This doesn't get us anywhere.
Gov. Sean Parnell has a new number for his oil tax bill, House Bill 3001. But the other numbers are much like those of House Bill 110, which provided more than $1 billion a year in tax relief to major oil producers without securing any binding commitments in return. The governor's bill does include a version of the tax break for new oil production that the Senate passed last week in the waning hours of the regular session. That Senate bill was a smart compromise that provided incentives in the right order -- produce new oil, bank more profit.
The governor's prescription for legacy fields abandons that principle and simply pushes billions across the table to the industry on faith and promises. That's the wrong approach.
Alaska should reward more production, more investment, more risk-taking on the North Slope and elsewhere. But performance should come first -- as it does now with generous credits for exploration.
Further, the administration can't go before a Senate or House committee, or before the people of Alaska, with no cogent explanation for its bill. That was a problem during testimony on oil taxes in 2011 and it's the same problem exhibited a few days ago by Commissioner of Revenue Bryan Butcher in his testimony before the Senate Resources Committee.
Our Department of Revenue doesn't seem to know what the major producers have in mind, what their projections and planning are. Further, as a matter of policy, they don't seem curious, as if it's none of our business.
That attitude, coupled with the contradictions and unsatisfactory answers in testimony, raises the suspicion that there is no good explanation for this bill, other than the major producers and their allies, including the governor, want it. We are asked to believe it will lead to more oil and sustained revenue but no one is willing to make a binding commitment to deliver that result.
Faith and promises are not good enough for Alaska. The Senate, to its credit, has made that clear.
Alaska shouldn't be afraid to modify ACES, the current tax regime. But Alaska should only change ACES when it is clear -- demonstrably clear -- that Alaska gains. That should be the governor's mission, the commissioner's mission, the mission of the House and Senate.
Lawmakers are in special session to see if they can craft a better tax regime. House Bill 110, by any other name or number, is dead and buried -- as it should be. Let's not dig it up and drag it back to square one.
BOTTOM LINE: Governor's warmed-over tax bill is a non-starter. Instead, Alaska leaders should work on a bill that rewards production and increases competition.
