Senate Resources Committee • SB 130 Oil Tax Bill
April 9, 2016 • Anchorage LIO 

Good afternoon. My name is Marleanna Hall, and I am the executive director of the Resource Development Council. 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 mine more minerals.

With regard to Senate Bill 130, raising taxes on companies that are reporting record losses and are in negative cash flow is not sound fiscal policy.

Increasing taxes on our natural resource industries will not increase production for the Trans Alaska Pipeline System, it will not encourage the development of new mines in Alaska, it will not attract more tourists, and it will not increase investment in the fishing industry. 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.  

The oil industry is struggling with low oil prices and tight capital markets. Companies are cutting budgets and making tough investment decisions. Increasing taxes on the industry at this time will jeopardize new investment, further damaging our private sector economy.

Changing the tax regime now will make a bad situation worse. But a some good news: A release issued by the Alaska Oil and Gas Association last week announced more proof of the current tax regime working. It said, “public data provided by the State of Alaska shows an almost one percent increase of year-over-year oil production during the past 12 months.”

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.

The current tax policy has brought new exploration, jobs, and continued investment to the state. It has stabilized North Slope production and has somewhat shielded Alaska from the massive cut backs that have occurred elsewhere.

The oil industry is truly the foundation of Alaska’s economy and keeping it strong is the key to sustaining the private sector, Alaskan jobs, state government, and the overall economy.

Conversely, this bill moves us in the wrong direction. It represents the sixth major tax change in Alaska in the last 11 years.

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

Madam chair and members of the Senate Resource Committee, I thank you for the opportunity to offer RDC’s perspective on SB 130 today and urge you to reject this legislation.