The discussion about oil tax credits began in the mid 2000’s when prices were rising and the state saw a need to break the “oligopoly” on the North Slope, or the stranglehold that the big three had on production in the area. As all Americans know, competition is good, and is very good for the state when it comes to the oil industry. As originally conceived the credits were targeted, capped, and only allowed to go to small companies who could show they were using it to eventually produce in Alaska.
The credits worked and are the reason for many new discoveries. That said, when SB21 was passed, the credit regime exploded due to changes that allowed for nearly unlimited cash to be paid from the state treasury to oil companies. I and every member of the Senate Democratic Caucus opposed those changes at the time.
While we agree that credits are helpful, the policy failures of SB21 have come back to haunt us today and left unchanged. And the $1.2 billion state debt to the oil industry will only continue to grow, pushing the state into poverty even if oil prices rebound! So credits were good when they were targeted and capped. They spun out of control when some lawmakers decided to turn the spigot up to 11 and now people have come to their senses....finally!
That being said, the Senate will be headed back to Juneau soon and negotiations will continue though many of us are deeply disappointed that the changes in the tax structure didn't go further. All is not lost however, as 3 sets of consultants have been hired to help us figure out how best to protect the state interests in oil and gas production. Those consultants start work later this month and we will demand a broader debate about oil taxes either this fall or in January.
I'm Berta and I'm listening,