Alaska's legislature this week passed legislation pushed by Gov. Sean Parnell that would cut oil taxes and cost the state billions, according to local reports.

The state Senate and House voted Sunday in favor of the bill to would reform taxes on the oil industry that the governor hopes will improve oil production in Alaska, the Anchorage Daily News said.

The measure would eliminate a monthly "progressivity tax," or surcharge on high oil prices, and restructure the tax credit system with the hope of encouraging more oil production, according to the governor.

Parnell has said the current progressive tax-rate structure creates highly variable tax rates, limiting the upside for investors at high oil prices.

Fitch Ratings upgraded Alaska in January to AAA from AA-plus, matching the gilt-edged ratings by Moody's Investors Service and Standard & Poor's.

Fitch said it raised its rating because of Alaska's "maintenance of very substantial and growing reserve balances and the continuation of conservative financial management practices at a time of strong revenue performance."

The state gets 92% of its unrestricted general fund revenues from oil-related activities, according to Fitch.

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