Alaska Senate committee to take up oil tax bill

Alaska Senate committee set to meet on governor's oil tax proposal, send on for more review

Associated Press

JUNEAU, Alaska (AP) -- Alaska Gov. Sean Parnell's oil tax plan is expected to advance from a Senate panel Thursday, with recommendations for the next committee taking up the bill.

Leaders of the special committee on oil flow through the trans-Alaska pipeline have said they plan to continue looking at other issues that might be affecting oil production even after sending the bill to Senate Resources for further review.

Parnell has proposed sweeping changes to Alaska's oil tax structure, aimed at making the state more competitive and encouraging new production. His plan would eliminate the progressive surcharge that companies say is a disincentive to new investment and revamp a suite of tax credits, focusing incentives on companies that produce new oil on the North Slope. It would retain the current 25 percent base tax rate.

The idea behind the current tax structure, passed in 2007, was that the state would help oil companies on the front end with things such as tax credits, and share profits on the back end when oil flowed and prices were high.

Tax credits under the current system could top $1 billion next fiscal year alone, and Parnell's Revenue commissioner has said he has seen no evidence the credits have led to increased production.

Parnell has said he wants to restore balance to the system, and make it simpler and durable. He said he also wants any tax plan to be fair to Alaskans. Parnell said Wednesday that if legislators want to propose something different, he's open to that, but his decision-making will be guided by those four principles.

All sides share the goal of getting more oil into the trans-Alaska pipeline. The disagreement lies in how best to do that.

At least two of Parnell's fellow Republicans on the special committee, Sens. Peter Micciche, R-Soldotna, and Anna Fairclough, R-Eagle River, have raised concerns with the bill. Micciche has said he thinks it will need some fairly significant changes to gain his support, while Fairclough has said she isn't convinced the progressive surcharge — credited with helping fatten the state's coffers amid higher oil prices the last few years — should be scrapped.

Minority Democrats in both the House and Senate plan to introduce bills aimed at new production. Democratic leaders argue the current system is working, benefiting both the state and companies, but said they are open to tweaks to improve it.

Senate Democrats said Wednesday that they were encouraged by some of the skepticism and questions being asked by Republicans.

When Republicans took control of the Senate following last year's elections, there were concerns, notably from Democrats, that there would be a rubber-stamping of any oil tax plan put forth by Parnell. The Senate's bipartisan ruling coalition in 2011 effectively killed Parnell's first attempt at cutting taxes. A plan he proposed during last year's special session was criticized by members in both parties and chambers before being pulled.

"It will be very, very interesting to watch, if people put party first, the oil industry first, their caucus first or if they put their conscience and the future fiscal and economic wellbeing of the state of Alaska first," Senate Minority Leader Johnny Ellis, D-Anchorage, told reporters Wednesday.

Industry representatives this week told the special committee the governor's bill is a good start. But concerns were raised with how the measure deals with tax credits and incentives for legacy fields, and the bill was seen as a tax increase at lower oil prices.

Parnell said he understands oil companies "want it all. And they can't have it all, you know? That's Alaskans' oil. And, so I am better protecting Alaskans at lower oil prices with this proposal, and I think that's something we need to do."

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