RDC Member Testimony:
SB192 (CS SB 192\B) -Oil Taxes
Before Senate Resources
Testimony provided by Jason Brune
February 28, 2012
For the record, my name is Jason Brune. I served as co-chair for Governor Parnell’s resources, energy, and environment transition team. I am chair of the board of Consumer Energy Alliance Alaska, a board member of the Alaska Miners Association, and a proud member of the Resource Development Council, State Chamber of Commerce, and the Alaska Support Industry Alliance all of whom have already testified and I would like to endorse their testimony for the record.
Let me be clear. I support HB110 and feel that the version of SB192 that the Senate is deliberating is a waste of time. I find it very intriguing that certain senators like to use the fact that HB110 only narrowly passed the House as a reason not to support the bill. This is especially interesting given that this same body did not use this logic when considering, and ultimately killing HB106, the ACMP bill which passed 40-0, unanimously, out of the House. Indeed, very interesting. But that is for a different hearing.
Governor Parnell’s resources, energy, and environment transition team was made up of a cross section of Alaskans. After many meetings and lengthy discussions, there was unanimous agreement that increasing throughput in TAPS should be the number one goal of Alaskans. We indicated in our report that “Increasing oil production on the North Slope is vital to Alaska’s economic future, and the Governor should proceed with a sense of urgency to achieving this goal. Taxes and royalties from oil development account for nearly nine out of every ten dollars in revenue the state collects. While current oil prices are exceedingly high relative to historic standards, North Slope oil production is less than one-third the level of its peak. Without sufficient new investment, Alaska’s future ability to provide basic services to its citizens will be imperiled.”
The report continued:
"Alaska’s taxation policy must be revised to encourage more investment in order to reverse this dramatic, continuing production decline. The Governor should introduce meaningful reform of Alaska’s oil production tax system that reduces the state’s tax burden on all Alaska oil and gas exploration and development activities and encourages increased production. Specific emphasis must be placed on addressing the negative investment climate caused by progressivity.
The importance of becoming an attractive and competitive place to do business is illustrated by our own experience with recent investment actions by the film industry (positive), the cruise industry (negative then positive), and the oil industry (negative). Alaska’s natural resource extraction, property, income, and royalty structure should be designed to attract investment for this and future generations, not maximize the financial take from investors, after they have committed investment monies--for the sole benefit of this generation. The Administration should continually evaluate Alaska’s competitiveness to ensure it has a business climate that encourages investment.”
In conclusion, I urge the senate to hear the voice of Alaskans. Pass a bill that makes a difference, not one that makes a mockery of tens of thousands of hard working Alaskans who believe it’s time for a change. Thank you for the opportunity to comment.
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