Moody’s Investors Service has given a thumbs-up  to the August decision by Alaska voters to keep the oil-tax system known as the More Alaska Production Act in place.
One of three ratings agencies covering the state of Alaska, the New York firm said the decision to reject Ballot Measure 1 in the Aug. 19 election, which would have repealed MAPA if passed, was a “credit positive” for Alaska.
The update issued by Moody’s on Thursday is not a credit-rating action. But it shows the state’s credit rating is being maintained, said David Jacobson, a spokesperson at Moody’s.
That rating is AAA stable, the highest possible rating, a level that helps keep interest rates low when the state issues debt to raise money, said Angela Rodell, commissioner with the Department of Revenue. Municipalities needing to raise money also benefit from that rating while investors feel more comfortable about doing business in the state.
"It’s like a Good Housekeeping seal of approval,” she said.
Thursday's report from Moody’s said the incentives in MAPA, also called Senate Bill 21, “may stabilize” declining oil production trends.
“While producers have no legal commitment to increase Alaskan production, they have indicated a desire to do so under MAPA’s more favorable provisions,” the update said.
Using data from the state Revenue Department, the report notes that state officials expect the former tax law to bring in more revenue at high oil prices, but that MAPA will “produce better or comparable results” if oil prices remain less than $111 a barrel.
The update notes that the state’s current revenue forecast indicates Alaska may need to rely on savings in the coming years to offset revenue shortfalls caused by falling oil production. But it also notes that by the end of the year, the state will publish its first revenue forecast factoring in new production tied to MAPA.