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Massive School Cuts; Massive Oil Company Gifts?
Last week the Senate passed additional major cuts to public school teachers, job counselors and education staff. Last year I and others tried to amend a three-year "education" plan that required educator cuts in many districts, and that was made worse last month when the Republican-led House Majority passed a budget deleting $32 million in promised education funds. Things got worse Friday when the Republican-led Senate hit schools with yet an additional $47 million in cuts. I believe in smart budget cuts, but not cuts with a bludgeon, or cuts that harm educational opportunity for the next generation.
If this $79 million in total school cuts from what was promised in last year's three-year school plan stands, that means over 100 lost teachers and staff we rely on to educate children in Anchorage, over 100 likely in Fairbanks, and cuts in Mat-Su (which will face a roughly $10 million school deficit), Juneau, and districts across Alaska.
The seeming session slogan - that everyone has to bear the pain of a budget shortfall - notably exempts the oil industry. In the next two years, under the oil tax passed in 2013, Alaska's will pay out $500 million more to oil companies than we get back in Production Taxes. A press release that I and Senator Bill Wielechowski issued on our bill to correct that problem follows at the end of this newsletter. When your house is on fire, we believe you should act, and not just stand watching embers fall.
Added to the House Republicans' elimination of all state funded pre-K in this year's proposed budget (something I opposed), this means:
I will work to reverse this continuing course of education cuts while finding smarter ways to cut the state’s budget, which include needed cuts to unaffordable megaprojects, and ill-conceived, controversial projects that have yet to begin.
Letters to the editor, to spur and inform a public discussion, and cause legislators and the community to hear your concerns, are welcome! Please write your local paper, and the Alaska Dispatch at firstname.lastname@example.org (200 word maximum limit).
As always, let us know if we can help or you have thoughts to share. Senator Wielechowski and my Oil tax press release follows.
Legislators Propose Emergency Fix to Oil Tax Bill
JUNEAU- In the next fiscal year, the State of Alaska will be required to pay out $700 million in oil company tax credits while the state is projected to only take in $300 million in production taxes. That will result in a net loss of $400 million to the public. Senator Bill Wielechowski (D-Anchorage) and Representative Les Gara (D-Anchorage) have sponsored legislation to protect Alaska in times of depressed oil prices by adjusting the current production tax floor from 4% to 12.5%. This increase would last for two years, which will give Alaskans time to craft a comprehensive oil tax that protects Alaska’s fiscal future and better rebuilds our surplus.
“This bill temporarily fixes a huge flaw in our current oil tax structure,” said Sen. Wielechowski. “Senate Bill 21 promised us that if we gave up billions in revenue at high oil prices, we'd be protected at low prices. Instead, we now have a $3.6 billion deficit and are paying out hundreds of millions of dollars more in credits than we are making in production taxes. This endangers our economy and must be fixed immediately.”
The proposed two year increase in the tax floor from 4% to 12.5% and cuts to certain credits will bring in an estimated $1.4 billion in additional revenue over 2015-2016. This will help extend the state’s savings and prevent dangerous budget cuts that will harm our economy. The increase in the tax floor will only apply to the largest and most profitable legacy oil fields of Prudhoe Bay, Kuparuk and Alpine. The legislation also includes a reduction to some per barrel tax credits and fixes a glaring giveaway for all future and post-2002 oil fields that a leading economist admits results in negative or near zero net present worth to Alaskans for our production taxes.
“We can fix the most glaring flaws this session, or leave Alaska on a road to recession. At a time when children, seniors and public education are being sacrificed, the oil corporations are benefitting from an oil tax law that includes provisions that produce almost no value for Alaska,” said Rep. Gara. “The massive tax break included in S.B. 21 for all future and post-2002 oil fields puts us on a pathway to poverty that will harm educational opportunities, job training and our ability to build a vibrant economy. This is a problem we can easily fix today.”
Sen. Wielechowski and Rep. Gara, along with many of their Democratic and Republican colleagues, have previously proposed a fairer minimum tax floor similar to what is included in the new emergency legislation. However, those fixes were not adopted into past legislation introduced and signed by former Governor Parnell.
Sen. Wielechowski and Rep. Gara will request expedited hearings on their legislation.
For more information contact Myer Hutchinson at 907-465-5319.