Blaming oil tax reform for Alaska's current budget deficit is just plain wrong.

• Author: Jansen, Jim
• Position: SPECIAL SECTION: Arctic Oil & Gas

Our budget deficit today is a result of low oil prices, low oil production, and overspending, not oil tax reform.

A group of Native leaders, unions, businessmen, and thousands of Alaskans who care deeply about Alaska's long-term economic future led a three-year campaign to reform oil taxes to stop the decline of oil production.

We spent an additional year defending against a referendum to repeal the new law, called SB21.

If we had not been successful, Alaska's current deficit could be substantially worse. Here's why:

SB21 raised the base tax rate but eliminated progressivity so taxes are lower under high oil prices but the state collects more revenue when prices are low. With oil less than $50/barrel that means Alaska is in much better shape with the new tax law because today's more predictable and stable tax policy encourages the oil industry to increase investment. More investment equals more oil.

Secondly, the new tax law changed the way tax credits are issued. Now they are tied to production to provide incentives to put more oil in the pipeline, as opposed to the prior credits which were based on dollars spent.

Many of the exploration credits are going to smaller or new companies that are actively seeking new oil, but have not yet reached the development stage. They are also going to Cook Inlet as well as the North Slope. If Alaska cuts back on these credits we may receive a little more present revenue, but would sacrifice future revenue from the new oil that will result. As prices improve, Alaska will benefit from more oil.

Even though we have a serious budget deficit problem this year, let's consider the positives spurred by tax reform.

Employment and spending by the oil industry is at record highs, caused by major investment on the North Slope. This activity is slowing the production decline with renewed ability to reverse the decline and increase production. This gives Alaska opportunity for a sustainable, long-term economic future. It also keeps Alaskans employed.

Oil tax reform was a very long and difficult process, with thousands of hours...