Alaska’s leaders are getting ready for tough negotiations over how the state will deal with its multi-billion dollar budget hole. How much the oil and gas industry should help fill that hole will be an especially controversial question for the legislature this session.
But during a speech to industry leaders, Governor Bill Walker’s top tax man said he wants lawmakers to focus on the big picture, instead.
Ken Alper, director of the Alaska Department of Revenue’s Tax Division, has a dream:
“We don’t want the 2017 legislative session to be dominated by fights over oil taxes. We just don’t,” Alper said in a Thursday speech at a breakfast hosted by the Resource Development Council, which advocates for the industry.
That dream may not come true. Last session, Governor Bill Walker and the legislature went back and forth over oil taxes well into the summer months. But Alper said the state should instead focus on bigger changes to fix its budget shortfall.
This means two things: an income tax or a sales tax, and a change in how Alaska uses earnings from the Permanent Fund. These are things Governor Walker proposed last year. But the legislature didn’t pass the comprehensive plan the Governor had in mind. So Walker infuriated the oil and gas industry by vetoing about $430 million in tax credits promised to the companies.
Alper says the Governor wants to pay those credits back — but it depends on how the legislature moves forward this year.
“I expect that this year there will be a pretty similar dynamic, where the governor’s comfort level for paying off these obligations is going to increase dramatically the closer we get to a fiscal solution,” Alper said.
Even though he wants to avoid a fight, Alper said changes to oil taxes are probably going to be part of the solution.
All these changes will be tough, but Alper said they have to happen this year — or the state will be in danger of draining its savings account.
“If no solution is passed this coming session, it means that the legislature in 2018 can’t balance the budget — period,” Alper said. “And at that point, it means almost a panic, hair-on-fire budgeting — one year from now.”
Alaska Oil and Gas Association leader Kara Moriarty said she agrees with Alper — she doesn’t want to squabble over oil taxes this year, either. But oil companies are also worried about how the Governor plans to deal with the issue.
“He didn’t say anything today that gives us any certainty or any stability,” Moriarty said. “Even though he doesn’t want oil taxes to dominate the legislative session, it’s still going to be part of the package, but it’s still not clear what that is.”
If Walker’s budget proposal is anything like what he released last year, which included raising taxes on oil and gas, then the industry is ready to fight it.
Governor Walker is slated to release the budget on December 15.
Elizabeth Harball is a reporter with Alaska's Energy Desk, covering Alaska’s oil and gas industry and environmental policy. She is a contributor to the Energy Desk’s Midnight Oil podcast series. Before moving to Alaska in 2016, Harball worked at E&E News in Washington, D.C., where she covered federal and state climate change policy. Originally from Kalispell, Montana, Harball is a graduate of Columbia University Graduate School of Journalism.
