April 28, 2016

Dear Neighbors,

It’s time for the total package!

Alaska has a $4.1 billion deficit due a budget that has been over reliant on one source of revenue—oil—which is at historically low prices right now. Oil is not projected to get above $50 per barrel anytime in the next 10 years, so we can’t just hope for prices to rebound. We only have enough funds on hand to cover about 25% of Alaska’s budget. 

Virtually everything we as Alaskans gain from our government, from caring for kids and their education, to ensuring the security of elder Alaskans, to road maintenance and public safety, is tied to our state’s budget.  We have made cuts to the budget in each of the last three fiscal years, but now no amount of cuts can solve the problem. (If you are not sure about that, check out the Plan4Alaska website where you can test different solutions yourself.)

The legislature must move toward a comprehensive fiscal solution that distributes the burden across all Alaskans AND those who benefit from our resources. The PFD restructuring ideas currently being considered by the legislature will make a huge impact on our revenue situation but will also have a disproportionate impact on middle and lower income Alaskans. This option can only be considered if we have other revenue sources that further spread the burden amongst wealthier Alaskans and our major industries.

Gov. Walker took the courageous step of proposing his “New Sustainable Alaska Plan” in January.  This plan would distribute the obligations for balancing the state’s budget across most income levels and across nearly every sector of the Alaskan economy.  

This is a time when all Alaskan’s need to come together and share in the responsibility of creating a prosperous future for the next generation. One sector, among many, that is being asked to sacrifice in order to create that better future is the oil and gas industry. Unfortunately, we have not yet seen an oil tax credit reform bill in the House that is fair and cuts back on state subsidies of the oil industry to a sustainable level. (See more on HB 247 Oil and Gas Subsidies reform below.)

Earlier this year, our fiscal situation overshadowed nearly all other issues before the legislature during the regular part of the session.  Now, it is the only issue facing legislators during this extended session.  I hope that everyone will roll up their sleeves and make the tough choices we were sent here to make.

HB 247 Oil and Gas Subsidies reform

The State of Alaska currently pays out roughly $775 million in subsidies to the oil and gas industry per year. That is more than the budgets of the Alaska Court System, Department of Corrections, Department of Military & Veterans Affairs, and Department of Fish & Game combined.

Ivy speaks out in support of Sexual Assault Awareness month legislation.

The current version of oil-sector subsidy reform, House Bill 247, doesn’t go far enough towards reducing state expenditures. Frankly, it just does not produce the level of cuts that we need to make a notable impact on our deficit. Even worse, it primarily benefits the established major oil industry players at the expense of independent oil and gas companies which focus on new development. The original purpose of the oil tax credit project was to motivate new development—not to prop up older projects.  Frankly, the legislature shouldn’t ask Alaskans to take a major reduction to their PFD’s only to hand over that money to industry.

While Governor Walker’s original subsidy reform bill would have saved the state over $500 million per year in reduced subsidies, the current proposed bill would only save us $275 million in fiscal years 2018 and 2019.

I am committed to ensuring that Alaska remains open to business for the oil industry—it’s been good to us. However, I am just as committed to making sure that we don’t take from Alaska’s working families in order to subsidize the oil and gas industry.

As always, I am here for you. If you have any concerns or suggestions for me, please let me know. Send me an email at rep.ivy.spohnholz@akleg.gov or by calling (907) 269-0123.

Best Regards,

Ivy Spohnholz