Our Commentary
ADN by Pat Forgey. Alaska Gov. Bill Walker (NGP Photo) announced Tuesday that he had signed state operating and capital budgets, approving $9.8 billion in spending sought by the Legislature but vetoing a possible $200 million worth of controversial oil tax credits. …
"It is apparent the current oil and gas production tax credit system is unsustainable," Walker said in a letter Monday to Senate President Kevin Meyer, (NGP Photo), telling him of the veto. He signed the budgets Monday, but didn't publish the final documents or announce his actions until Tuesday afternoon. …
"I'm glad the governor took appropriate action" on the tax credits, said Rep. David Guttenberg, (NGP Photo), a member of the budget-writing House Finance Committee.
By limiting payment of credits, he said, oil companies will share the pain that Alaskans are facing due to budget cuts. (As if the oil companies weren't already paying the lion's share of state taxes. -dh)
"It makes everybody involved in this budget crunch that we're dealing with," he said. ….
Our comment:
The Governor and his democrat allies would rather raise taxes and stop/delay agreed-upon credits than make meaningful spending cuts. We have also seen signs that odd coalitions involving "moderate republicans" could support that effort.
Alaskan producers (and explorers and refiners) have tried over the past year to maintain a positive, optimistic attitude. However, they are mindful of Alaska's history with ACES; with retroactive taxation; with anti-oil voters' initiatives; with the governor's vow to not include oil in gas pipeline fiscal certainty policy; with "revenue enhancement" signals for increased oil taxes; and, with this week's credit veto action as they finalize corporate, CY 2016 investment decisions in a low oil price environment.
It's looking more likely that legislative positions could become solidified much farther in advance of the next legislative session than in previous years. Government spending supporters will be putting more and more constituent and financial pressure on lawmakers in the coming months.
Rep. Guttenberg has already sounded the rallying cry (See ADN quote above).
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