 by Senator John Cowdery July 10, 2006
Creating a new tax regime would have raked in an extra $3.2 million dollars per day for the state. The extra revenue pays for the fundamentals of good government like schools, public safety and transportation. We need that revenue to keep our state's infrastructure sound and our economy strong. Governor Frank Murkowski and a lot of legislators understand what is at stake here. That's why the governor decided to call a second special session for July 12th. I don't like having a special session in the middle of summer anymore than anyone else, but Alaskans elected us to do a job. If that means spending a few extra weeks in Juneau instead of fishing or barbequing, so be it. Our neighbors in rural Alaska have a lot riding on this. The FY 07 capital budget pays for new schools in the villages of Kongiganak, New Stuyahok and Noatak. The existing schools must be replaced as soon as possible so those children have a warm, safe place to learn. High oil prices create a crushing burden on families in rural areas. The price of diesel fuel, used to power generators in rural villages, has skyrocketed to the point where they have to choose between paying the electric bill or other essentials like food and clothing. The capital budget pumps $183 million dollars into the Power Cost Equalization program to help make electricity a little more affordable. PCE funding and the new schools are contingent on the legislature passing of a new oil tax because the additional revenue will be there to pay for them. Without a PPT bill, those items may have to wait another year. That's another school year with crumbling classrooms and another long, cold winter figuring out how to keep the lights on. Just for the record, I voted against the PPT bill that failed in the closing days of the first special session because the 22.8% tax rate was too high. Crafting an oil tax shouldn't just be about getting more money out of the oil industry. These companies already provide about 80 percent of the state's general fund revenue and everyone knows Prudhoe Bay production is falling rapidly. We have to draw a fine line between raising more tax revenue and encouraging more investment on the North Slope. Slamming the oil producers with an onerous tax hike isn't how we get them to look for more oil. The Murkowski administration proposes taxing the industry at 20 percent of its net profits with a 20 percent tax credit for oil exploration and production. Not only do we get an additional billion dollars a year in tax revenue, the producers are on the record saying it will promote new investment on the North Slope. That's a tax rate I can vote for because it works for Alaska and our most important industry. Some of my colleagues voted against it because they believe 22.8% isn't high enough, I really hope no one voted against it for political reasons. Clearly, we have our work cut for us if we're going to pass a PPT bill that can muster at least 21 votes in the house and 11 in the senate. It's time for Alaska to get
its fair share of the staggering oil revenue created by $70 dollar
oil, but we can't do it unless we get back to Juneau and start
hammering out a bipartisan PPT bill that works today and for
many years to come.
About: Senator John Cowdery (R) is a member of the Alaska Legislature representing District O, Anchorage.
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