Posted on 03/18/2011 1:12:52 PM PDT by 2ndDivisionVet
An article in the New York Times today discusses both the call by some in Alaska to dismantle two of Governor Palin’s energy related legislative victories and the claim by others that they are responsible for Governor Palin’s great fiscal record and Alaska’s strong fiscal health.
Current Alaska Governor Sean Parnell is seeking to make changes to Governor Palin’s oil tax structure–”Alaska’s Clear and Equitable Share” (ACES) legislation. This legislation replaced Governor Murkowski’s corruption-tainted oil tax plan. Governor Palin’s plan primarily taxed oil company’s net profits on production, which encouraged greater capital development and investment than Murkowski’s gross tax structure. ACES also provides oil companies with tax credits for investment in future production. Moreover, Governor Palin signed ACES into law in order to make the oil tax structure more in line with the state constitution which stated that natural resources (i.e. oil) belong to the people and need to be developed for the maximum benefit of Alaskans.
While Governor Parnell has stood with Governor Palin on AGIA (the natural gas pipeline), in rejecting federal earmarks, and in opposing Obamacare, he is among those who have called for reforming Governor Palin’s ACES legislation:
Gov. Sean Parnell, Ms. Palin’s fellow Republican and former lieutenant, has announced that it is his top priority to undo parts of major oil tax increases that Ms. Palin made law. He argues that high state taxes, not just federal regulations, are preventing oil companies from exploring new drilling in Alaska and therefore jeopardizing future state revenues.
“Lower taxes means more competitive,” Mr. Parnell said last week. “It means more jobs.”
The reality doesn’t match up to the Governor Parnell’s claims. 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. Governor Parnell is right on other issues, but the numbers tell a different story than he asserts when it comes to ACES.
The New York Times actually conceded that Governor Palin’s ACES contributed to Alaska’s surplus and strong fiscal health. However, some Alaskan legislators are trying to to laughably claim otherwise:
Compared with many states, Alaska is in fine shape in the short run. It is sitting on a $12 billion revenue surplus, a sum driven directly by the high price of oil. Taxes on oil production provide nearly 90 percent of state revenue. Some of the surplus comes from the increased tax on oil production, tied to the price of oil, that Ms. Palin supported in 2007. But not everyone is willing to give her credit for helping to create a nest egg for Alaska.
“We’re probably the most fiscally sound state in the union,” said Bert Stedman, a Republican who is co-chairman of the Senate Finance Committee and one of the Legislature’s most influential members. “I’d say she had little to nothing to do with it.”
[...]
Mr. Stedman, meanwhile, said the state was in good shape in part because lawmakers in both parties – armed with the surplus – pushed through major spending projects that have limited the recession’s impact.
Let’s take a look at Senator Stedman’s voting record, shall we? Stedman voted “No” on ACES, which did contribute to Alaska’s $12 billion surplus. However, Stedman did vote “Yes” on Governor Murkowski’s corruption-tainted oil tax plan. Stedman also voted to override Governor Palin’s veto of stimulus funding in 2009.
Also, as a part of the both the Senate Finance and Legislative Budget and Audit committees since 2005, Stedman helped craft and voted for every operating and capital budget proposal brought before the state Senate. Governor Palin vetoed hundreds of millions of dollars from the FY2008 capital budget alone, and in full made the largest veto cuts in the state’s history.
Additionally, Governor Palin cut the state budget by 9.5% during her time as Governor compared to Governor Murkowski, indicating that Governor Palin’s fiscal restraint, not legislative spending, was the cause of Alaska’s fiscal strength. It’s quite obvious that Governor Palin’s record shows far greater fiscal responsibility than Senator Stedman’s, and Governor Palin can rightly take far more credit for Alaska’s fiscal health than Senator Stedman.
The New York Times also questions the progress of Governor Palin’s natural gas pipeline project–the Alaska’s Gasline Inducement Act (AGIA)–which will bring natural gas from the North Slope of Alaska through Canada to the Lower 48 as an additional means of achieving energy independence. Governor Palin’s pipeline project was done in a transparent free-market friendly manner with proposals available for public consumption-- a far cry from the behind-closed-doors pipeline discussion with oil companies that were commonplace and unsuccessful in previous administrations. The New York Times argues that neither gas suppliers nor federal permits had been obtained for the project.
However, at the end of the first open season for bidding by gas suppliers this past summer, there were “several major players” who had submitted bids. Additionally, the pipeline company TransCanada and oil company ExxonMobil, both partners on AGIA-backed pipeline project, have had discussions with BP-ConocoPhilips to work together on the project. Additionally, the permitting process with both American and Canadian regulatory agencies has made “significant progress,” and the progress is right on track with time projections.
Despite what the media and Governor Palin’s detractors say, her record has been effective and fiscally sound. It’s ironic that the New York Times’s attempt at journalism in highlighting misrepresentations of Governor Palin’s record comes shortly after they announced that they will be charging for access to their site due to shrinking readership. So, while they generate faux concern for Governor Palin’s fiscal legacy, they should probably be more concerned with their own.
Redistributionist BS.
At the same time, I must admit that I am not at all familiar with the details of the issue and must therefore rely on this story to explain it.
It has failed to do so.
It tells us that someone proposes lowering the taxes --- something celebrated by conservatives and libertarians. And yet, in this particular case, it is not only wrong, but is supposed to be obviously wrong. The author admits that the present surplus is due to sky-high oil prices that has never been observed before. (S)he offers not a singles argument why lowering taxes would be bad.
What’s with all the Palin news lately (this week)? They’re scared of something...
On the pipeline, I thought the Times simply pointed out that it was no longer commercially viable, which is probably true. There’s a glut of natural gas in the lower 48. Maybe an LNG terminal for global export would have been a better idea.
Any questions about Gov. Palin’s policies and her activities, just read her first book. She admits making a few mistakes, but quickly corrects them.
Virtually everything she did as Gov., was for the best interests of her constituancy, and not pandering to special interests, no matter which party or group.
Beats the s**t out of what BHO has shown...
It’s nothing new:
Palin Eclipses Obama in Google Hits
http://www.freerepublic.com/focus/f-chat/2671276/posts
I was referring to the statement that government spending shortcuts a recession.
With oil prices so high, the tax in Alaska is too high. Who cares who set it so high, conservatives are generally supportive of lowering high taxes when they are fueling a huge tax surplus.
Just because Palin is the one who put this together years ago shouldn’t mean we have to fight against changes now.
Charging corporations a percentage for taking natural resources out of the ground to sell and using that money for the benefit of the citizens and to balance the state budget is anti-conservative?
I have not said that, have I? The issue is not whether to tax but by how much to tax. The Governor suggests that the tax is too high and proposes to reduce it. Reduction (not elimination) of taxes is generally championed by conservatives, so on its face value it is not wrong. The Governor may or may not be right --- the devil is in the details. But the article claims he is wrong without saying a word on why that is so.
Waatch your step there you heretic. ;)
At the same time, I must admit that I am not at all familiar with the details of the issue and must therefore rely on this story to explain it.
It has failed to do so.
_______________________________________________________
I’ll try since I lived through the issue (and basically supported it then), and my business is feeling its effects now.
ACES is a progressive tax based on the price of oil. The higher the price of oil, the higher the tax. It starts in the 20% range and goes all the way to the 90% range including a 12.5% state royalty. Meanwhile the Trans Alaska Pipeline (TAPS) is running at about 1/3 capacity and losing 6% a year; so future exploration is necessary or the TAPS may reach a point where it’s no longer economically feasible to run (estimated to occur in 5-7 years without additional production). Once it’s shut down the original act from the 70’s requires the pipeline and its infrastructure to be removed and the environment restored to its original state. Therefore, it is in Alaska’s best interest to somehow spur new exploration on state land especially in light of North Dakotas flat 12% tax on oil production. It’s a matter of staying competitive since the Feds won’t allow exploration on the 67% of Alaska they control. When ACES was passed a highly charged “Anti-Oil Corruption” political atmosphere existed.........and remaining competitive with other states was not necessarily fully considered. Now major exploration investment has since ostenibly left for more profitable grounds, while the major oil companies simply maintain what they have knowing full well the final circumstances of no new production to the State’s economy. It’s called being over a barrel.
At the same time, I must admit that I am not at all familiar with the details of the issue and must therefore rely on this story to explain it.
It has failed to do so.
_______________________________________________________
I’ll try since I lived through the issue (and basically supported it then), and my business is feeling its effects now.
ACES is a progressive tax based on the price of oil. The higher the price of oil, the higher the tax. It starts in the 20% range and goes all the way to the 90% range including a 12.5% state royalty. Meanwhile the Trans Alaska Pipeline (TAPS) is running at about 1/3 capacity and losing 6% a year; so future exploration is necessary or the TAPS may reach a point where it’s no longer economically feasible to run (estimated to occur in 5-7 years without additional production). Once it’s shut down the original act from the 70’s requires the pipeline and its infrastructure to be removed and the environment restored to its original state. Therefore, it is in Alaska’s best interest to somehow spur new exploration on state land especially in light of North Dakotas flat 12% tax on oil production. It’s a matter of staying competitive since the Feds won’t allow exploration on the 67% of Alaska they control. When ACES was passed a highly charged “Anti-Oil Corruption” political atmosphere existed.........and remaining competitive with other states was not necessarily fully considered. Now major exploration investment has since ostenibly left for more profitable grounds, while the major oil companies simply maintain what they have knowing full well the final circumstances of no new production to the State’s economy. It’s called being over a barrel.
That is true , however they make it sound as if she was wrong to do such a thing in the first place. Which is simply not true.
I did not speak up because I had not facts, but I did suspect that the tax was populist --- simply because I remember that, during Palin's governorship, the sentiment was strongly against the oil companies that were supposedly "gouging" us, poor folks.
And, regardless of motives, any (i) progressive tax or (ii) linear tax that rises to 90% is plain stupid: it screams, "Don't do more work, don't explore, don't invest..." The only similar stupidity that I recall was during the New Deal of FDR when Congress passed a tax law with a maximum income tax of... 100% (together with state tax, it made it greater than 100%). In his infinite wisdom FDR, probably under influence of Morgenthau, reduced it to 90%. Socialist insanity at its worst. It really pains me to hear that the same is happening as we speak.
I am truly sorry to hear that you are on the receiving end of this, and your business is adversely affected. I very much hope that sanity will prevail -- for your sake, for the sake of people you employ, and for the sake of the rest of the country.
Thank you again for educating me on this issue. It's not the information that is easy to acquire.
If you would have clicked on the highlighted portions of the article, you would have gotten the explanation you requested. BTW - first post on FR
Welcome, Bam. Stick around.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.