Compass: Oil tax cut in SB 21 threatens public education, Alaska's future

A recent opinion piece by a friend and fellow ASD Board member may have left the impression that the ASD Board had taken a position on the oil tax debate. The Board has not. Individually, we are free to express our views.

My own view is that giving away billions of state revenue is a threat rather than a benefit to public education in Alaska.

Let's be clear about what SB21 did. I have supported tax incentives and investment credits for the oil industry in the past and would do so again. These measures reward actual activity; drilling for and producing more oil to fill the pipeline. SB21 is a massive tax break with no obligation or commitment for the oil companies to do anything at all. It is just as likely that Exxon or BP will distribute our money in dividends to its world-wide stockholders or spend it drilling elsewhere.

Moreover, even Gov. Parnell, the bill's biggest champion, has acknowledged in the State's most recent oil projections that the giveaway is not expected to put more oil in the pipeline.

Recently, a different twist has been added to the discussion. Some in the Legislature have started to claim that SB21 does not cost us any money at all at current oil prices, $105 per barrel or lower. They assert that we can get more money for schools, save the PFD, and magically fill the pipeline. Happy days and nobody pays.

Three quick points.

First, does anybody, even the legislators, really believe this and expect us to believe it? The oil companies pushed SB21 and are spending millions in TV ads to make sure we don't repeal it. Now we are told that the oil companies are doing all this in order to pay more? Nice of them.

Second, if this really doesn't raise any new money and doesn't save the oil companies any money, doesn't the whole Pollyanna assumption of the largest fiscal gamble in Alaska's history just evaporate?

Third, the fact that the Parnell administration has failed to complete even a single audit of big oil company taxes under either ACES or SB21 means that we are likely being gamed under both. This lack of knowledge makes us vulnerable. It is simply unacceptable that the Legislature would take such a huge fiscal gamble with no idea of the real fiscal impact.

The Legislature originally estimated that SB21 would cost Alaskans about $750 million per year; the actual budget gap appears to be more like $2 billion per year and now the Legislature want us to believe that we will make money on the deal.

I am trying to imagine telling my wife that I used our joint money to buy a new boat for $75k. Wait maybe it was $200k. Wait maybe the sellers are paying me to take their boat. (Long silence follows.) Oh, and I might never get the boat, depends on what the sellers decide to do.

She would tell me to cancel the deal, get my numbers correct, and then do it right.

That is just what I expect Alaskans to do, tell the Legislature in August: "Go back, get real facts, and write a tax break that has firm requirements for real investment and increased oil production."

When Benjamin Franklin was asked after helping write the US Constitution what we had, a Republic or a Monarchy, he answered "A Republic if you can keep it." It has always been the obligation each generation of Americans to protect and defend the constitutional rights they inherit.

Alaska's constitution provides that we own our oil resources together, that the oil should be developed for our collective benefit, and that the state shall "establish and maintain a system of public schools open to all children." But no document can force a people to protect their rights. If this generation of Alaskans does not stand up for our constitution, we will lose our fiscal health, threaten our Permanent Fund, and endanger public education.

I know we, as Alaskans, will do the right thing.

Eric Croft is a member of the Anchorage School Board, proud parent, former legislator and theoretical bowhunter. He wants to travel the world with his lovely wife, someday.