After years of study, public testimony, and debate, Alaska turned the corner this week to a brighter economic future. The Legislature voted to create greater opportunity for Alaskans by putting our state's oil patch in a more competitive position globally.
Senate Bill 21 reforms Alaska's oil taxes to attract new investment and spur production. Everyday Alaskans who want to work, pay their bills, support their families, and enjoy our great state, will have the opportunity to. Senate Bill 21 means young Alaskans can look to a future of opportunity. They can look forward to establishing their own families here in Alaska, rather than having to move away.
The legislation, which has been fully debated in the halls and committee rooms of the Capitol, as well as across the state, meets the four guiding principles that I laid out at the start of this session: One, any change must be fair to Alaskans; two, it must encourage new production; three, it must be simple, so it restores balance to the system; and four, it must be competitive and durable.
As I said in my State of the State address in January, legislation meeting these four principles will get my signature. I commend legislators for their commitment to these principles, but also for fostering an open, respectful, and honest dialogue with Alaskans.
Senate Bill 21strikes the right balance. By eliminating the unpredictable tax calculation known as progressivity, we created more certainty for Alaskans as well as oil explorers, investors, and producers.
We've also fixed a risky fiscal condition that left Alaska's treasury exposed to paying out billions of dollars in tax credits that were not tied to production. By rebalancing our tax credit system, Alaskans, our communities, and our state are all better protected when oil prices are low, and the North Slope oil patch is more competitive when oil prices are high.
Senate Bill 21 eliminates the complicated "progressivity" feature of the current tax system and replaces it with a simple 35 percent base rate and a per barrel tax credit tied directly to the production of oil.
With the greatest oil pipeline in history, the Trans-Alaska Pipeline System, now three quarters empty, we have taken a giant step to filling it once again.
Alaska can now compete with states like North Dakota and Texas for investment capital and jobs. With Senate Bill 21, tax breaks will now be tied directly to putting new oil in the pipeline.
The Alaska Legislature has sent a strong message to the world: Alaska is back, ready to compete, and ready to supply energy to America. Having produced only less than half of our known reserves, Alaskans have every reason to be optimistic about the future of our state.
Senate Bill 21 lays the groundwork for a great Alaska comeback. Thanks to the Alaska Legislature and our administration members for seeing this through. A future of new jobs, new opportunities, and a bright future for all Alaskans starts now.
Sean Parnell has served as governor of Alaska since 2009.