Democratic Legislators Stand Against Historic Giveaway of Alaska’s Oil
Massive giveaway with no commitments is based on trust, not facts
JUNEAU – Last night, House Democratic legislators stood up against the governor’s massive giveaway of Alaska’s oil wealth during a debate on the House Floor that lasted well past midnight.
“Our history is one of outside industry taking our resources and leaving our state, our Alaska,” said House Democratic Leader Beth Kerttula (D-Juneau). “Throughout Alaska’s history, our furs, gold, copper, and fish have been exploited with the benefits taken Outside. This giveaway is an historic mistake and one we should know better than to repeat.”
House Democrats have consistently offered solutions to encourage more oil production by offering tax breaks and other incentives tied to increased production and helping new producers. The governor’s proposals, including the House version passed this morning, reduce the state’s return on its resource without commitments, guarantees, or ties to increased production.
“The public elected us to make business decisions on their behalf. We must negotiate from a position of strength to get the best deal for Alaskans, our stockholders,” said House Democratic Whip Chris Tuck (D-Anchorage). “This bill is a no-strings-attached giveaway that sells Alaska short and asks Alaskans to give up our savings, but it doesn’t demand anything in return.”
“This vote was a $4.5 billion vote of trust. We've received nary a commitment from the oil industry, and the Alaska Legislature voted to give oil companies $4.5 billion on the basis of trust -- really, nothing more than trust -- that they will increase production,” said Representative Jonathan Kreiss-Tomkins (D-Southeast). “I am gobsmacked we have indulged in such inexcusable trustfulness. This vote is a tragedy for Alaska."
“There’s good tax reform that requires investment in new oil production in Alaska as a condition to get reasonable tax breaks. And there’s tax reform that creates a fiscal cliff for us to fall off, that lets companies take $1.5 billion and more of Alaska’s oil share and then lets companies spend it anywhere in the world they want,” said Representative Les Gara (D-Anchorage). “Yesterday’s vote will damage Alaska, our ability to find roads and schools, and our ability to truly get more oil production in Alaska. It will lead to raids on the Permanent Fund, calls for income and sales taxes. It is a lose-lose bill for Alaskans, and there are much better ways to spark production.”
“With this bill, Alaska is running a clearance sale on its oil,” said Representative Geran Tarr (D-Anchorage). “This giveaway lowers the sale price of our oil by billions of dollars over the next few years and the oil companies are committing to nothing in return.”
“I cannot support a massive giveaway of our resources with no commitments for more production or more investment in Alaska,” said Representative Scott Kawasaki (D-Fairbanks). “The facts do not support this no-strings-attached approach, and neither can I.”
“We’re being told this will increase production, but no one will say how much or by when or even what action this change will generate to get there,” said Representative Andy Josephson (D-Anchorage). “I am concerned this is a very, very expensive test.”
“The Legislature is asking for more accountability from our students before funding our schools, but they’re willing to give the oil industry billions with no commitments, no benchmarks for success, and no accountability to Alaskans,” said Representative Harriet Drummond (D-Anchorage). “I cannot accept that.”
Representative Max Gruenberg quipped, “This reminds me of Wimpy from Popeye saying ‘I’ll gladly pay you Tuesday for a hamburger today.’ This is a Wimpy bill.”
Under Alaska’s current tax structure, Alaska’s return on its oil increases as oil prices and company profits increase. Companies can “buy down” their tax rate by investing in Alaska. Oil companies have made record profits and Alaska has paid off debts and increased savings from $3 billion to $15 billion in the five-and-a-half years since the system became law. North Slope employment has been at record high levels, and there has been a sharp increase in the number of new oil companies operating in Alaska. Still, Democrats acknowledge the tax system could be adjusted to strike a better balance at high oil prices and to encourage the development of new oil fields and have offered a bill (HB111) and a series of amendments to the governor’s proposal to reach those goals.
Posted: April 15, 2013