Committee Fails to Adequately Fix Flawed Oil and Gas Tax Credit System
FOR IMMEDIATE RELEASE
April 8, 2016
Juneau – Tonight, the House Finance Committee passed out House Bill 247 sponsored by Alaska Governor Bill Walker. The version of the bill approved by the committee is substantially different than the version of the bill put forward by Governor Walker. The new version of the bill includes less than half of the savings anticipated in the original bill.
“This bill gets Alaskans less in oil production taxes than we will receive in fishing and hunting license fees in three of the next four years,” said House Finance Committee member Rep. Les Gara (D-Anchorage). “The version passed tonight leaves Alaska with no strong path towards a way to fund schools, protect seniors, or ever build up our savings again.”
Governor Walker’s version of HB 247 sought to increase the minimum tax floor on North Slope oil from the current four percent up to five percent. The version of HB 247 passed tonight further lowers the minimum tax floor down to two percent. The bill also fails to fix the scenario that allows oil and gas companies to be reimbursed for their losses by the state and then carry those tax credits over from year to year. Such a scenario could eliminate any production taxes to the state for years to come.
“During the amendment process we offered up fair and responsible ways to encourage production and help fill our ever growing budget gap,” said House Finance Committee member Rep. David Guttenberg (D-Fairbanks). “The version of HB 247 approved tonight by the committee leaves in place an unsustainable tax credit system. At these low oil prices, this system will remain an albatross around the neck of the state of Alaska for years to come.”
Alaska’s oil and gas tax credit liability in the next fiscal year is projected at $825 million while production tax revenue is projected at only $190 million. Since 2007 Alaska has paid out $8 billion in credits to oil and gas producers and developers.
“Alaska is facing a $4 billion budget gap and HB 247 was intended to help take a major step forward to closing that deficit. I consider the version of the bill passed out of committee tonight as a step backwards,” said House Finance Committee member Rep. Scott Kawasaki (D-Fairbanks). “Given our fiscal situation, the state can no longer afford to pay over 55 percent of a project’s cost in development, and sometimes up to 85 percent for exploration costs, while simultaneously receiving no taxes in return. That’s not sustainable.”
HB 247 was moved out the House Finance Committee tonight and has been calendared for consideration by the full Alaska House of Representatives on Saturday.
For more information, please contact Alaska Independent Democratic Coalition Press Secretary Mike Mason at (907) 444-0889.