Gov: Unsustainable for tax breaks to exceed oil tax revenue

  • By Becky Bohrer
  • Thursday, January 8, 2015 10:16pm
  • News

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.

More in News

"The Bouyman" participated in the 2021 Fourth of July "Whatever Floats Your Boat" Parade down Pioneer Avenue. (Photo by Sarah Knapp)
July 4 events held around the bay

Weekend in Anchor Point, Homer and Seldovia features parades, games and barbecues

Central Peninsula Hospital is photographed on Oct. 19, 2021, in Soldotna, Alaska. (Peninsula Clarion file)
College of Health building renovation aims to increase number of grads, address worker shortage

Health care expert says building is one of many steps needed to address shortage

KPBSD Summer Work Program Coordinator Olivia Orth welcomes guests to a program celebration in the Soldotna High School Library on Tuesday, June 28, 2022, in Soldotna, Alaska. (Ashlyn O’Hara/Peninsula Clarion)
Summer Work Program students celebrated

The program places current KPBSD students with disabilities in local businesses

The U.S. Coast Guard Cutter Reef Shark replaced the USCGC Liberty as the cutter for Sector Juneau earlier in June, stationed at Don D. Statter Harbor. (Michael S. Lockett / Juneau Empire)
Reef Shark replaces Coast Guard Cutter Liberty in Juneau

The new cutter has big boots to fill, but brings the enthusiasm to do it

Kim Kovol will be the acting commissioner for the new Alaska Department of Family and Community Services which debuts Friday. (Courtesy Photo)
New state department gets new commissioner

Kim Kovol, a longtime social services worker, will head the Department of Family and Community Services

Former Democratic state Rep. Beth Kerttula holds up a sign reading "Vot No Con Con," during a Saturday rally at the Dimond Courthouse Plaza in Juneau. Opposition to a constitutional convention, which could alter the Alaska State Constitution to allow for banning abortions was a frequent topic during the protest. (Ben Hohenstatt / Juneau Empire)
Constitutional convention ballot question in November becomes focus in Alaska’s abortion fight

Abortion rights supporters urge ‘no’ votes on question, while abortion opponents seek changes to constitution

Cassidy Hutchinson, former aide to Trump White House chief of staff Mark Meadows, arrives to testify as the House select committee investigating the Jan. 6 attack on the U.S. Capitol continues to reveal its findings of a year-long investigation, at the Capitol in Washington, Tuesday, June 28, 2022. (AP Photo/Jacquelyn Martin)
Aide: Trump dismissed Jan. 6 threats, wanted to join crowd

Cassidy Hutchinson, a little-known former White House aide, described an angry, defiant president that day

Gov. Mike Dunleavy signs Alaska’s fiscal year 2023 operating and capital budgets into law on Tuesday, June 28, 2022, in Anchorage, Alaska. (Photo courtesy Gov. Mike Dunleavy’s office)
Dunleavy signs budget

$3,200 in payments to Alaskans, money for local projects included

Most Read