On Saturday, Alaska legislators voted 43-16 to override Gov. Mike Dunleavy’s veto of Senate Bill 183, which is intended to compel the executive branch to provide information about settlements paid by oil companies to the state of Alaska, in order to resolve tax disputes with the Alaska Department of Revenue.
That vote was overshadowed by an education funding veto override that took place minutes later, but the override on SB 183 could be more significant for state revenues in the long run.
Since 2020, lawmakers have unsuccessfully attempted to audit the Department of Revenue’s audit division in order to determine whether the state has been settling tax disputes with oil companies for what Sen. Bill Wielechowski, D-Anchorage, calls “pennies on the dollar.”
“I would expect that we will see there has been significant underpayments,” he said, explaining that the state had been collecting tens or hundreds of millions of dollars in settlement payments, “and then it dropped to $250,000. Based on the amount that the settlements dropped, which was huge, I expect there’s probably massive underpayments.”
In comparison, Saturday’s veto override on education funding involved just $50.6 million.
Legislative Auditor Kris Curtis, who has worked in that position since 2012, hasn’t been able to examine the Department of Revenue’s work because the department hasn’t provided the necessary information.
Until 2019, the department supplied that information regularly. Curtis previously conducted an audit of the same division in 2014.
“I’ve never seen this type of non-cooperation with any other administration,” she said in an interview Tuesday.
If the department still does not comply with the new law, the joint House-Senate Legislative Budget and Audit Committee is prepared to issue subpoenas to legally compel the department to release the information, said Sen. Elvi Gray-Jackson, D-Anchorage and chair of the committee.
“The engagement letter has been signed and executed, and the attorneys that we hired to move forward with the subpoenas are just waiting for instruction,” she said, speaking to reporters on Saturday.
Curtis said she hopes it doesn’t come to that.
“My plan is to reach out to the agency and basically restart my audit,” she said.
The commissioner of the Alaska Department of Revenue, Adam Crum, is scheduled to resign on Aug. 8, meaning that the audit will take place under a new commissioner.
“I’m hopeful that I can just restart my audit and everything will just proceed,” she said.
Curtis said she can’t provide much information publicly — or even to lawmakers — since the audit process is confidential.
“If they were to provide (the information) right away, it would be a few months,” she said of the timeline to complete her work. “And we also have financial and federal audits that are competing priorities.”
Asked whether the department will provide the information and for a timeline of work, the Department of Revenue forwarded questions to the Office of the Governor.
“The administration will continue to provide the information necessary for the legislative branch to complete its audits,” said Jeff Turner, the governor’s communications director, in an emailed response.
“Yeah, well, we’ll see,” Curtis said when told about the answer. “I’ll keep my fingers crossed. I want to give them the benefit of the doubt.”
Wielechowski said that under SB 183, state officials could face criminal charges if they refuse to comply. That possibility is a long way off, he said.
“The Legislature is not itching for a fight with the executive branch,” he said. “We just want the information.”