House Resource Committee • HB 111 Oil Tax Bill
March 1, 2017 • State Capitol

Good evening. My name is Marleanna Hall, and I am the executive director of the Resource Development Council. Thank you for the opportunity to testify today.

RDC is a statewide trade association comprised of individuals and companies from Alaska’s oil and gas, mining, forest products, fisheries and tourism industries. RDC members are truly the life-blood of Alaska’s economy. We believe the best approach to expand the economy and generate new revenues for the state is to produce more oil, attract more tourists, harvest more fish and timber, and mine more minerals.

With regard to House Bill 111, raising taxes on companies that are in negative cash flow is not sound fiscal policy.

Increasing taxes on Alaska’s oil industry will not increase throughput for the Trans Alaska Pipeline System, it will not encourage the development of new prospects, and it will not solve Alaska’s fiscal crisis. Higher taxes in this low-priced commodity environment will likely deter investment and lead to lower state revenues and a weaker private sector over the long run. 

HB 111 will jeopardize recent gains like the first oil production increase in 14 years, billions of dollars in new investment since 2013, and optimism about recent multi-billion barrel oil discoveries on the North Slope. If HB 111 becomes law, the production decline rates of 6 percent or more annually may reappear and Alaska will end up with a much smaller economy.

When you incentivize something, you get more of it. We need to incentivize the industry to drill more, create more wealth, create more activity, and aim for next year's production to be even higher than this year's. SB 21 that passed in 2013 and was affirmed by Alaskans in 2014 has brought new exploration, jobs, and continued investment to the state.

My members are not asking for a tax decrease during this time of low commodity prices like other states and countries are considering or have already implemented, but we do request that as the state considers changes, it do no harm to the state’s largest industry.

Co-chairs Tarr and Josephson, and members of the House Resources Committee, thank you for the opportunity to offer RDC’s perspective on HB 111 today and urge you to reject this legislation and look to the future for all Alaskans, the future of our children, and the future Alaskans.