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You would think that any politician who wanted to turn Alaska’s near-balanced budget into a $2 billion deficit at the stroke of a pen would be run out of town on a rail. Yet this is exactly what Gov. Sean Parnell proposes to do with his oil company tax cuts. Cutting $2 billion from our oil income would immediately put our state in a budget emergency, drain our savings in five years and leave us in the same pathetic financial condition as states like Wisconsin and California. Our choices then will be to institute an income tax, break into the permanent fund or cut $2 billion worth of jobs from construction, infrastructure and all manner of other state services.
Why would Parnell want to do this to Alaska?
According to the governor, these cuts would encourage further exploration. If this were the case, one might argue for cuts to oil from new, unexplored fields (where, in fact, the state already pays 20 percent to 40 percent of exploration costs.) Yet Parnell’s proposed cuts apply to enormously profitable legacy fields that do not need further exploration and are simply being milked at huge profit. The oil companies have made no guarantees in return for this cut. They have not agreed to explore, drill or create jobs. The likely outcome is that the money they save will be distributed to shareholders and spent as befits their global business plans. It’s a backwards way to try to spur economic development, especially since the jobs and revenue it might create are unlikely to equal those that will certainly be lost.
Parnell has made it clear he’s philosophically opposed to taxes and “big government.” Yet Alaskans pay zero taxes already. Not only is the governor’s plan reckless and extreme, it’s also dishonest. Parnell assumes the brutal cuts in government will come after we’ve spent all our savings, when he is safely out of office. If Parnell really thinks government is too big, he should cut it now: cut schools, cut rural power subsidies, cut roads and infrastructure, cut domestic violence programs. Cut $2 billion from the budget and let Alaskans decide whether that money should be spent on government, put in savings, or given back to the oil companies. Personally, I feel Alaskans have better use for this money than distributing it to Exxon’s shareholders.