Paul Jenkins: Repeal the oil tax cut? Fool's work

Arguing with those itching to repeal oil tax reform is frustrating. Sometimes, in black moments bereft of chocolate chip cookies or Jack Daniel's, it is an appealing notion to urge them on for the pure entertainment value; to tiptoe safely off the tracks and giggle as flames from the train wreck singe their little clown noses. It would be satisfying -- but so, so wrong.

I had one of those urges the other day when a guy chatting me up about next year's primary election and the possible repeal of the Senate Bill 21 oil tax cuts turned out to be, if you can imagine, a state employee sold on the idea of sticking it to the North Slope oil companies.

Why? Government, he says, is not spending too much. Look at its good works, and, besides, where would we be without it? Wringing out more money from the North Slope to pay for all that, which benefits us all, he says, is not a bad thing. Oil companies can afford it - and, he says, it is our oil. Why give them anything?

I asked: How can a state employee whose very job depends on a thriving oil industry believe that? Oil pays the bills.

Alaska is an oil state. About 90 percent of its government spending comes from North Slope oil. It fuels half Alaska's economy; a third of its jobs. It has contributed nearly all the $161 billion the state has received in resource revenue since statehood.

Alaska has no income tax, no state sales tax, a $47 billion Permanent Fund and an annual dividend check for every man, woman and child. We are the envy of every other state. Our spending is a problem; this year's is the second-largest state budget ever. We need fix that, soon. Oh, and it is not our oil, I told him. We sold it. He seemed surprised.

Despite the propaganda, Alaska's Clear and Equitable Share oil tax, I told him, was a debacle. It made Alaska as attractive to investors as a canker sore. The levy stifled investment for new oil as production from the old North Slope fields lagged.

Even Democrats agreed ACES stunk up the joint. They had their own fix in the works as Republicans went ahead with Senate Bill 21 to cut taxes in a bid to ramp up production and revenue. Despite the silly repeal effort, it looks as if the reform is fueling renewed industry activity on the North Slope.

None of that makes the Left happy; it likes to tax and spend; it hates the oil industry. It wants money -- now. It could not care less about the future. If repeal advocates succeed, there is very bad news in Alaska's future. If ACES returns, oil production continues to slide, investment goes elsewhere and revenues -- already plunging by hundreds of millions annually because of lagging production -- slowly dry up. In a few years our billions in savings will evaporate. Something will have to give, I told him. You tax something, you get less of it.

At the state level, that will mean axing programs, layoffs, an income tax or a state sales tax, or something just as unpalatable We will have to somehow pay for education and all those hefty state employee retirement packages. (Judges, for instance, can draw 75 percent of their generous salaries after only 15 years -- forever.) Then, there are the billions we already owe retirement programs. That must be paid. The state constitution says so. The red ink will trickle down to local property tax payers. Revenue-sharing will dry up. Lawmakers will have to decide whether to continue funding the matching portions of things like school bonds. Corporate philanthropy - which amounts to hundreds of millions each year - will dry up. Money for sporting events, higher education, community events, and on and on, will vanish.

We cannot -- must not -- ever go back to ACES, I tell this guy. The only hope for this state is to do what it can to spur oil production and cut spending. Anything else is nonsense.

Repealing the only real incentive for North Slope companies to boost production is the epitome of cutting off our noses to spite our faces. You see that, right? I ask the guy. You'll suffer along with Alaska if we go back to ACES.

He says he gets it, but I wonder.

How many of him are there?

Paul Jenkins is editor of the