Governor Sean Parnell Urges Alaskans To Comment On Tax Reform TODAY!
|
Commentary: Just for Alaskans by Dave Harbour Normally, our commentary is designed for consumption of Alaskans, Canadians and decision makers in the Lower 48–and our readers in other countries who are interested in how Alaskans and Canadians are confronting Northern energy challenges. Today, we direct a comment to fellow Alaskans. Most of us know that Alaska’s economy hangs on by a thread. Elected officials talk about billions in various savings accounts in addition to the Alaska Permanent Fund. But the Public Employee and Teachers’ Retirement fund liability is bigger than Detroit’s at an amount approaching $15 billion. This doesn’t include hundreds of billions of dollars of state and municipal bond indebtedness — that also requires 24/7 gigantic pipeline gushing a reliable torrent of currency. So we are really living from paycheck to paycheck with Alaska North Slope (ANS) oil paying for almost 95% of the state budget. That undiversified budget revenue, in turn, depends on the price of oil growing at rates exceeding $100/barrel in order to compensate for oil production declining at an annual rate of 5-7%. Meanwhile, no matter what the politicians say publicly, the state budget continues to creep higher. Even we optimists should view this situation realistically: as frightening, unsustainable and requiring immediate action. What immediate action could rescue such foolish fiscal planning and such an unsustainable economy? The near term step: stop digging the hole deeper and cut spending dramatically–say, by 5-7% annually to make up for oil production declines (Note, the cuts would have to be deeper if the price of oil begins to decline.) In doing so, lawmakers will have to decide if Alaska can continue to afford to be the most attractive magnet state in the nation to those coming North for entitlement benefits rather than benefits associated with free enterprise, self sufficiency and procreation of the pioneering spirit. The medium term step: since Alaska’s oil taxes are among the highest in the world, higher taxes are now proven to not be the answer. In fact, the experiment of exorbitant oil taxes has failed to sustain — and even threatens — Alaska’s long term future. Accordingly, this is now the time to view the future through a different lens: the lens of competition. In recent weeks, opponents of tax reform have argued:
(Continued below) |
April Fools…. The best of the April Fools emails we received today were one from a Canadian environmental organization describing a project to use injected dry ice to bind cracks in the Arctic icepack due to global warming. Another announced that the President of the United States had hired one of our readers (a distinguished, think tank energy executive) as a special advisor. With all the crazy happenings abounding everywhere, we give this warning so our readers will not to confuse trickster efforts to fool us today with normal, foolish policy initiatives. -dh
The Resource Development Council for Alaska’s Deputy Director, Carl Portman (NGP Photo, at earlier hearing), reminds us that Governor Sean Parnell¹s oil production tax reform bill, SB 21 is now "front and center in the House", having passed the Senate by an 11-9 margin. The House Resources Committee will be taking public testimony on the bill Today, April 1 from 1:00 to 3:00 p.m. Testimony will be taken statewide and the preference is for people to testify in person at local Legislative Information Offices (LIO). Comments should be limited to two minutes. … The State House Majority released its annual statewide survey last week that found Alaskans support modifying ACES and want the Legislature to stop studying the issue and act this session. The survey found that 56 percent believe ACES should be modified and 63 percent say its time for the Legislature to take action to stem the decline. For additional information … see RDC’s updated Action Alert at: http://www.akrdc.org/alerts/
Anchorage Daily Planet by Tom Brennan (NGP Photo). … Hopefully Shell will be back in the game next year. ConocoPhillips will also be exploring in Arctic waters in 2014 with plans to drill one well in its Devilʼs Paw prospect. So far federal authorities seem agreeable to ConocoPhillips plans. We wish both companies good luck, good fortune and safe seas. *** Let’s hope that the state’s new oil tax schedule is reasonable enough to attract new oil development investments, which could increase Alaska’s oil output and give a big boost to its economy.
|
(Continued) Likewise, some oil lobbyists say the current tax reform being considered is too little, too late. This is a dangerous position to take since it begs the question, "OK, fine, what production will you guarantee for what level of tax reform?" That would stop them short since no lobbyist can predict what a board of directors will allocate to Alaska exploration or development years from now. It also ushers forth the specter of a state embracing concepts of blackmail or bribery depending on who is on the offering or accepting end of the transaction. One adult position to take over these squabbles might simply be this: If…
If lawmakers took this less emotional and more logical approach, they wouldn’t argue with lobbyists about what amount of tax relief was ‘too little’ or ‘too much’. They could still collaborate on issues like how to make the tax and regulatory environment more clear and predictable. The long term step the country could take to make Alaska more productive to itself and to the Nation at large, is to make Arctic Offshore, Arctic National Wildlife Refuge and National Petroleum Reserve Alaska more friendly to reasonable development and permitting processes more reliable and timely. * * * We referred to three steps above as solutions for Alaska’s imminent fiscal crisis. Most will require several years to mature and bear fruit–even if the seeds of reform are planted this spring. That leaves cost cutting as the only effective near-term tool available. Though tax reform, is critical to long term survival, it will require courageous lawmakers willing to run over constituent fires and through the gauntlet of entitlement program beneficiaries who see reform as an immediate threat to their subsidized lifestyles. But even that challenge will be easy compared with the challenge of curing this year’s budget and succeeding budgets in proportion to declining oil production and volitile oil prices. One’s view of human nature leads to a conclusion that politicians, by nature, will not be able to successfully confront these short and long term challenges. One’s optimistic nature aches for the courageous Alaskan leadership which believes that, "The future of our Children is more important than my reelection." While we see signs of such courage, we are not sure it exists as a majority favoring meaningful spending and taxing reform. While we hope for courageous leaders, we know that Jesus, the Beowulfs and Medal of Honor recipients typically represent a minority and not a majority of spiritual or physical warriors. Furthermore, we have been told that hope can never be a wartime or political strategy. But we also remember others who have shared our challenges with dignity and reason and had reason to be optimistic. Through the awful political struggles of early 17th Century England, we are thankful for Alexander Pope’s message to us amid today’s unrest, that, still, "Hope springs eternal in the human breast". 100 demonstrators protest Pacific Trails Pipeline – CBC.ca – The pipeline will run more than 450 kilometres through the BC Interior from Prince George to Kitimat, transporting liquefied natural gas to be sold to … Ewart: Pipelines proving to be industry’s Achilles heel – Calgary Herald – By Stephen Ewart, Calgary Herald March 9, 2013. Tweet. Comment. … Oilpatch historian David Finch calls pipelines the Achilles tendon of the oil and gas industry – critically important to movement and a complete nightmare if they rupture. From … |
Leave A Comment