The New York Times just can’t seem to get much of anything right lately. No wonder they’re facing economic and reputation woes. Their article falsely reporting on my record as governor is full of spin, and I shall call them out on it.
Regardless of the recent political posturing, ACES (Alaska’s Clear and Equitable Share) is a success for all stakeholders who want more domestic energy supplies for our great country. The Alaskan people (who collectively own the natural resources, via our state constitution), the resource producers who bid on the right to develop our oil and gas, and consumers all benefit under ACES. It incentivizes production and development. It works.
Amazingly, to the uninformed (or to those who really don’t want to incentivize oil exploration in America) ACES is spun to sound like an oil windfall profits tax and its progressivity is made to sound excessive. In reality, it was born of a need to have a tax structure that did three things:
1. It could not be created under a cloud of political corruption and self-dealing like the former Alaska administration and legislature’s PPT oil valuation structure. That’s a critical fact that is now frequently overlooked years later. Remember the legislators and oil industry players who went to jail because of bribes leading to votes in favor of the former administration’s PPT, which was unfairly tilted in favor of the resource producers against the resource owners (i.e., the people of Alaska)? Have we conveniently forgotten the fact that a corrupt process brought forth PPT, and I and others set out to change it by cleaning up the corruption?
2. It had to align the interests of Alaskans and the oil producers through exploration and production credits in partnership so that they benefit proportionally from commercialization of Alaska’s sovereign resources. This is very different from a government overtaxing personal or corporate income in which the government has no ownership stake in whatever it is that is being taxed.
3. It had to use a progressivity system that protects the producers from commercial strain when oil prices are low, otherwise the producers would seek development opportunities elsewhere. ACES does incentivize industry, but beware that Big Oil will always do what it does best for its shareholders: it will look out for its bottom line and always claim that it needs even more tax breaks. More power to them for trying, but resource owners deserve A CLEAR and EQUITABLE SHARE (ACES) of the value of their commonly-owned oil and gas.
ACES accomplished all three. The current criticism of this fair valuation makes no real sense. As an article at Big Government notes:
“The number of oil companies filing with the Alaska Department of Revenue has doubled indicating that competition has indeed increased. Alaska has the second most business friendly tax set-up — up two spots since the passage of ACES. Additionally, a report from Governor Parnell’s Department of Revenue indicated that 2009 yielded a record high in oil jobs. Even more recently, the newest employment numbers from Alaska show that oil job numbers were higher in January 2011 than in January 2010, indicating that jobs are growing at the seasonal level. Parnell argues that state revenues are in jeopardy, but it is estimated that his proposal would reduce revenues by $100-200 million.”
Most importantly, Alaska enjoys a $12 billion surplus thanks to ACES and the sound fiscal policies of my administration. It’s kind of amusing to see state legislators claim credit for the surplus when they didn’t vote for ACES and they cried to high heaven when I vetoed their wasteful spending.
Of course, I could have made a lot more friends in Juneau if I had spent the surplus. But I chose to put billions in savings for a rainy day and return a portion to the people of Alaska (it was their money after all). I paid down hundreds of millions of dollars into our under-funded pension plans, then set aside another billion to forward fund education. That’s sound fiscal policy. I’m proud of it, and Alaska is stronger today because of it.
Now, if others would like to claim credit for it, fine. As Ronald Reagan used to remind us: “There is no limit to what a man can do or where he can go if he doesn’t mind who gets the credit.”
But let’s not pretend that ACES wasn’t a key factor in the surplus, and let’s not pretend that it hasn’t been a success.
As for AGIA, it’s moving along according to plan.