(See today’s CBC story. As we have reported extensively herein, Canada has a similar set of energy challenges: dependence on fossil fuel and the enviro-governmental-business special interests that want to subjugate an ill-informed constituency to higher utility prices by use of sophist, climate change narratives. -dh)
.jpg)
Alaska State Senate Resources Committee Chairman, Cathy Giessel. NGP file photo.
Senate Resources Committee Chairman, Cathy Giessel, offers Alaska the sort of wisdom Alaska needs to work itself out of its current fiscal chaos in today’s Op-Ed piece (Left column, below). In the Alaska Support Industry Alliance’s Ak-Headlamp opinion piece yesterday, another voice representing several hundred businesses and thousands of Alaskan employees offer similar wisdom from a broader perspective (Right column, below).
Since oil tax reform has worked by increasing Alaska production, even in a low price environment, oil tax policy is not the culprit in Alaska’s current inability to balance its budget. Certain tax and spend legislators and their wealth redistribution allies are trying to take even more taxes; instead, they should be looking in the mirror.
Alaska’s financial problem — as the University of Alaska’s Institute of Social and Economic Research has warned the Legislature for over two decades — is not caused by the private sector paying too little in taxes. The problem is that the public sector spends too much. Instead of focusing how to increase taxes on the state’s most productive and overtaxed industry, the Legislature should instead swallow the bitter pill of reversing the unsustainable spending policies they and their predecessors have put in place with support from a poorly led, acquiescent constituency.
How can they reverse the unsustainable budget trend?
Now is the time for legislators and the governor to LEAD, as Senator Giessel and the Alliance demonstrate here: by factually informing constituencies on the need for fiscal discipline rather than fanning the flames of emotion designed to make political lynch mobs of otherwise well-intended constituents. -dh
‘Tis the Season To Debate Oil Taxes
by
Senator Cathy Giessel – Chairman Alaska State Senate Resources Committee
As routine as annual dipnetting and moose hunting seasons, this is the season for rehashing Alaska’s oil taxes. It’s becoming a ritual, complete with its own traditions, and its own myths.
I have read in these pages that Alaska “is giving away more in tax breaks than we collect” from the oil industry. This is simply not true. From 2007-2014, Alaska’s government received nearly $27 billion in oil and gas taxes, and nearly $40 billion in total oil and gas revenue. Even at 2015’s depressed prices, Alaska cleared $1 billion in net oil profits, after all applicable credits were paid.
Oil has paid nearly every bill and seeded our Permanent Fund for decades. Naysayers focus on production taxes, and overlook the state’s royalty take: one of every eight barrels of oil goes straight to the state, before any tax or credit calculations even take place.
Alaska’s staggering oil income came at a time of historically high prices, and demand for fuel worldwide was insatiable. Still, Alaska’s production, continued to go down year after year. At one point, California, with more environmental red tape than a Macy’s Thanksgiving Day parade, surpassed the Last Frontier in production of black gold.
Why?
Our tax system, called ACES, was punishing at higher prices. Alaska already has operating costs three to four times higher than anywhere else in North America. ACES just added insult to injury.
On top of that, ACES had a wrinkle: credits that were not tied to production. This past week, the Alaska Department of Revenue testified between that same 2007-2014 period, over $7.4 billion in credits were issued under ACES. Of that, $5.4 billion went to the North Slope in a shotgun approach. Even worse, ACES credits had no bottom: if prices collapsed, companies could spend indiscriminately on work not designed to get more oil to market, and credits could drive Alaska into the red.
The flaws in ACES were known for years, and we worked hard to fix them in Senate Bill 21.
The irrefutable numerical fact is that the sea of red ink we are swimming into today would be much deeper if ACES were still the law of the land. Thank goodness voters knew best.
SB 21 worked to protect the state by balancing the scales: instead of punishing, progressive tax rates, we raised the base rate and removed several credits, then tied credits to actual production instead of expenses.
And what about that falling production? For the first time since 2002, oil production year-over-year actually grew this year, reversing the 7 percent decline in average annual production we saw in calendar year 2013. And this production increase happened despite a worldwide price collapse.
SB 21 has delivered more money and increased production all in the same package. How is that broken?
As we work to reform the remaining oil and gas tax credits this year, we are striking a delicate balance.
Just six years ago, I recall neighbors, business leaders and city officials leading the charge on getting more gas out of Cook Inlet. Anchorage was testing brownouts, in the coldest months of the year. For any region in the United States, especially one next to abundant gas fields, this was unacceptable.
The Cook Inlet Recovery Act sponsored by Rep. Mike Hawker was passed, enthusiastically, by every single member of the Legislature.
That’s right, many of the very same voices decrying credits today, voted “yes” just yesterday. It’s an election year, and every hero needs his villain. Amnesia can be very convenient. But don’t Alaskans deserve the facts?
The fact is we need to reform oil and gas tax credits yet again. The fact is the Senate and House majorities have been consistent on that front: every version of our bills has seen more and more reductions in credits, and more potential disruption to an industry that employs thousands of Alaskans statewide.
Alaskans would be far better served by sticking to the facts and not being misled by statements about “giveaways” and “free rides” and “oil costing us more than it provides.” Yesterday’s investment might look like a giveaway, but that doesn’t change the fact that production and revenue are higher today than they would be under ACES.
As we finish this legislative session, and we reform oil and gas tax credits, we must exercise patience, discipline and work with a long-term vision. Rewriting history while dramatically overhauling the rules that made success possible does not move Alaska forward.
* * *
Senator Giessel’s opinion piece may also be found on the ADN website, here.
From a FB post received today:
 |
|
|||
|
||||
A Walk Down Oil Tax Memory Lane
by
Today, Headlamp would like to indulge our readers with a brief history lesson. For as the saying goes, those who do not learn history are doomed to repeat it. Let’s harken back to a time when our Legislature and Governor understood the importance of Alaska’s oil and gas industry, and actually wanted to create an environment where both the industry and Alaskans could successfully thrive.
Make no mistake, Headlamp is not speaking about forgone eras, but in fact recent history! The year was 2013, and after years of declining oil production under the highly progressive tax regime ACES, Gov. Parnell and the Legislature recognized that change was desperately needed if Alaska was to have a bright economic future.
After hearing from industry officials, support company leaders, expert oil and gas consultants, and the public, Alaska policy makers crafted and passed SB 21 to increase production, attract more investment, spur job growth, generate new revenues for both state and local government, and create an overall thriving private sector. SB 21 originally passed the Alaska State Senate by a vote of 11-9, and then passed 12-8 after the House had amended it. The Alaska House of Representatives passed SB 21 by a vote of 24-15, on reconsideration it passed 27-12. A year later nearly 100,000 Alaskans voted NO on Ballot Measure One and upheld SB 21 as the law of the land.
What is most relevant for today’s discussion is that, during a time of economic downturn, when thousands of Alaskans have lost their jobs due to low oil prices, a number of legislators who voted for SB 21 just voted for HB 247 to substantively change SB 21 and increase taxes on Alaska’s oil and gas industry. The legislators who voted for SB 21 (legislation meant to attract investment, increase production, create more jobs, and keep Alaska competitive), and who just voted for HB 247 (legislation that will deter investment, decrease production, kill more jobs, chase companies away, and make Alaska an unattractive place to do business) are as follows: Rep. Gabrielle LeDoux, Rep. Charisse Millett, Rep. Lynn Gattis, Rep. Mark Neuman, Rep. Steve Thompson, and Rep. Tammie Wilson. Rep. Seaton and Rep. Munoz voted against SB 21, but on reconsideration switched their votes in favor of it. They both adamantly supported and voted for HB 247.
Senators still in office who voted for SB 21 are: Sen. Bishop, Coghill, Dunleavy, Fairclough (now MacKinnon), Giessel, Huggins, Kelly, McGuire, Meyer, and Micciche. Sen. Olson joined that group and voted for the final version of SB 21 that was sent to the Governor.
Headlamp was encouraged to hear the members of Senate Finance express extreme concern about the impact of HB 247 on Alaska’s economy. With potentially just one day left in the session, we hope the Senate will confirm their support of SB 21 and Alaska’s economy and leave the tax system we have in place.
Today’s related energy news links thanks to Daniel McDonald:
It’s oil tax debate season in Alaska, but let’s do it right
OPINION: Reforming oil and gas taxation should not be done hastily, and it should keep the best parts of SB 21, which has been a success.
Alaska Legislature approaches Wednesday deadline with most of its work still incomplete
The Alaska Legislature is lurching toward its Wednesday deadline without consensus on an operating budget, oil tax reforms, or any of the other major deficit-reduction bills introduced by Gov. Bill Walker.
New Senate oil tax proposal preserves key tax break for big companies
The Alaska Senate on Tuesday dismantled the compromise oil tax bill that passed the House last week, offering a substitute that agrees with a pair of significant provisions…
Alaska Attorney General’s office fights House-led appeal in Medicaid lawsuit
The Alaska Attorney General’s office says the Alaska House lacks the authority to substitute itself for a legislative committee in the appeal of a lower court’s decision…
University gets $18 million for U-Med road project in Alaska House committee
Republican Anchorage legislators in the state House sponsored an amendment to transfer $18 million in one-time capital funding to the University of Alaska to build the contentious extension…
Key legislative committee supports buying bank building for offices
The House-Senate Legislative Council has voted 13-1 to abandon their newly renovated offices in downtown Anchorage and spend up to $12.5 million to replace it with the Wells Fargo building…
With governor’s approval, Alaska Dave & Buster’s inches closer to reality
Gov. Bill Walker just signed a bill that updates the state’s gambling law, paving the way for restaurant and entertainment chain Dave & Buster’s to open here.
No Arctic summit in Finland after all
Finland, which in 2017 takes over the chair in the Council, has decided to abandon plans for an Arctic summit as part of its chairmanship period.
Alaska’s $100 million plastic problem catches congressional attention
Congress is considering how to help with the nation’s marine debris problem, particularly in Alaska, where the problem continues to pile up despite millions of pounds of plastic removed…
We’re just a vote away from helping Alaska’s foster children
OPINION: Alaska’s foster children need to see our commitment to them as they endure circumstances they did not choose and cannot control.
Voices must be heard, even after storyteller’s child sexual abuse charges
OPINION: The recent sexual abuse charges against a prominent Alaska storyteller were a heavy blow to our community…
It’s far past time for Alaska to protect Denali wolves with a buffer zone
OPINION: For the sake of good science, lucrative tourism and simple stewardship, Alaska leaders need to stand up and protect Denali’s wolves on state land along the park boundary.
GOP Permanent Fund strategy puts future dividends at risk
A veto warning by Gov. Bill Walker may not stop the Legislature from taking billions from the Permanent Fund earnings reserve as a quick fix…
Raiding the Permanent Fund threatens Alaska’s economy and future
OPINION: The leadership in the Senate majority caucus has found a shortcut, but it’s dangerous and has the potential to jeopardize our state’s future.
Readers write: Letters to the editor, May 17, 2016
LETTERS: Readers sound off on events of the day.
Despite Walker’s objections, Legislature considers dipping into Permanent Fund
Alaska’s government has never in 40 years used permanent fund earnings to balance the state budget.
Trump campaign reveals list of Alaska Republican co-chairs and supporters
Alaska Republican leaders from all parts of the GOP spectrum are uniting behind Donald Trump for president.
Prospect of special session looms for Alaska lawmakers
The prospect of a special session loomed as Alaska lawmakers hit their fourth month in regular session without agreement on a plan for pulling the state out of a massive budget deficit.
Department of Law fights House substitution in Medicaid case
Attorneys for Gov. Bill Walker are fighting an attempt to prolong litigation challenging Walker’s authority to expand Medicaid unilaterally.
Coghill named to Trump’s Alaska policy committee
State Sen. John Coghill, of North Pole, is one of five people named to the Alaska policy committee of Republican presidential candidate Donald Trump.
Time to act on state budget gap is now
It’s time to solve our fiscal problem. The price of inaction is too high.
Prospect of special session looms for lawmakers
The prospect of a special session loomed as Alaska lawmakers hit their fourth month in regular session without agreement on a plan for pulling the state out of a massive budget deficit.
Lawmakers approve cheaper Anchorage LIO
The Alaska Legislature is proceeding with plans to purchase an Anchorage office building.
Two weeks until deadline, but no challengers for Kito or Muñoz
Two weeks before the deadline to sign up, no one has yet challenged either of Juneau’s two sitting delegates to the Alaska House of Representatives.
Empire Editorial: No end in sight for Legislature
Today is Day 121 of the Legislature’s regular session.
Chamber luncheon will focus on wastewater treatment
The weekly Juneau Chamber of Commerce luncheon on Thursday will discuss the future of flushing.
Mat-Su Borough Mayor vetoes moratorium on marijuana businesses
Mat-Su Borough Mayor Vern Halter has vetoed an ordinance that would temporarily prohibit marijuana businesses and the…
As legislative clock runs out, governor plans for special session
After 120 days in session, lawmakers still haven’t passed any pieces of Gov. Bill Walker’s fiscal plan, and time is almost up.
Gov. Walker signs bill clearing way for Dave & Buster’s to open in Alaska
Bill Walker has signed into law legislation that would clear the way for the restaurant Dave & Buster’s to do business in Alaska.
Leave A Comment