations. We must reinforce, not erode, the norms of oversight and accountability that are vital to Alaska’s republican form of government.”

State legislators passed SB 183 by a combined vote of 59-10-1 earlier this year. Forty votes would be needed in a joint session of the House and Senate to override the governor’s decision.

Already, lawmakers are planning to vote on an override of the governor’s decision to veto millions of dollars in education funding.

That vote is not expected to take place until lawmakers reconvene their regular session in January.

Wielechowski, a member of the Senate majority caucus leadership, said SB 183 will “absolutely, yes, 100%” be a subject of an override vote as well.

The governor’s office declined to comment on the veto beyond the formal letter to the Legislature that accompanies every veto.

In that letter, the governor writes that he believes SB 183 “would enact a sweeping and likely unconstitutional delegation of legislative authority” to the Legislature’s audit committee and auditor.

“The Alaska Supreme Court has long held that a grant by the Legislature of a sweeping discretionary mandate without guidance or limitation is an unconstitutional delegation of legislative power,” the letter states.

Wielechowski said he’s not sure what the governor meant by that. SB 183 was written with the guidance of legislative attorneys who know the Alaska Supreme Court’s case law.

“I have not had any indication that they thought there were any constitutional issues with it,” he said of the bill.

Gray-Jackson said she sees the Legislature’s powers as clear.

“The (Alaska) Constitution and the state statutes give the Legislature authority to audit executive branch agencies so that we can ensure that public funds are properly managed,” she said. “The auditor relies on these agencies in order to get the information that she needs.”

Asked whether the Legislative Budget and Audit Committee might now sue over access to the audit records that inspired SB 183, Gray-Jackson said she couldn’t answer that question until she spoke with the Legislature’s attorneys.