Oil Taxes or Education - A Clear Choice

Alaska’s State Legislature faces a clear choice this session: we can bank oil revenue for the future, making investments in education and grow our economy; or we can give away $20 billion to multinational companies for oil they will continue to produce anyway.

 

The question is, why on earth does Gov. Sean Parnell want to give Big Oil a huge tax break when we are already facing budgetary challenges and Alaska’s school districts have not received a base student allocation increase in three years?

Over the last 30 years we have lived through incredibly volatile state budgets, a result of our reliance on oil for over 90 percent of the state’s revenue. Under the state Constitution, it is our oil. A prudent governor and Legislature would recognize that oil prices and the supply of economically recoverable oil will change in the future, and that we must save and reinvest revenue produced from today’s oil.

In 2007, the Legislature made a conscious choice to save for the future. Passage of Alaska’s Clear and Equitable Share (ACES) program produced budget surpluses and allowed the state to save billions of dollars in the budget reserve. Through strategic tax incentives, ACES also succeeded in attracting new oil explorers to Alaska. Today, we have more jobs in the oil industry, more capital investment in the oil sector, and more new exploratory wells than when ACES passed. This is major progress. However, the longstanding decline in oil flowing through the Trans-Alaska Pipeline (TAPS) has continued due to maturation of the Kuparuk and Prudhoe Bay fields.

Using TAPS as justification, the governor has proposed eliminating taxes on oil from existing fields even if it results in a revenue loss of $20 billion. The tax giveaway will create ongoing budget deficits, and will cripple our state’s competitiveness. We need to invest in education and worker training to create jobs, including but not limited to, the oil industry. Creation of high tech jobs and jobs in the renewable energy sector, such as jobs to develop our wind and geothermal resources, are an opportunity for our state’s economy to grow. Unfortunately, the governor’s budget, combined with his oil tax giveaway, will bankrupt our education system and preclude strategic investments we should be making now.

This year the Anchorage and Juneau school districts announced hundreds of layoffs. Over the last three years, the Juneau School District has lost close to 90 positions. We are looking at the loss of more in the coming school year. The Anchorage School District eliminated 100 school district jobs this past November. According to the Anchorage Daily News, these cuts are a result of the governor’s three-year freeze in education funding. Taking inflation into account, the governor’s freeze represents a real cut in basic education funding of approximately 7 percent. We cannot afford to cut educational investment at a time when our students are competing in a global market, and Alaska is competing with other states and nations to attract employers.

The choice is simple: We allow Governor Parnell to slash oil taxes, or we save money for the future and invest in education. Alaska cannot cut oil taxes and have a viable educational system.

The big three oil companies will continue production from Prudhoe and Kuparuk because it is profitable. In fact, ConocoPhillips earns three times as much profit from Alaska as the Lower 48 combined, and its SEC reports state that Alaska is the most profitable place to produce oil.

Governor Parnell’s oil tax giveaway is a dangerous idea that will lead to more funding cuts to schools, and a continued downward spiral of our educational standards. We must speak out and let Governor Parnell and our Legislature know that we will not sacrifice our children’s future for a giveaway to Big Oil! Alaska’s competitiveness and our children’s future depend upon it.

• Kimberly Metcalfe is the Democratic National Committeewoman for Alaska.

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