FOR IMMEDIATE RELEASE
December 15, 2016\
Senate Democratic Caucus Responds to Governor’s Fiscal Year 2018 Budget
ANCHORAGE — This afternoon, Governor Bill Walker released his proposed fiscal year 2018 budget which highlights previous reductions in state spending, a reintroduction of previous legislation to use the Permanent Fund Earnings Reserve account to help fund state government, and a statewide motor fuels tax. The remaining $890 million gap is left to be addressed by the legislature during the upcoming legislative session.
Glaringly absent from the budget proposal was any mention of reforming the state’s flawed system of oil tax credits under which Alaska receives less from the industry than we owe. According to the recently released Alaska Revenue Sources Book, next year Alaska will receive $89.7 million in oil production taxes but will owe the industry $1.374 billion in oil tax credits.
“We are slated to pay out over $1.3 billion in oil tax credits while receiving only $89 million in production taxes. In fact we are projected to pay out more money in oil tax credits than we get in oil production taxes not just this year, but every year through at least the year 2026, and that’s as far out as they project,” said Senator Bill Wielechowski (D-Anchorage) who sits on the Resources Committee. “This is simply not sustainable, and any responsible fiscal plan for the state must acknowledge that this needs to be fixed.”
“The obvious lack of any mention of subsidies to the oil industry by the administration is the elephant in the room,” said caucus leader Sen. Berta Gardner (D-Anchorage). “This is a huge amount of money, without any accountability or information to allow us to make informed decisions. We appreciate the Governor’s sentiments, and agree that the time to act is now, but it’s impossible to get behind any fiscal plan when it doesn’t even include step one.”
The Alaska Constitution mandates developing resources for the maximum benefit of the people. For more than 30 years, Alaska got about 30% of the gross value of our oil wealth. With our current tax structure Alaska is receiving only 8% of our oil wealth.
“If we were receiving our historical average from our oil resources, there is no question that it fills a huge chunk of the hole in our budget,” said Senator Wielechowski. “I think Alaskans would rather readjust our system to what worked in the past than give up vital services, and have money taken out of their pockets to fund government.”
Contact Jeanne Devon, Press Secretary for the Alaska Senate Democrats at 907-465-5319.