Former Fairbanks Sen. Joe Paskvan told reporters Monday he felt the state’s current fiscal crisis was entirely due to a Senate bill passed five years ago to provide additional tax credits to oil companies across the state. Paskvan, who previously served as chair of the Senate Resources Committee, is now part of a group that hopes to overhaul Alaska’s oil and gas tax credit system through a ballot initiative called the Fair Share Act.
The group met with members of the public and reporters Monday to introduce its official steering committee and explain their rationale behind a ballot initiative proposal they hope to enact into law in 2020.
The legislation Paskvan referenced is Senate Bill 21, which group members cite as the impetus for their initiative.
Robin Brena, an Anchorage-based oil and gas attorney and one of the members of the group’s steering committee, cited statistics that show in 2013 the state made about $3.6 billion in oil revenue, while the next year after SB 21 was passed, the state brought in about $1.6 billion less. The price of oil for each of those years remained steady at $108 per barrel and production increased between 2013 and 2014.
“Going forward, three of the five years that Senate Bill 21 has been in effect, we have had a negative production tax,” Brena said. “We are paying the producers to produce our oil from large and profitable legacy fields. This is ridiculous.”
The initiative would only apply to three of the state’s large oil fields: Prudhoe Bay, Alpine and Kuparuk, which produced a minimum of 40,000 barrels of oil per day on average in the last calendar year, Brena noted during Monday’s meeting.
The initiative would increase the gross minimum production tax for those fields from the current 4% to 10% and increase the 10% minimum by 1% (up to a maximum of 15%) for each $5 per-barrel increase in the price of oil beginning at $50 per barrel; increase the net production tax by eliminating the $8 per-barrel credit and adding an additional 15% tax on producers’ profits beginning at $50 per barrel of profit; and would require producers’ production tax returns for the included fields to be public.
”In order to be a fair share, it needs to be fair to the industry and it needs to be fair to Alaskans,” Brena said. “Right now, it’s not fair to Alaskans.”
One area of pushback the group has received is the drop in oil prices over the past few years. Ken Alper, former director of the Alaska Department of Revenue’s Tax Division, dispelled the notion during Monday’s meeting.
“Yes, the price of oil’s gone down. Most certainly our revenues have gone down in large part because of that,” Alper said. “But what you see is that the percentage of the value of the oil, whether we’re talking the wellhead value or whether we’re talking about the net profits, is lower than it’s been throughout most of our history and the forecast from the department of revenue are that it’s actually going to trend down a little lower than that in years to come. So what this initiative is doing is trying to reclaim a little bit of that.”
The group turned in the initiative application with more than the required 100 signatures to Lt. Gov. Kevin Meyer last month. Meyer has until Oct. 15 to approve or reject the application. If approved, the group would need to collect 10 percent of the number of voters in the last general election — or 28,501 — in the next year. Brena says the group hopes to get the measure on the Nov. 2020 ballot.
Other committee members include former Anchorage Democratic Sen. Chancy Croft; Cindy Roberts, author of "Cracking the Code—A Citizens Guide to the Alaska Natural Gas Pipeline Discussion: and former member of the Denali Commission; and former Homer Republican Rep. Paul Seaton.
Contact staff writer Erin McGroarty at 459-7544. Follow her on Twitter: @FDNMPolitics.
Correction: An incorrect amount for the price of oil in 2013 and 2014 was listed in the fourth paragraph in early versions of this story. The correct amount is $108 per barrel.