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Write a Letter to the Editor
submit your 225 word letter to the Anchorage Daily News via e-mail letter@adn.com, or fax them to 258-2157, attn: letters to the editor.

Contact the Governor
Governor Palin's Anchorage office may be reached at 269-7450, or e-mail her at sarah.palin@gov.state.ak.us
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Contact your
Congressional Delegation
Congressman Don Young,
Anchorage Office:
907-271-5978
don.young@mail.house.gov

Senator Lisa Murkowski,
Anchorage Office:
907-271-3735,
Sen. Lisa Murkowski

Senator Ted Stevens,
Anchorage Office:
907-271-5915
Sen. Ted Stevens

Dear Neighbors,

I am glad to be back in Anchorage.  I’m also glad the Legislature finished its job on oil taxes.  It wasn’t easy, but the various factions in the Legislature came together in a way I think Alaskans can be proud of.  We passed an oil tax bill that bridges the divide between the higher net tax proposed by Governor Palin and the gross tax favored by most Democrats, including myself. 

You can read the bill for yourself, but here are some of the key points:

• The main breakthrough was basing the deduction for operating costs in the big legacy fields (Prudhoe Bay and Kuparak) on a standard deduction.  By holding one element of the net tax calculation constant, the state reduces risk, improves its ability to forecast revenue and simplifies the audit process while maintaining the net tax’s ability to adjust for new investment. 
• The base net tax rate is 25%.  This is an increase from 22.5% and was part of Governor Palin’s original bill. 
• A progressivity feature increases tax rates at high oil prices.  This gives the state a share of windfall profits from oil price spikes like we are experiencing right now.  Because this extra money may come and go, it will be important to save it for future years. 
• Deductions will not be allowed for expenses related to negligence – such as pipeline spills due to lack of regular maintenance. 
• Companies exploring for and producing oil in the state will be required to provide additional information to the state about their future plans so the state can better forecast oil production. 
• Finally, the bill helps the state audit tax returns filed by oil companies by hiring additional auditors, adding whistleblower provisions and extending the time allowed to audit a return. 

Opponents of the new oil tax complain the state doesn’t encourage investment.  From everything I have seen, this oil tax bends over backwards to encourage exploration and capitol investment – investment that will be needed to fill TAPS and a future gas line.  Consider these facts: 

• For each dollar spent on exploration and capitol investment, the exploring company pays less than 30 cents.  According to the tax experts who testified in committee, the state pays about 60 cents of every investment dollar through a combination of credits and deductions and the federal government kicks in a little more than ten percent. 
• The progressivity feature is based on net revenue.  This means that in addition to credits and deductions, money spent on capitol investment can actually lower a company’s tax rate. 

This bill is a compromise.  Like most of the 27 people who voted for it, I do not agree with everything in this bill.  But, after much research, expert testimony, debate and reading the responses more than 220 of you made to my constituent survey, I believe it is both a meaningful improvement over our current oil tax and the best bill we could pass in this Legislature.  

Hope you have a wonderful Thanksgiving weekend.

Best,

Bob