• Forecast
  • News Tip
  • Categories
Temperature Precipitation
Estimated read time
2m 54s

Dwindling state revenue projections spark oil tax debate

By Rhonda McBride 10:52 AM December 6, 2013

Oil tax reform opponents say sharp decline in Alaska oil revenues provides more ammunition to repeal SB 21

ANCHORAGE – Just one week before Alaska Gov. Sean Parnell is scheduled to roll out his budget for the next fiscal year, state finances took a huge hit.

Revenue from oil and gas taxes has decreased sharply. Earlier this year, the state was expecting about $4 billion in revenue for the current fiscal year. But new budget estimates cut that number in half.

The Parnell administration said the $2 billion dollar shortfall is because of lower-than-expected oil prices and a decline in production — not SB 21, the oil tax reform bill that was signed into law this year.

Vic Fisher, one of the backers of a referendum to repeal the bill, questioned the administration’s explanation.

“Well, that’s pure nonsense,” Fisher said. “The price of oil is down by $4. That would make it a minimal difference in the tax take. I think Alaskans should be very alarmed. They should look very closely at what is being projected, and they should vote to repeal SB 21 in the next election.”

Voters will get to weigh in on Proposition 1, the referendum to repeal SB 21, in August’s primary election.

The revenue projections for the current fiscal year are based on two different tax structures. The first half of the 2013-14 fiscal year is under Alaska’s Clear and Equitable Share (ACES), a tax reform bill designed to capture more revenue when oil prices are high.

Oil in the second half of the current fiscal year will be taxed under SB 21, which Parnell has rebranded as MAPA, the “More Alaska Production Act.” The legislation takes effect Jan. 1.

“The governor’s projections are bringing us to a precipice, where within a very few years you will see the economy of Alaska hurting very, very bad,” Fisher said. “They will have no one to blame but themselves.”

The Alaska Oil and Gas Association, a trade industry organization representing oil and gas producers, paints a very different picture.

Kara Moriarty, AOGA’s executive director, points to recent signs of increased production.

“There are new rigs coming on line in Kuparak and Prudhoe,” Moriarty said. “The number of rigs in Prudhoe are going to go from five in 2012, up to nine. So we have more money in the private sector today in eight short months before the law even takes effect than we ever had under ACES.”

Moriarty contends that the state is already better off, even before the new tax regime takes effect.

She worries that the referendum backers will use the revenue shortfall to further distort the picture and scare away potential investors a natural gas line.

Parnell said he stands by MAPA, and believes the law will actually help capture more oil revenue than ACES because its structure is more favorable to today’s current low-oil-price environment.

Fisher doesn’t buy that argument and believes the trend in declining oil revenues could deplete the state’s $17 million in budget reserves.

“That can disappear in less than five years,” Fisher said, who fears this could lead to drastic cuts and perhaps an income tax.  “It’s going to be a real hit to the economy, and it will reduce jobs in Alaska. It will reduce the quality of life in Alaska.”

Moriarty doesn’t see it that way. She believes increased oil production will grow more jobs and revitalize the state’s economy.

Despite the differing visions of the future, the bottom line for now: $2 billion less in revenues, and very likely, some painful cuts ahead for state government.

Latest Stories

  • Lifestyle

    Film festival kicks off with premier of last movie shot under tax incentive program

    by Bonney Bowman on Dec 03, 17:39

    The Anchorage International Film Festival kicked off Friday night, with the premier of a movie shot right here in our home state. “Sugar Mountain” was the last film made under the tax incentive program, which the state ended due to budget issues. “Sugar Mountain” was shot in Seward, and featured the town and its people. […]

  • Politics

    Green Party drops bid for statewide Pennsylvania recount

    by Associated Press on Dec 03, 17:29

    The Green Party is dropping its court case seeking a statewide recount of Pennsylvania’s Nov. 8 presidential election. It had wanted to explore whether voting machines and systems had been hacked and the election result manipulated. The decision came Saturday, two days before a court hearing in the case. Lawyers for the Green Party-backed voters […]

  • News

    Scholar says China concerned about Trump policy following Taiwan call

    by Associated Press on Dec 03, 17:28

    China’s foreign minister says he hopes Beijing’s relations with the U.S. won’t be “interfered with or damaged” after President-elect Donald Trump broke with decades-long diplomatic tradition and spoke directly with Taiwan’s leader. Hong Kong’s Phoenix TV reports that Chinese Foreign Minister Wang Yi said Saturday the call between Taiwan’s president and Trump was “just a […]

  • News

    Bergdahl seeks pardon from Obama to avert desertion trial

    by Associated Press on Dec 03, 17:22

    A former prisoner of war accused of endangering his U.S. comrades by walking off his post in Afghanistan is asking President Barack Obama to pardon him before leaving office. White House and Justice Department officials say U.S. Army Sgt. Bowe Bergdahl submitted the clemency request. If granted, it would allow Bergdahl to avert a court-martial […]

  • News

    Officials say up to 40 people may have perished in California warehouse fire

    by KTVA / AP on Dec 03, 15:41

    31st- pic.twitter.com/8TX6jk0iYq — Oakland Firefighters (@OaklandFireLive) December 3, 2016 OAKLAND, Calif. (AP) — Authorities say they fear up to 40 people might have died in a fire at an Oakland, California warehouse, which was hosting an electronic dance party. Alameda County Sheriff’s Sgt. Ray Kelly said Saturday that nine people were confirmed dead, and that he […]

  • News

    Bethel fire investigation reveals 2 bodies, police say

    by KTVA CBS 11 News on Dec 03, 14:42

    Last updated at 5 p.m. on Saturday, Dec. 3 Two Bethel residents were found dead inside their home after a fire early Saturday morning. Bethel police and fire personnel responded to the fire in the area of Trailer Court just after 1 a.m. and quickly extinguished it, according to a statement from Bethel Police Department […]

  • Weather

    Sitka airport closed after storm forced rocks, debris onto runway

    by KTVA CBS 11 News on Dec 03, 14:13

    The Sitka Rocky Gutierrez Airport was closed for several hours Friday when a storm forced rocks and other debris onto the runway. High winds and heavy seas were blamed for the debris, which stretched across the runway for much of the day, according to the Alaska Department of Transportation and Public Facilities. “The airport is […]

  • Lifestyle

    A night at the Bethel Winter House

    by Adrian Wagner/KYUK on Dec 03, 13:47

    Bethel’s homeless shelter, Bethel Winter House, opened earlier this week, providing relief from the cold to Bethel’s many in need. A story published by KYUK Public Media showed what it was like for guests on Wednesday night. Around dinnertime, Major Lonnie Upshaw checked a large convection oven. “I’m serving lasagna, and chicken alfredo pasta with rolls tonight,” Upshaw said. […]