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February 7, 2014
Alaska’s Finances Fall into Ruin while Oil Companies Make Blockbuster Profits
The final session of the 28th Alaska Legislature is well underway. As we wrestle with such issues as a constitutional amendment change to allow state funding of private schools, or whether Alaska should become an investment partner in a future gas pipeline, it is critical that we also stay focused on Alaska’s fiscal situation.
Our financial status has changed drastically from surplus to deficit in just a very short time. The magnitude of the deficit is sobering, and annual deficits are projected to continue for the foreseeable future.
Contrast this with yet another quarter of blockbuster profits reported by Conoco Phillips on its Alaska operations of $555 million in fourth quarter earnings and annual earnings of $2.17 billion—all earned under our previous revenue structure, Alaska’s Clear and Equitable Share (ACES), which has consistently yielded phenomenal profits for the oil industry.
The current situation can be attributed in part to the following:
However, the problem has been projected to greatly increase under the new revenue structure introduced by the Governor and passed by a majority of the legislature last year.
Under our old system, Alaska took a greater share of profits at very high oil prices and a smaller share when they were low. This was known as “progressivity” and it allowed the state to rebuild its savings during goods times while guaranteeing profitability for the industry during lean times.
Under SB21, the Governor’s own 10-year production forecast shows a decrease in production over today’s levels. That means we now have no means of rebuilding our savings through either high oil prices or through increased production.
That is why I joined over 45,000 Alaskans in signing a citizen’s initiative to allow a vote on repealing the oil tax giveaway. Thanks to the actions of an outraged public, we will now have a chance on the August ballot to overturn the negligent and ill-conceived policies that have set Alaska on the path to financial ruin.
It is time to restore fairness and balance to our oil revenue structure and return to a system in which our partners in the oil industry can continue to make record profits, while we incentivize new competition, and we Alaskans get a fair return from our publicly-owned resource.
I’m here for you, so please keep in touch on matters important to you and your family!
February is Visit Our Schools Month
Community members, businesses and parents are invited to visit any ASD school during the month of February to learn more about our public schools. While schools welcome members of the public year-round, Visit Our Schools Month will provide parents and community members an opportunity to learn more about the many educational opportunities available to them.
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