Dingman: Alaskans should not repeal oil tax cuts

Mike Dingman
OPINION: Columnist Mike Dingman argues that because oil is so important to Alaska, cutting taxes on production upholds the constitutional requirement that Alaska's resources be developed for maximum benefit of its people. Bob Hallinen / Anchorage Daily News

Alaska is going to vote on one of the most important issues we have ever faced as a state in just 20 days.

I’ve written in this space that it is a much more complicated issue than should be decided by the average voter -- and I still believe that is absolutely true -- regardless, we are still tasked with this decision.

As I said, the issue is complex, so complex that Ballot Measure 1 takes up significant space in its own 48-page election pamphlet. (It’s the only ballot measure on the August ballot since all the initiatives were moved to the November general election.)

The fight is over the new tax structure, dubbed by the Parnell administration the “More Alaska Production Act” or MAPA. Alaska likes to name oil tax structures; they all have names – MAPA, ACES, PPT, ELF ... none named Spot or Fido, but who knows what the future holds.

As confusing as it all is, there is a simpler question that should help you make up your mind as to how you should vote.

First, let’s briefly examine the arguments on both sides.

Those in favor of repealing MAPA will tell you that it is a multi-billion dollar “giveaway.” They argue that by significantly lowering the taxes the oil industry pays, we are violating the Alaska Constitution’s requirement that we develop our natural resources for the maximum benefit to all Alaskans.

They will make the point that oil production is declining -- it was declining before ACES, declined during ACES and will continue to decline after ACES. According to them, there is no significant correlation between oil taxes and the level of production; furthermore, that even under the ACES structure, the big three North Slope oil companies were making more profit on their Alaska holdings than their holdings Outside.

MAPA supporters will tell you that changing the oil tax structure will spur development on the North Slope and that it’s already working. They say that oil companies will invest their money where they can make the most money. They argue that continual decline in production on Alaska’s oil patch can be attributed to a less favorable tax environment. They would say that production dollars were spent in places like North Dakota, Texas and Oklahoma rather than Alaska.

Both are perfectly valid positions. Both sides have good, well-articulated and closely evaluated opinions. People on both sides of this issue are good Alaskans with the best of intentions and the best interest of our great state at heart. I have no doubt in any of that. Personal attacks and accusations of personal interest or hints of corruption on either side are unnecessary and unsubstantiated and have no place in an honest and open discussion of the issues. Not only is it disingenuous, it detracts from the real substantive point surrounding the issue.

After all of the talk of the past oil tax systems, the fluctuating price of oil, the world market, the domestic market, heavy oil, offshore oil, progressivity along with a litany of confusing acronyms, we are left with one, very important fundamental question -- do we want our oil tax system to be a short-term cash cow or do we want to create an environment of economic stability on the oil patch and ensure high-paying jobs for Alaskans.

For me, that’s the fundamental question.

There is no argument that based on projections done by the state that Alaska cannot sustain the current level of spending under oil tax revenue coming in from either ACES or MAPA.

Secondly, while ACES did bring in quite a bit of money to the state budget, oil production has steadily declined.

It’s a defeatist attitude to believe that we cannot increase oil production. While we may not reach the goal of 1 million barrels a day that Gov. Parnell set in 2011 for HB 110, a similar oil tax system which did not become law, the goal of drilling for more oil is a more worthwhile endeavor than simply taking as much money from the oil companies as we can while they are still here.

Oil revenue accounts for between 80 and 90 percent of our state’s unrestricted general fund, which pays for almost every state service, including education, transportation infrastructure, public health and safety, and many other programs. There is not much room for error when it comes to this -- our most important issue.

We, as Alaskans, have to decide if we want to be partners or adversaries. I would contend that a partnership much better serves our goal at developing our natural resources for the greatest benefit of all Alaskans.

Mike Dingman is a fifth-generation Alaskan born and raised in Anchorage. He is a former UAA student body president and has worked, studied and volunteered in Alaska politics since the late 1990s.

The views expressed here are the writer's own and are not necessarily endorsed by Alaska Dispatch News, which welcomes a broad range of viewpoints. To submit a piece for consideration, e-mail commentary(at)alaskadispatch.com.