NEWS: It Doesn’t Have To Be This Way

Alaska State Seal

Oil Wealth Giveaway increases deficit now, undercuts ability to replenish savings later

December 12, 2013


A small budget is not surprising, but the lost opportunities for Alaskans and inability to replenish state savings accounts due to recent changes to the state’s oil tax will cost Alaska in the future, said House Democratic leadership today in response to Governor Parnell’s proposed budget.


“With a two billion revenue decline, we knew the budget would be tight this year,” said House Democratic Leader Beth Kerttula. “It would be worse if we didn’t have the savings we’ve accumulated under ACES, and as long as we are no longer getting a fair share for our oil, it’ll be harder to get out of this hole in the future. It doesn’t have to be this way.”


This spring, the Legislature passed the governor’s controversial oil tax reduction. Now that the tax law is in effect, the Alaska Department of Revenue’s most recent revenue forecasts show revenue is nearly two billion dollars less than previously expected.


“It’s unfortunate this new oil tax regime is forcing us to go deeper into our savings and to put off opportunities for Alaskans,” said House Democratic Whip Chris Tuck. “It’s putting our economy on hold and devouring our savings. What’s worse, if we aren’t getting our fair share for our oil, we won’t be able to put money back into savings when oil prices go back up.”


Income from the state’s previous oil tax system, one which allowed the state to share in windfall profits when oil prices rise, helped the state pay off debts and increase its non-Permanent Fund savings to $18 billion.


Despite years of surpluses and billions in savings, school districts have been forced to lay off teachers and staff due to inadequate resources from the state for the last three years. This year’s budget does not include the necessary resources for schools to reverse these cuts. It also does not include funding to help child protection workers spend more time investigating abuse cases. And it cuts money to renewable energy funds and home weatherization programs.


“A sustainable budget is necessary, but Alaskans should know that more proposed education layoffs, the failure to implement the state’s own child abuse prevention study, and the cuts to the renewable energy fund which will hamper our ability to lower the cost of energy, were all avoidable,” said Representative Les Gara, a member of the House Finance Committee.


“At statehood, Alaska was granted control of its resources to build our state. I don’t want to build government; I want to build a state, but until we get a return on our resources that reflects what they’re worth, we won’t be able to build the roads, bridges and other infrastructure we need to build our state,” said Representative David Guttenberg (D-Fairbanks), a member of the House Finance Committee. “This budget is what we get when we don’t sell our resources for what they’re worth.”


There are parts of the budget House Democratic legislators agree with, such as putting an additional $2.3 billion toward the retirement liability which Democratic legislators have proposed in the past. The governor also expressed a willingness to work with Democratic legislators to address shortcomings in education, energy, and elsewhere in the budget.


“We want to work with the governor to make sure Alaskans’ priorities get what they need, and we appreciate his willingness to continue this discussion during the upcoming legislative session,” said Kerttula.


“I do hope the Governor follows through to amend these shortcomings, and am willing to work with him because these problems damage opportunity, damage children, hurt communities, and need to be fixed,” said Gara.



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