Welcome to my last Peggy’s Corner for the 2013 session. We have worked diligently in both houses of the Legislature on many pieces of legislation that will affect our state for many years. Throughout the process this year we have been trying to keep our eye to Alaska’s future. We all knew that if we didn’t manage to do something about our oil decline, we would be committing the ultimate crime against the next generation, our children. The cost of doing nothing was simply too great. We need oil production to increase, otherwise, it won’t matter how high our tax rate is, we could end up generating little in tax revenue. Right now Alaska is dependent on high oil prices to maintain our budget and mask our oil declines. We need to energize Alaska’s economy.
The oil bill, SB21 that was passed by both the Senate and the House has had a tremendous amount of collaborative work put into it. Both houses worked diligently in various committees our entire session. We listened to testimony and detailed analysis by three separate consultants as well as the Department of Natural Resources, Department of Oil & Gas and a multitude of other experts, businesses and oil companies. I have confidence that the new oil tax regime that was produced through all of these concerted efforts will create a more competitive business environment in Alaska. I believe we have found the critical point where the needs of Alaskans are met, while establishing Alaska as a much better place to do business. Increasing development is about far more than just bringing in tax revenues to the state’s coffers. We need to be sure that our state tax system is competitive against the rest of the world and the lower forty-eight states. Alaska’s revenues are about more than just the oil taxes – it also includes state royalties, production taxes, corporate income taxes and property taxes. Making us competitive is especially important for us because the cost of doing business in Alaska is higher than almost any other place in the world.
There may be components of the final version that we don’t all completely embrace but I believe that every single legislator has the best interests of their constituents in mind. Our varied backgrounds, diverse districts and interpretations of what matter in the final product differ, but we all agree on stimulating our economy. From my perspective, the important components in this bill are having a competitive tax rate (one that is mid lined with world markets), limiting the downside risks to our revenue stream from too many credits, balancing our tax system so that it evenly impacts both new producers and the incumbent North Slope producers. I also believe that incentives for new production and continued credits for exploration are a vital key to the smaller companies. I am supportive of the Competitiveness Review Board, which I believe will help us maintain an attractive tax regime on a worldwide basis and bringing that information back to us at the Legislature. This is not a hands-off bill. We are not passing it and then going on our merry way. We will be watching very carefully, as will you, to ensure that we see more oil in the pipeline in the next 3-5 years. I see inaction as a far worse scenario than trying our best to create a more competitive business climate in Alaska. I am pro-business and I do not want to see Alaska close up shop as our oil continues to decline. I want Alaska to become a more attractive place to do business.
This brings me to the budgets for this year. We slowed the growth of government in the operating budget as we had tasked ourselves in our guiding principles of fiscal responsibility that the majority established. Those same principles were adhered to in the passage of the capital budget. We knew at the start of this session that we couldn’t sustain the huge capital budgets that we had for the last several years. Those budgets were intended to insulate Alaska from the effects of the recession and I’m proud of the product we delivered. Many of you may not realize how slim the capital budget is this year. It reminds me of my first session when we struggled just to balance the operating budget with $20.00 barrel oil. I feel as though I wore the hallway carpets bare as I trekked from office to office working at length to capture as much capital money for House District 33 this year as possible.
Thank you to everyone in House District 33 for your countless emails, letters, and visits throughout this first session. I feel blessed to have met so many of my new constituents this year. This is the end of the weekly “Peggy’s Corner” during the 1st session.
During the interim, please contact either my Wrangell or Ketchikan office if you have questions, need assistance this summer or have an idea for a bill or needed statute change. I look forward to seeing you this summer and fall.
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