As elections near, some political operatives have seized on the oil and gas issue, aiming to blame Alaska's deficit on the current tax structure, rather than a historic collapse in crude prices, Moriarty said.
"It's not the policy per se. It's price that has driven the deficit," she said.
But that thinking cuts the other way, too, according to Doug Reynolds, an economics professor at the University of Alaska Fairbanks. While tax credits promote exploration and development, rising oil prices between 2008 and 2014 boosted spending on new projects.
The Smith Bay strike is so large, Reynolds said he cannot imagine it would not be developed under a less accommodating tax structure. He also rejects the notion that Alaska production, absent subsidies, isn't competitive with areas like North Dakota's Bakken formation and Texas's Eagle Ford basin.
"What often happens is you get saturation in Eagle Ford and Bakken fields, and only so many people can work there at a time. If there's money to be made, more than in any other industry, the market, the Wall Street money will go into new companies that are willing to go into Alaska even if it is a little bit more expensive," he said.
Hendrix, the energy advisor to Walker, said he believes Alaska can offer incentives beyond tax benefits, such as building roads to oilfields, expediting permitting for drilling and making land accessible. Musselman, as well, said he believes state and industry can find common ground in public-private infrastructure projects.
Ultimately though, the current budget crisis will likely require some tough decisions on tax reform, Hendrix said.
"Like it or not, we're an oil state," he said. "It's the only lever we can really pull."