On Thursday, Walker took to the pages of the Alaska Dispatch News to raise concerns over how the existing oil production tax works at low prices. With the value of oil now in free fall, Walker explained the state is now collecting less money than it is paying out. The Department of Revenue expects to collect $524 million in revenue this fiscal year, after North Slope producers deduct $750 million available to them in liability credits. Those liability credits can be used to buy their tax burden down, but do not require the state to pay out money. The major producers — Exxon, BP, and ConocoPhillips — are the top beneficiaries of these credits.
But on top of those deductions, the current tax law also grants smaller producers refundable credits meant to encourage more competition on the North Slope and stimulate production in Cook Inlet. These independent companies are eligible to receive $625 million in subsidies that can be cashed out if they end up exceeding their tax bill.
Once both kinds of credits are applied, the state expects to lose $100 million on its oil production tax.
Walker called this situation “irresponsible and unsustainable,” and said the revenue problem must be addressed “from all angles.” But that doesn’t mean legislators should prepare for an oil tax fight this session. In an interview with APRN, Walker said he does not plan to introduce a tax bill.
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