In a online cash-counter that's akin to the national debt clock, Alaska Democrats are tracking the cost of Gov. Sean Parnell's massive tax break for some of the world's richest companies. It shows dollars fleeing the Alaska treasury at a dizzying rate, more than $125 million lost so far this calendar year.
The problem is, the tax cut for oil producers isn't yet law, so its provisions haven't cost the state a dime. Not yet anyway.
The real pain starts Jan. 1, when most of Senate Bill 21 goes into effect, even as a referendum to overturn the oil-tax cut appears increasingly likely to get a vote, more than a year from now, in the August 2014 Alaska primary elections.
The counter's other flaw is that it's actually reporting the cost to the state of Alaska's Clear and Equitable Share, the current tax law. ACES is a creature of the Sarah Palin administration that robustly taxes BP, ConocoPhillips and Exxon Mobil Corp. But it also gives those oil companies and others generous tax credits for capital investments.
The ticker was the brainchild of Rep. Chris Tuck of Anchorage, who acknowledges that the counter records an ACES liability.
Nonetheless, he said the ticker is appropriate because it's tracking a cost the state wouldn't have borne this year. That's because Senate Bill 21 included a retroactive provision, applicable for this year, that sped up the timeline under which oil producers could collect the tax credits they're due under ACES.
"We decided to include this loss (on the counter) due to the fact that this normally would not be stacked in this one year," Tuck said.
What's being recorded is a pro-rated amount of the $225 million that BP, Exxon and Conoco can start collecting when the bill becomes law on Aug. 20. Under ACES, they wouldn't have been able to collect that credit until next year.
Tuck said Senate Bill 21 is already causing the treasury "pain" because the accelerated payout of ACES' debt strains the current budget with costs that previously would have been spread out over time.
But Bruce Tangeman, the Revenue Department deputy commissioner who often went to bat for the Parnell-introduced measure, said he "absolutely" took umbrage at the counter's current tally. It's a "desperate move" and a "pretty far stretch" to blame Senate Bill 21 for a previous liability, said Tangeman.
In fact, he said, the real giveaway is not Senate Bill 21, as opponents have claimed. Instead, it's the hundreds of millions of dollars yearly the state owed in ACES tax credits.
"We showed that we're shoveling a ton of tax credits out the door with no guarantee of production or no connection to production," said Tangeman.
The current bill will appropriately reward increased production, he said.
The dispute shows the zeal with which opposing sides have tried to blast or praise the bill, with some leading Republicans quick to claim that passage of Senate Bill 21 has sparked increased hiring and critics eager to paint it is a massive failure.
What no one disputes is that Senate Bill 21 will initially cost the state huge sums of money. The hit to the treasury will be up to $720 million in the current fiscal year that began July 1, compared to what ACES would have earned, according to a Revenue Department fiscal note.
Democrats argue the cost will be much greater, and it will be, if the price of oil continues to rise.
Republicans that supported the cut argue it's an investment that will result in more North Slope production to help sustain Alaska's oil-dependent economy in the long-haul.
To that end, Tangeman said some companies are already ramping up hiring in preparation for the extra work, including Little Red Services, an oil field services company.
Tuck said Senate Bill 21 will never pay for itself because it won't reverse the decline in North Slope oil production experienced for more than two decades. The current tax credit encouraged exploration by new companies, and the incoming law doesn't do that.
"The only way to slow decline is to have new exploration," he said. "We need more competition on the North Slope, not less."
Contact Alex DeMarban at alex(at)alaskadispatch.com