Department of Revenue sourcebook, oil production

To the editor:

Alaskans learned some very disturbing news last week when the Department of Revenue released its fall revenue and oil production projections: Following passage of the oil giveaway, Alaska is losing $2 billion in oil revenue, oil production is projected to decline 38 percent, and the Permanent Fund is losing $118 million next year alone.

It wasn’t supposed to be this way. When Gov. Sean Parnell advocated for Senate Bill 21, aka the oil giveaway, he claimed it would boost oil production. In a Frontiersman op-ed, former DNR Commissioner Dan Sullivan promoted his Senate candidacy with the claim he supported more oil production. Well, according to the Parnell administration itself, oil production is declining now and will continue to decline after passage of the administration’s signature legislation.

Falling oil production isn’t the only problem with the oil giveaway. We’re also in massive budget deficits as a result of it. In Fiscal Year 2013, Alaska had a $1 billion deficit that was attributed to Parnell’s oil giveaway. In fact, last year was the first time we’ve had a state budget deficit since 2007. Between 2008 and 2012, under the previous oil tax system known as ACES, Alaska ran multi-billion dollar surpluses and we saved $17 billion in the Constitutional and Statutory Budgetary Reserves, which are like the state’s piggy bank. It didn’t take very long for the oil giveaway to turn multi-billion dollar surpluses into a $1 billion deficit.

Parnell’s deficit just keeps getting bigger. Last week the Department of Revenue said oil revenue will decline $2 billion next year, so Parnell’s Fiscal Year 2014 deficit might be close to $3 billion. These kinds of deficits are not sustainable.

Loss of oil production and revenue also is a threat to our PFDs. The Department of Revenue estimates that our Permanent Fund will get $118 million less income next year following passage of the oil giveaway. We can’t afford to be cutting Permanent Fund income.

Elected officials and politicians like to claim that they’re putting oil in the pipeline. When he was advocating for the oil giveaway, Gov. Parnell said it could bring 1 million barrels per day in the pipeline. In fact, his own administration now admits production will fall 38 percent to 313,000 barrels per day. Former Commissioner Sullivan, who hasn’t been in Alaska very long, hung his hat on passage of SB 21, claiming it would boost production. In fact, the oil production is declining after the bill he supported became law.

We need a state government focused on balancing the budget, boosting oil production and protecting the PFD. We can start by repealing the oil giveaway by voting “yes” on Proposition 1 in August 2014. But we also need leaders in the state Legislature who will vote for real oil production incentives. We can’t afford any more giveaways that cut oil production, reduce oil revenue and threaten our PFDs.

Beverly Serrano

Wasilla