JUNEAU, Alaska (AP) — The head of the Alaska Oil and Gas Association warned state legislators Monday that increasing taxes on an industry strapped by low prices is poor policy that will mean fewer jobs and a reduction in oil and gas production.
Kara Moriarty testified on HB 247, a bill from Gov. Bill Walker geared toward getting a handle on the cost of credits, which have become a major state spending item. Legislative consultants have said that credits that go to companies with no tax liability, which are typically smaller companies developing and exploring on the North Slope and Cook Inlet, reached their highest point during the last fiscal year. Walker has called the bill an integral component of his plan for a sustainable budget.
The bill would, among other things, raise the minimum tax and would not allow for credits to be used to lower that floor. It would repeal or allow certain credits to expire and would turn North Slope per-barrel credits into a monthly calculation rather than an annual one to guard against large tax refunds in years of great price volatility.
Alaska relies heavily on oil revenue to fund state government and is grappling with how to address multibillion-dollar deficits amid chronically low oil prices. Legislators have focused on cutting the budget before deciding on bills that could provide new or additional revenue. Walker has proposed tax increases among a range of industries, as well as a personal income tax. He also has one of several proposals to use money from the Alaska Permanent Fund earnings reserve and to change how permanent fund dividends are calculated.
The oil industry is in a tough spot, too, Moriarty told the House Resources Committee. Companies spend $52 to produce a barrel of oil before paying any taxes in Alaska, she said, citing state estimates. The price for North Slope oil Friday was about $32 a barrel.
If additional taxes are levied, forcing the situation to be more out of balance, the industry will have to make greater cuts in spending needed to maintain and increase oil production, she said.
In an interview, Moriarty said state leaders face tough choices. But the oil and gas industry is “not a well that they can go to without having ramifications for investment, jobs and production,” she said.
“The bottom line is, Do no harm,” she said. “Prices are already kind of doing that for us.”
Copyright 2016 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.