In Alaska, journalists see a conflict over oil taxes—but their business side doesn’t

Appointment of public media CFO to state board prompts concerns in the newsroom

In Alaska, oil is king. A third of the state’s jobs are tied to the industry. Political campaigns have been won and lost on oil taxation platforms. It is a major part of many media beats: energy, business, courts, and politics, to name a few.

And, at the moment, oil is at the center of a disagreement between editorial employees and top executives at Alaska Public Media, which operates a TV channel, radio station, and website, and reaches 96 percent of the state through an affiliate network.

At issue is whether it’s appropriate for Bernie Washington, APM’s chief financial officer, to sit on a board that plays a key role in determining oil tax revenues. Washington and Steve Lindbeck, the general manager and CEO, don’t see a problem. But a number of journalists in APM’s seven-person newsroom do—and they worry about a conflict of interest and even a loss of public trust in their reporting. “My management doesn’t understand how bad this looks and how bad this actually is,” said Steve Heimel, a senior editor and producer and the host of Talk of Alaska.

To try to summarize the issues here: Companies that use the trans-Alaska pipeline to ship oil pay taxes to the municipalities the pipeline runs through. Those taxes are based on a valuation set by the state Department of Revenue. But when municipalities believe the value is too low, or oil companies believe it is too high, they can appeal to a five-member, nonpartisan State Assessment Review Board. (The board’s rulings, in turn can be appealed in court—a process that can drag on for years.)

Last year, the Department of Revenue assessed the pipeline’s value at $7.2 billion. Both municipalities and oil companies appealed, and the SARB placed the value at $11.9 billion—giving the municipalities millions more in tax revenue more than the oil companies and even the state thought they deserved.

Gov. Sean Parnell, a Republican who has worked to push tax breaks for oil companies through the legislature, believes the SARB valuation was too high. As governor, Parnell also gets to appoint volunteer members to the board. Not long ago, he fired the board’s chairman and announced two new appointees to fill vacancies.

One of these nominees withdrew his name from consideration just before the confirmation hearing almost two weeks ago; it turned out he was not, as state law requires, an Alaska resident. The other nominee was Washington.

Washington’s appointment, which will come up for a vote in the legislature on April 11, has not been broadly controversial. But if he is confirmed, the decisions he and the other board members make could be part of news stories for years to come. The board almost certainly will be in the news for the next several months, as a referendum on the oil tax breaks comes up for a vote in August and Parnell runs for re-election in November. The board itself is not supposed to be political in nature, but, as Lindbeck acknowledges, “there’s a lot of political theater around it right now.”

Journalists at APM are worried about how their coverage of that theater will be received if Washington’s on the board.

“My concern lies with the public’s perception of our independence in that regard,” Lori Townsend, APRN’s news director, wrote in an email. “The SARB is a highly political board that, especially in an election year, with so much heat surrounding the issue of oil taxes, the Parnell administration and the oil companies, could generate a negative perception.”

Another member of the newsroom who asked not to be named called it a “clear conflict,” but one that management couldn’t see.

“It opens us up to a level of scrutiny that we’re going to find difficult to deal with,” this person said. “The people at the top do not realize the full import of this.”

Heimel, the Talk of Alaska host, was blunt: “We are aghast, quite frankly, aghast that our management doesn’t understand that this is a solid, more than apparent conflict of interest.”

APM’s coverage has so far addressed the issue by noting that Washington “has served as the chief financial officer of Alaska Public Media, the parent company of KSKA, KAKM and the Alaska Public Radio Network, since 2010. Prior to that, he worked for ConocoPhillips.”

“We have to make sure that we always explain our institutional conflict here every time it’s referred to,” Heimel said. “Even though it might really be a minor story in the news, we still have to devote undue amount of time and attention and valuable airtime to just spelling it out, once again … it’s cumbersome and inconvenient.”

For his part, Washington says he applied to be on the board last fall, before the chairman was fired and other stories put the board in the news. He thought the volunteer role would be a way to contribute to the community, he said.

“I sit on lots of boards,” Washington said. “I have a lot of good valuation expertise. I have an undergraduate degree in engineering and an MBA. So I’ve done lots of valuations … I thought it’d be a great two-day, three-day intellectual challenge. There was an opening and I applied.”

Even now, Washington doesn’t see the situation presenting a conflict. An appearance of one, perhaps, but no more so than the fact that APM is funded in large part by state grants and underwriting from oil companies—something all public broadcasters have to deal with.

“The audience really probably doesn’t care unless certain individuals keep bringing up the issue,” Washington said. As for the newsroom’s concern about the appearance of a conflict, he said: “If I tried to worry about what everyone was thinking, I’d go nuts.”

The people in the newsroom I spoke to would prefer that Washington withdraw from consideration, and that APM establish a policy that addresses the situation—just as the ethics code for APM journalists already says they “may not serve on government boards or commissions.” Lindbeck and Townsend pointed out that they have tried to create a policy in the past that might have covered this issue, but APM’s board turned it down.

Lindbeck said he understands the newsroom’s concerns and was proud of the journalists for being passionate about the issue. But “in a small place like this it’s very difficult to avoid those things completely,” he said.

The solution, he said, is the existing firewall between editorial and business. He called that “the very best possible protection.”

In fact, the one thing both sides seem to agree on is that APM’s “firewall” is strong, and editorial coverage has not been and will not be influenced by anything on the business side, including Washington’s appointment. The newsroom just doesn’t think that’s enough.

“As citizens increasingly consider public broadcasting a trusted source of news and information compared to commercial and especially cable news organizations, it is all the more critical that we fiercely guard our autonomy and capitalize on that public trust momentum,” Townsend said. “We have that trust because dedicated people have worked for years to build it at 26 member stations across the state. I like to say we’re The New York Times of the Alaskan airwaves, but trust is fragile and must be constantly protected.”

For now, those concerns aren’t winning out. But Lindbeck said he’ll continue to monitor the situation and “keep an open mind about it.”

“The subject is not closed,” he said. “This might fall into one of those categories of ‘no good deed goes unpunished.’”

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Sara Morrison is a former assistant editor at CJR. Follow her on Twitter @saramorrison. Tags: , , ,