The governor wants me to give a billion and a half dollars of your money to three of the wealthiest corporations on Earth. To put it in perspective, that is about 15 percent of the state's general fund revenue. As tempting as that sounds, I get nervous when people start talking about a billion anythings. Most of us can't even imagine what a billion of something looks like -- if you want to know, you have to ask an oil company executive.
The governor's idea is that the tax reform the Legislature passed 27-13 in the House and 14-5 in the Senate a few years back has so injured three of the wealthiest corporations in the world that they can't afford to explore for new oil, re-invest in Alaska operations or, most importantly, create jobs for Alaskans. Apparently if we give the oil companies 15 percent of our money, they'll be so happy they'll start exploring, and create more jobs. When pressed about why he is so confident about that, the governor cited "common sense." In this case sometimes I wonder when it's appropriate to apply some uncommon sense to these big issues.
A Jan. 18 report from the governor's Department of Revenue provides plenty of food for thought. The producers tell us ACES will reduce investment. The report says capital expenditures in Alaska's oil patch have increased in each of the four years since we switched to a net profits tax. The producers tell us exploration will suffer. The report says exploration is up and that development continues in three new North Slope fields. Are you recognizing a trend here?
The producers tell us employment will dip, but the report says ... you guessed it, jobs are up since ACES became law. One reason for that is the number of oil-related companies filing annual tax returns in Alaska has doubled, meaning competition is also increasing. Last time I checked, competition was a good thing. The report also says companies are claiming more and more of the myriad tax credits offered under ACES - the credits are intended to encourage investment, so they're working, too.
Tell me what I'm missing here. Since ACES became law, not only has the sky not fallen, but jobs, investment, participation and, oh yes, oil company revenue are all up. And here's something else.
Before ACES, Alaskans were earning about zero dollars on Alaska's most productive fields. Even though the producers were claiming all that extra cash, exploration and reinvestment were stagnant. In fact, when the producers set world records for net profits, they chose to pay windfall profits dividends to their shareholders rather than reinvest in Alaska.
I don't know about you, but I don't feel like trading away quality schools, fire and police services or safe roads so Exxon's shareholders can buy a longer timeshare in St. Moritz. I've never even been to St. Moritz. More importantly, uncommon sense tells me we don't have to do that. I want increased oil production as much as anybody. I want the producers to succeed because I know that's good for Alaska. But it's only good for the state when we're getting the proper value for our resource. ACES is designed to ensure prosperity on both sides of the equation, without gluttony on one side.
The tax rate and progressivity ensure a fair share for the state, and the credits and incentives ensure ample opportunity for the companies to increase their profits by reinvesting and expanding production. I don't know if that's common or uncommon, but it sounds like good Alaska sense to me.
Rep. Mike Doogan, a Democrat, is from Anchorage and represents House District 25.