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Balancing the Budget
Meetings in the Capitol have been off to a fast start. I've met with dozens of neighbors visiting Juneau advocating for education funding, energy production, elections reform, food security, retirement reform, child care access, facility and road maintenance, and more. We have also heard from nonprofits and about the potential impacts of reduced or paused federal dollars coming to Alaska, and this week the municipalities will testify on the same topic.
What do all these things have in common? They highlight the need for revenue reform to ensure we can continue to fund the critical services we rely on. Alaska's budget deficit has grown to over $500 million, meaning that without decisive action we will not have the money to plow our roads, fund our schools, and keep Alaska working.
After the passage of SB 21 in 2013, the State of Alaska's revenue fell precipitously. Where we once funded 90% of state government with royalties and taxes paid from oil and gas production, we now can only fund around 40%. This is while drilling for oil and gas in Alaska remains the most profitable place in the world for oil companies to operate, as it has for decades. This give- away to oil companies has been funded by drawing on Permanent Fund earnings.
I worry that if we don't find more ways to diversify our revenue sources, the PFD will be reduced to nothing. While developments like the Willow project promise to increase oil production around the start of the next decade, the State of Alaska will be forfeiting hundreds of millions of dollars in tax breaks per year until Willow starts producing. Even once Willow starts production, the State of Alaska will receive little revenue because it is being developed on federal land.
Senator Rob Yundt of Wasilla, introduced - SB 92. Estimates say the policy could earn Alaska roughly $185 million in revenue this year.
This week, I introduced two bills that could see a combined total of roughly $200 million in additional revenue. SB 112 would reduce the per barrel credits against oil taxes from $8 to $5, and SB 113 would modernize Alaska’s corporate income tax law to tax outside and online corporations the same as Alaska brick-and-mortar corporations. SB 113 will get its first hearing this year on Thurs, March 6, at 9:00 AM before the Senate Finance Committee. I anticipate SB 112 to be heard in Senate Resources the following week.
I continue to work closely with my colleagues to find a way to close the budget gap this year, without depleting savings. I hope to hear from you on any other ideas you may have.
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