My Turn: SB 21 is Working - give it a chance

Come Aug. 19, I will be voting “no” on Ballot Measure 1.

A “no” vote will continue Alaska down the road to economic prosperity. It also represents a simple acceptance of the facts: ACES failed, while Senate Bill 21, also known as the More Alaska Production Act (MAPA), essentially stopped the drop in North Slope oil production and is attracting billions in new investment. I voted against ACES in 2007 due to its major flaws. Seven years later, the policy has been proven to be a failure.

In 2013, the last year of ACES, oil production plummeted by 8 percent, representing a loss of $1.8 billion. Alaska’s gross domestic product also declined 2.5 percent, making it the only state in the nation to see economic decline.

After only eight months under the new oil tax reform, however, the 24-year decline in North Slope oil has finally abated. Six new rigs have come online and Alaska has seen a staggering $10 billion in new investment, which will mean more revenue and bigger Permanent Fund Dividend checks.

The new investment dollars are no coincidence; they are purposely built into the blueprint of oil tax reform. SB21 directly ties tax credits to oil production by requiring oil companies to put new oil through the pipeline before getting a tax break. Under ACES, tax credits were paid to the oil companies for capital spending, which meant the state of Alaska was giving oil companies billions of dollars with no guarantee of new oil. In fact, if we revert to ACES, Alaskans will have to dole out nearly $1 billion in tax credits for spending on Point Thompson.

It’s suggested we can simply go back and tweak ACES, despite its massive flaws, but there’s no such thing as a small change in the tax system. It will be difficult, potentially a multi-year process, resulting in the third change to Alaska oil tax system in eight years, creating yet more instability. Stability, after all, is a key element to remaining competitive because businesses need a stable tax regime when making long-term plans.

Alaskans should be proud their legislators responded to the failures ACES and supported oil tax reform in a bipartisan final vote (12-8 in the Senate). In fact, I do not know a single legislator in the state who believes ACES was not flawed. Eight months into oil tax reform, we’re seeing the positive effects of the major resurgence of investments on the North Slope.

These developments under the new oil tax reform add up to a big win for Alaska. With an economy fueled by a healthy oil industry, we’ll have more high-paying jobs for Alaskans and more funding for education, roads, law enforcement and basic infrastructure.

This is just the beginning. Oil tax reform will build a bridge into the future toward development on the outer continental shelf and hopefully the Arctic National Wildlife Refuge.

I urge my fellow Alaskans to cast their votes based on the facts and common sense, not empty rhetoric and scare tactics. The people of Alaska must make a decision. A “yes” vote will regress to a tax system we all know was a failure. A “no” vote will tell the rest of the world we are open for business and on a path toward long-term economic prosperity, guaranteeing the Alaska Permanent Fund will continue to grow, more Alaska businesses will prosper, and all of our children will reap the benefits. I encourage every Alaskan to check the “no” box and give oil tax reform a chance to work.

• Alaska Senate President Charlie Huggins, R-Wasilla, has served since 2004. He leads a caucus of 13 Republicans and two Democrats.

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