JUNEAU — The state is expected to pay about $100 million more in tax credits to oil and gas producers than it receives in production taxes this year amid low oil prices, Gov. Bill Walker said.
In an opinion piece published in Alaska newspapers, Walker said he supports the philosophy behind tax incentives, but “giving away” more in tax breaks than the state collects is irresponsible and unsustainable.
Walker spokeswoman Grace Jang said the opinion piece was not a precursor to legislation. Rather, she said Walker simply was sharing facts with Alaskans as the administration learns them. Walker took office Dec. 1.
“The governor is not currently proposing any particular change to state law,” she said by email.
“We need to analyze our tax laws and determine what is working and what is not. Any proposed change will be rooted in solid analysis. We’re in the analysis phase right now.”
According to the state Revenue Department, oil and gas production taxes yielded $2.6 billion for the state in 2014. Those taxes are estimated to total $524 million this fiscal year because of much lower oil prices and about $308 million in 2016.
With credits factored in for next year, Walker said the situation is expected to worsen, “with the state netting negative $400 million on what has traditionally been our biggest source of unrestricted revenue.”
“I have learned these bitter facts over the past few weeks, and I feel obliged to tell Alaskans the hard truth,” Walker wrote.
“As for how we got here, it appears to be a combination of tax breaks and credits, and a tax structure that magnifies the state’s losses at low oil prices. The last oil tax rewrite occurred during a period of sustained high oil prices, and there was little consideration given to the low-price scenario.”
Alaska voters in August upheld the tax rewrite, championed by then-Gov. Sean Parnell and passed by the Republican-controlled Legislature in 2013. Walker supported the failed attempt to repeal the tax rewrite.
In September, he said he did not intend to introduce legislation to change the oil tax if elected but said if the Legislature proposed changes, he would consider them.
North Slope oil prices have fallen from the mid- to high-$90 range in September to about $50 this week.