Rocky Elerding
Key Topics for Today 1. The importance of oil in Alaska’s economy 2. Oil tax reform fixed a failed system 3. New oil tax reform is already working 4. Ballot Measure 1 impacts our future
Importance of Oil to Alaska “Alaska is uniquely dependent on oil” -CBS News, 12/27/13 • Jobs, jobs, jobs • Significant revenue to state of Alaska • Economic growth & future prosperity
Importance of Oil to Alaska “…without oil, [Alaska’s] economy today would be only ½ the size.” University of Alaska Anchorage, ISER report, Prof. Scot Goldsmith, February 2011
Jobs for Alaskans One- third of all Alaska’s jobs (approximately 110,00 jobs) are attributed to the oil and gas industry. Source: University of Alaska Anchorage, Prof. Scott Goldsmith, December 2008
Jobs for Alaskans One oil/gas industry job creates 9 other jobs in Alaska. McDowell Group Economic Impact Report, October 2011
REVENUES: Alaska Depends on Oil
REVENUES: Alaska Depends on Oil Oil revenues also led to the creation of the Alaska Permanent Fund: • 25% of oil royalties go to the Permanent Fund • Permanent Fund Dividend created in 1982 • Since 1982, $35,143 per person in PFD payments • No state income or sales taxes
What is the Problem? Oil Production Decline
What is the Problem? Oil Production Decline
What is the Problem? ONLY Alaska Production Declined in 2012
What is the Problem? Alaska Fell to 4 th in Oil Production
What is the Problem? Oil Companies Invested Outside of Alaska Estimated Capital Spending for Exploration and Development: Alaska North Slope vs. U.S. and Worldwide Spending WC ANS Crude Econ One Research
US Production is Booming But NOT in Alaska “Alaska, one of the country’s top oil suppliers, is being left in the dust.” -CBS News, 12/27/13
What Caused the Problem? The Old Tax Structure • Old tax structure passed in 2007 • Most complicated oil tax laws in the country • One of the highest tax rates in North America • Did not increase production • Chilled investment climate
THE SOLUTION: Oil Tax Reform • Both Republicans and Democrats agreed that the old law needed to change •Legislature passed oil tax reform in 2013 • Passed after 100’s of hours of analysis, debate & public testimony
THE SOLUTION: What Changed? • Eliminated the punitive, progressive tax • Base tax rate increased from 25 to 35% • Reduced complexity • Provides incentives for production & investments •The main goal: Increase production
Repeal Measure on the Ballot August 2014 • Why go back to a failed tax structure? •Production declined every year under the old tax system Under the old tax structure, production declined by an average of 6% annually for six years.
What the Critics are Saying THE FACT CLAIM #1 New tax By 2015 the new legislation is a tax structure will tax giveaway produce more revenue than ACES Source: DOR Dec. 2013 CLAIM #2 THE FACT Where is the The only guarantee guarantee? is continued decline in oil production under old tax law.
OIL TAX REFORM: It’s already working
OIL TAX REFORM: It’s already working • Companies have already announced billions in NEW investments •Projected new spending $10 billion in 10 years. •Investments will drive NEW production • Jobs for Alaskans • Long -term stability for growth
Alaska’s Future • Gas project requires a healthy oil industry • Gas for Alaskans: Fairbanks • Gas project would be a tremendous boost for Alaska’s economy
In Review 1. Oil is essential to Alaska’s economy 2. Oil tax reform fixed a failed system 3. It is already working 4. Ballot Measure 1 impacts our future
Join our coalition today www.forAksFuture.com Paid for by Vote No on 1, Anchorage, AK 99509. Bob Berto, Rick Boyles, Leslie Hajdukovich, Linda Leary and Rick Mystrom, co-chairs, approved this message. Top contributors are BP, Anchorage, Alaska, ConocoPhillips, Anchorage, Alaska, and ExxonMobil, Anchorage, Alaska.
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