Friday, June 30, 2006

The state's share

In today's ADN, there is an article on a House bill that made its way through the U.S. House. One key point in the bill is very interesting.

Under the bill, states' share of royalties would increase to 50 percent over 10 years and eventually could rise as high as 75 percent. States currently get less than 5 percent of royalties from offshore oil and gas leases in the central and western Gulf.

The Interior Department estimated that revenue-sharing changes could cost the federal government as much as $69 billion in lost royalties over 15 years and "several hundred billion dollars" over 60 years.

The White House issued a statement saying it favors much of the bill but strongly opposes the changes in royalty revenue sharing, which it said "would have a long-term impact on the federal deficit."

First, it is disappointing to see the White House reaction on this one. The reaction is shortsighted and off the mark.

If done correctly, the states can decrease taxes on production with the increase in revenues generated by the increase in royalties to the states. Thus increasing production.

For Alaska, it should be at least 75 percent.

Good to see this bill pass in the House. It will be interesting to see what the Senate does with it.

This should send a sign to our own congressional legislators that now is the time to act on re-negotiating the royalties here in Alaska.

No comments: