What others say: Walker’s tax credit cut a fair move

Is Alaska’s oil tax credit system broken? That’s what Gov. Bill Walker said Wednesday after cutting $200 million from $700 million budgeted by lawmakers to aid companies exploring and developing new wells. Considering these payments to oil producers could soon top $1 billion, it was a necessary line item veto until a larger conversation can happen.

Last year Alaska paid out more in tax credits than it collected in oil production taxes from producers. Until Walker pulled out his veto pen, Alaska was anticipating to spend $400 million more this year on tax credits than it collected.

Under different circumstances, say, $110 per barrel oil, this conversation wouldn’t be necessary. When prices are high, there’s more than enough money to go around. But these are not those times.

Very few in the Alaska Senate’s and House’s Republican-led Majority were willing to tackle the tax credit dilemma despite cries by the Minority to do just that. Majority leadership, among other reasons, has said Alaska needs to send a message of stability to the oil industry by keeping the credits intact. It’s hard to convince anyone of stability when you’re staring down a $4 billion hole this year and next.

Juggling what Alaska spends on tax credits compared to the revenue it brings in through oil is a necessity considering the current fiscal crisis. Every state department has taken its licks, some hard-working Alaskans have lost their jobs, so giving immunity to the oil industry makes little sense when everyone else is being asked to do more with less. Alaska will honor its tax credit commitments, but a cutoff point was needed. Otherwise, prospective oil producers could have recovered more than the $700 million originally budgeted.

Every penny matters, or in this case 20 billion pennies. It’s a fair compromise considering the Minority wanted to do away with the credits entirely and the Majority wasn’t willing to cut a cent.

Smaller companies will still have tax credit payouts available this year, and likely next as well. If the oil is there, and these companies have a means to retrieve it, they will. A $200 million reduction isn’t enough to force businesses to pack up and go entirely. What it will do is temper how much the state invests in these companies before they ever put a drop of oil into the Trans-Alaska Pipeline System.

Slashing payouts to the oil industry is the necessary move if Alaska is ever to balance its budget amid low oil prices. No entity, whether private business or governmental, should be getting a free ride, let alone taking more from the state than it is putting in. This isn’t about picking on oil producers; rather it’s about sharing a burden that every resident and business must bear until Alaska’s budget is once again balanced.

— Juneau Empire,

July 5

More in Opinion

Deven Mitchell greets his fellow members of the Alaska Permanent Fund Corp.’s Board of Trustees at the start of his interview to be the APFC’s new executive director on Monday, Oct. 3, 2022. (Mark Sabbatini / Juneau Empire)
Opinion: It’s an honor to now lead Alaska’s largest renewable resource

As a lifelong Alaskan, leading APFC is my childhood dream come true

t
Opinion: Freedom in the classroom sets precedence for the future

We advocate for the adoption of legislation to protect students’ First Amendment rights…

A roll of “I Voted” stickers await voters on Election Day in Alaska. Voters overwhelmingly rejected the prospect of a state constitutional convention. (Ben Hohenstatt / Juneau Empire File)
Opinion: Election winners, losers and poor losers

Tshibaka and Palin misread Alaskans by thinking Trump’s endorsement all but guaranteed they’d win.

This 1981 photo provided by the Centers for Disease Control and Prevention (CDC) shows an electron micrograph of Respiratory Syncytial Virus, also known as RSV. Children’s hospitals in parts of the country are seeing a distressing surge in RSV, a common respiratory illness that can cause severe breathing problems for babies. Cases fell dramatically two years ago as the pandemic shut down schools, day cares and businesses. Then, with restrictions easing, the summer of 2021 brought an alarming increase in what is normally a fall and winter virus. (CDC via AP)
Alaska Voices: What Alaskans need to know about RSV

By learning more about respiratory illnesses and taking helpful actions, we can all take steps to improve the situation

Homer Foundation
Point of View: Multiplying the power of every local dollar given

Each community foundation is a public charity that focuses on supporting a geographic area by pooling donations to meet community needs

The Homer Public Library as seen on Aug. 18, 2021, in Homer, Alaska. (File photo by Sarah Knapp/Homer News)
Point of View: Banning books corrodes diversity and inclusion in our community

Recently, a community member requested that a long list of books be removed from the children’s collection

Peninsula Oilers fans display encouragin signs for Oilers’ pitcher Bryan Woo, Friday, June 28, 2019, at Coral Seymour Memorial Park in Kenai. (Photo by Joey Klecka/Peninsula Clarion)
Gavel (Courtesy photo)
Opinion: Judging judges — balancing the judicial selection process

Alaska’s method of selecting judges can be and should be improved.

Sarah Palin speaks at a July 11 Save America Rally featuring former President Donald Trump at Alaska Airlines Center in Anchorage. (Mark Sabbatini / Juneau Empire File)
Opinion: The realities of Palin’s political demise

Palin wouldn’t be running for the seat if Rep. Don Young was still alive

Former Democratic state Rep. Beth Kerttula holds up a sign reading “Vote No Con Con,” during a recent rally at the Dimond Courthouse Plaza in Juneau. Ben Hohenstatt / Juneau Empire File)
Opinion: What can a liberal and conservative agree on? Voting against a constitutional convention

“We disagree on many issues. But we… urge Alaskans to vote against Proposition 1.”

A “Vote Here” sign is seen at the City of Kenai building on Monday, Sept. 21, 2020, in Kenai, Alaska. (Clarion file)
Down to the wire: Be prepared before you vote

Remember your voice counts and all votes matter