The drop in oil prices has left an enormous gap in Alaska’s budget lawmakers are trying to find new revenue streams to help close the gap. A forecast of revenue that was released this week estimates that the state is facing a deficit of over $450 million going into the fiscal year to come.
Senator. Bill Wielechowski, an Anchorage Democrat who introduced an act last week that aims to boost oil tax revenue in order to bridge the gap.
“It’s fundamental math. How will you be able to ensure that the math is balanced out? It’s not even balancing out,” he said.
The measure, SB 114 will close what is known as the “S-corp loophole.” It would also require private companies like Hilcorp to begin paying taxes on corporate profits that are set by the State of 9.4 percent.
The bill will also cut the tax credit for oil production and also limit the amount of expenses that oil producers are able to deduct from state taxes. Wielechowski believes that the bill could increase by nearly half billion dollars in the state’s revenues every year. He also said that “this is the right time to pass it.”
“We’ve had hundreds of teacher posts that are vacant There are hundreds of vacant positions on the Marine Highway, you’ve got roads that aren’t being cleared,” he said. “I believe people are beginning to realize the consequences of the government not being able to pay for.”
House Majority members expressed doubts about the bill at the news conference held on Tuesday. House Resources Committee Chair Tom McKay who is an Anchorage Republican who argued that the increase in production of oil — not taxing it as the answer to Alaska’s budget problems.
“By invoking taxes on oil however, they do the opposite and has a negative impact on investment,” McKay said.
McKay stated that the bill would result in “uncertainty and uncertainty” in the tax system as ConocoPhillips recently passed a resolution to approve the Willow the oil-drilling project continues to move ahead. According to his website for campaigning, McKay has worked as an oil engineer since the year 1980 with a variety of energy companies including Conoco.
An additional bill that was introduced on Tuesday by Nikiski Republican Rep. Ben Carpenter proposed the state sales tax at 2%. tax.
Alaska has not ever had a sales tax that is statewide and is one of only the few states without. It also doesn’t have an individual income tax it is also the sole one to not have either. The biggest portion of Alaska’s revenue is derived from oil.
Carpenter has not responded in response to inquiries for an interview. However, during a hearing on Wednesday night, during which he presented the sales tax bill Carpenter stressed that it’s only one aspect of a larger plan.
“I don’t think I’m taking the idea lightly when I propose legislation that would impose the sales tax for Alaskans,” he said. “If we had an open discussion that didn’t encompass several other parts of a fiscal plan I wouldn’t be sitting in front of you.”
More than 100 cities and boroughs throughout the state have local sales taxes of between 1% and 7%, however the state’s biggest city, Anchorage, does not have any local sales tax. The proposed 2% state-wide sales tax that is proposed by Carpenter will be collected on top of local taxes. The proposal does not allow exemptions for medicines, food items, or other categories that were exempted in sales tax bills previously as well as in other states.
In the month of March, Carpenter also proposed a bill that would reduce corporate tax rates in Alaska and said it hinders businesses from conducting business within the state. The legislation would reduce the corporate tax cap from 9 percent to 2% and would make the rates equal for all businesses regardless of their size. Carpenter stated that his bill will lower the state’s revenues by $300 million during in the current fiscal year.
Gov. Mike Dunleavy introduced a series of bills at the beginning of the year in order to set up an industry of carbon sequestration located in Alaska. Governor Mike Dunleavy said that carbon capture could be able to create “billions” worth of money to Alaska, however it’s unclear when the industry will begin to earn revenues.
