FOR IMMEDIATE RELEASE
March 14, 2013
Fiscal Note Reveals Cost of “Ticking Time Bomb” in Latest Oil Giveaway Proposal
Up to 20% of barrels already slated for production would get extra breaks for new oil
JUNEAU – According to the Department of Revenue’s draft fiscal note, one out of five barrels of oil the department already expects to see produced will receive extra tax breaks ostensibly for new oil under the latest Senate Finance Committee version of the governor’s oil tax proposal.
“This is the ticking time bomb hidden in this latest giveaway,” said Representative Beth Kerttula (D-Juneau), whose office analyzed the fiscal note after it was released yesterday. “By their own numbers, we’ll be giving away up to a quarter of a billion dollars each year in extra breaks for oil that will be produced anyway. It’s the giveaway on top of the giveaway, and if it passes it will sink Alaska’s economy for decades to come.”
Line five of the Fiscal Note shows the revenue loss for tax breaks targeted at new oil costing up to $250 million as soon as 2017. Under this proposal, the Department of Revenue and the Department of Natural Resources would determine which oil is classified as “new oil” for purposes of getting additional tax breaks. According to the Department of Revenue, North Slope production is estimated to be 478,000 barrels a day for 2017. To reach the $250 million in revenue losses on line five, at least 100,000 of those barrels would have to be re-classified as new oil.
“Our alternative oil tax bill gives targeted breaks for new oil fields, but it defines them and ensures we don’t give breaks for oil already on the way. But it’s lazy law to punt the tough decisions to agencies to decide what is actually new oil, and by the looks of this fiscal note, they could be giving hundreds of millions of dollars away in extra tax breaks for oil the administration thinks will be produced anyway,” said Rep. Kerttula.
The draft fiscal note for CSSB21(FIN) is available here.