AD Main Menu

State deserves credit for oil industry donations to UA

Dermot Cole
OPINION: In his opposition to the oil tax referendum, Herb Schroeder should have given more credit to a state tax credit program that encourages corporate and private giving to the Alaska Native Science & Engineering Program and other university programs.
Alaska Dispatch illustration

FAIRBANKS — Herb Schroeder of the University of Alaska Anchorage neglected to give full credit where credit is due for many of the private donations to the Alaska Native Science and Engineering Program and other university programs.

In an Alaska Dispatch News commentary opposing the effort to repeal the SB 21 oil tax cut, Schroeder praised industry contributions to the ANSEP program over the the years, citing these as evidence of what the industry has done to "crush the barriers that have excluded Alaska Natives from the science and engineering professions."

He said industry donations in the last year alone have exceeded $1 million, with ExxonMobil, Alyeska Pipeline Service Co. and Udelhoven Oilfield System Services each giving $200,000.

Schroeder took an approach that is all too common among university officials in giving effusive thanks for corporate support. He did not mention the generous state tax credit program that helps generate most of these contributions.

By failing to do so, he gives an inaccurate picture, creating a false impression of the extent of corporate largesse and downplaying the degree to which the state is involved in donations that crush barriers for students.

It is true that the companies are donating their own money and for that they deserve credit. But first and foremost he should thank the state of Alaska for its generosity. That's because our elected officials have created a system in which the bulk of corporate donations to the university and other educational institutions is indirectly financed by the state.

Instead of paying the state in tax dollars, an activity for which no company ever wins praise or publicity, companies are able to get plenty of both by making payments to educational institutions, qualifying for tax credits in return. University officials help with the level of praise and publicity by not mentioning the tax credits when they thank the companies for their financial assistance. Perhaps they fear that revealing the facts somehow takes the glow off the corporate donations or diminishes the appearance of altruism.

The Alaska Educational Tax Credit, described by the university as the “ultimate return on investment,” means that the state typically pays for 75 percent of a $200,000 donation through tax credits of $150,000.

The companies can reduce their cost still more with a reduction on their federal taxes. Many companies pay less than the assumed federal tax rate of 35 percent but a hypothetical entity in that category could get an additional $17,500 federal benefit on the $200,000 donation.

That would push the net cost to $32,500 for a $200,000 gift, according to the university, “The ultimate ROI,” as UA puts it.

Under the state program, Alaska provides a 50 percent tax credit for donations of up to $100,000. The tax credit rises to 100 percent on the portion of a gift between $100,000 and $300,000, dropping to 50 percent above that. The net cost of a $1 million gift, according to the university, could theoretically be $260,000.

That said, it’s fine to thank the companies for donations but corporate contributions that qualify for large tax breaks are irrelevant to the debate about whether SB 21 should be repealed.

Dermot Cole can be reached at dermot(at)alaskadispatch.com

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, email commentary(at)alaskadispatch.com.