JUNEAU — Gov. Sean Parnell vowed Wednesday that he would not accept a bill that cuts oil taxes but doesn’t elicit pledges of new investment.
Parnell addressed a friendly — and large — crowd at a rally for oil tax changes in Anchorage, hundreds of miles from where senators in Juneau are working on an oil tax plan of their own. Wednesday’s “Make it Meaningful Rally for Reform” was sponsored by business and pro-development groups.
The other speakers included former Gov. Tony Knowles, a Democrat who praised Parnell for setting “the right agenda” for Alaska by seeking to boost oil production. Knowles warned of an impending “train wreck” for the state if oil production continues to fall, and he called on the Republican Parnell and House and Senate leaders to have a united position on Alaska’s “fair share” of taxes — and to stay in Juneau until the job is done.
Alaska relies heavily on oil revenues to run, and high prices have helped to mask the impact of declining production. The decline isn’t new; it’s been happening since the late-1980s. Industry officials say Alaska should be enjoying a boom of activity, given prices, but isn’t because of its tax structure.
That structure features a 25 percent base tax rate and a progressive surcharge that is triggered when a company’s production tax value hits $30 a barrel. Industry officials say the surcharge eats too deeply into profits when oil prices are high, and discourages new drilling and projects.
The Senate Finance Committee plans to rework the current Senate proposal, SB192, and co-chair Bert Stedman has said he thinks there’s agreement with the companies that the state’s take at high oil prices is too high. One of the ideas that’s been floated for consideration is freezing the percentage of government take at a specific point, meaning that at any point above that, the percentage that the state and companies would get would remain constant.
The committee is also looking at ways to encourage new production.
On Wednesday, signs declaring such things as “We want reform this year!” and “No go for status quo” were found in the ballroom where the rally was held.
Parnell said billions of barrels of oil have yet to be recovered, and cast the current debate as an “epic struggle” for Alaska’s future that boils down to whether those resources are untapped for Alaskans’ benefit or remain “locked in the ground,” undeveloped.
He repeated his assertion that his plan has elicited commitments of $14 billion in new investment, while the SB192 has garnered none. Critics balk at Parnell’s use of the word commitments, saying there are no guarantees of new investment.
Two-and-a-half weeks remain in session, a “lifetime,” according to Parnell, and he said he remains optimistic that meaningful change — the buzz term this session — can still be achieved.
Last year, Parnell addressed a similar rally in the midst of debate over his tax-cut plan. That plan, which has industry support, later stalled in the Senate, where leaders said they didn’t have the information needed to make a sound policy call and refused to be rushed into a decision.