I appreciate vibrant discussion on public policy. But some are proposing revenue plans that notably ask individuals to pay, and leave Alaska's three major oil companies, who profit handsomely even at low oil prices in Alaska, out of plans to address our fiscal gap. That's a recipe for a public backlash.
It's good to put everything on the table for people to debate, so policymakers can listen. It's wrong to write off receiving a fair share, or as the Alaska Constitution says, the "maximum benefit" to "the public," for our oil. An open discussion isn't one that tells hard-working Alaskans and those who struggle to pay for heat that they should pay, but the oil industry should be left with a sweetheart deal on the oil Alaskans own in common.
I was fortunate to become friends with, and get to listen to former Gov. Jay Hammond. He used to say before you tax Alaskans, or consider Alaska Permanent Fund dividend cuts, you get a fair share for Alaska's oil. Whether you agree with his politics, his political acumen was correct. The public won't pay money that in effect subsidizes a major oil industry short-payment to Alaskans for our oil. Want a few facts showing why the 2013 oil tax rollback pushed by then-Gov.Parnell, some legislators and the major oil companies went too far?
The production tax rate on all oil fields started after 2002 is so low it produces a negative "net present value" for Alaska today. Even if oil prices returned to $110 per barrel, these and all new fields, including ANWR if it's ever opened, will pay a production tax that produces a near zero or negative net present value for Alaska. Private companies don't sell their products that cheaply, and we shouldn't either.
Under current law Alaska will owe companies roughly $600 million more in state-paid oil tax credits for 2015 and 2016 than we get paid in production taxes. That's a recipe for crippling schools, law enforcement and emptying our savings.
Some say changing tax credits to small explorers is the full answer. They're wrong. We need an oil production tax that earns Alaskans enough -- a fair share -- that we both get fair revenue to help fund public safety, education and savings, and can afford more smartly crafted development incentives to spur new North Slope production.
Today a meager 4 percent production tax rate applies all the way up to $80 or $90 per barrel on big, profitable oil fields. Alaska's production tax is even lower, or negative on post-2002 oil fields. Alaskans deserve a discussion with reliable experts, rather than the "experts" who misleadingly danced around hard questions and served as shallow cheerleaders for Parnell's 2013 plan. And, we all need to work on eliminating government waste, like continued spending on a $6 billion Susitna dam.
Sure, Alaska gets a royalty, and oil companies pay a small corporate tax, and property taxes go mostly to local governments. But the production tax has been Alaska's mainstay for state revenue.
Finally, let's take a few red herrings off the table.
Those of us who want our oil tax fixed also proposed balanced reforms to the older law, ACES. The retort that we simply want to "return to ACES" ignores production tax and incentive bills that I, and Democratic and Republican legislators have proposed.
Some say we narrowly voted to keep this law last election. But we voted in the low-turnout primary, not the general election when Alaskans would have said yes to repealing this law. Current polls show Alaskans want oil tax reform.
Finally, big oil companies aren't making their normal $2 billion-plus in annual Alaska profits at low oil prices. But they're doing fine. ConocoPhillips is the only company that reveals its Alaska profits. SEC filings show it made $340 million in profits the first half of 2015 in Alaska, more than it made in the rest of the world combined. The company lost over $700 million just in the Lower 48. Prudhoe Bay, Alpine and Kuparuk are among Conoco's most profitable fields.
We should never be scared of public opinion. Let's have an open debate, not a stifled one.
Rep. Les Gara has served in the state House of Representatives since 2003. He is a Democratic member of the House Finance Committee.
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.