HB 331 passed the Alaska house yesterday and is headed to the senate. Opponents of the bill say it is kicking the can down the road and placing a burden on future Alaskans. Supporters say it is a good, not necessarily the best, solution to a problem that is having a significant, negative impact on our economy.
Ed King, of King Economics Group in Juneau, makes a compelling argument that the bill is a good deal for the state from a cash flow basis.
The Alaska State Legislature is currently considering a bill that would allow the Department of Revenue (DOR) to borrow money to make oil tax credit purchases. The bill is called HB 331 in the House and SB 176 in the Senate. Both bills sit in their respective finance committees but are said to be a part of the final compromise to get done with the session. The entire issue is very touchy and ripe for political rhetoric. I’m not going to get into all that. This quick analysis doesn’t speak to the politics of the issue, or the legal merits that have been raised. The only thing this analysis contemplates is the money. I’ll give you the conclusion up front. If you are committed to purchasing these credits, this bill is a good deal for the State (from a pure cash flow basis). I feel like I need to explain that caveat, so I’ll come back to it at the end.