Key Provisions to Protect Alaska During Low Oil Prices Stripped from the Bill by the Senate Majority
FOR IMMEDIATE RELEASE
May 16, 2017
Juneau – Tonight, the Alaska House of Representatives rejected changes made by the State Senate to a key piece of pending legislation to reform Alaska’s flawed system of subsidizing the oil and gas industry with tax credits. The State Senate significantly weakened House Bill 111, which passed the House last month.
“The Senate version of the bill follows the lead of the House in stopping the unsustainable practice of the State of Alaska paying cash for tax credits. That is a good thing that is long overdue,” said House Resources Committee Co-chair Representative Geran Tarr (D-Anchorage), who helped develop the House version of HB 111. “However, the Senate version of the bill has major problems that we just could not accept. As an example, the Senate refused to accept the provisions we included to make Alaska’s tax system work better in the current low oil price environment, which is expected to continue for the foreseeable future. The hard-working Alaskans that I represent have been clear in demanding that this flawed system be fixed. The House version of the bill works for the people of Alaska. I’m discouraged that the Senate version of the bill is worse than the status quo and appears to only work for oil companies.”
The House version of HB 111 reduces the base tax rate on oil from 35 percent to 25 percent in an effort to spur increased exploration and development on the North Slope. The House version of the bill also protects the State of Alaska by hardening the minimum four percent tax floor, which will ensure some production tax revenue during period of low oil prices. In contrast, the Senate version of the bill creates additional opportunities for oil tax credits to be used to reduce tax payments below the four percent minimum floor, which will cost the state between $10 million to $45 million a year.
The House version of HB 111 is projected to bring in an additional $20 million in new revenue in Fiscal Year 2018 and an estimated $475 million a year by FY 2027. The Senate version of the bill is forecasted to bring in no additional revenue in FY 2018 and only $145 million a year by FY 2027.
“The Senate Majority took our good bill that was developed in the open, with advice from the experts and the input of Alaskans, and replaced it with a bad bill that continues many of the flaws that have placed Alaska in our current precarious financial position,” said House Resources Committee Co-chair Rep. Andy Josephson (D-Anchorage), who helped develop the House version of HB 111. “The best course of action is to take this bill to a conference committee where an acceptable compromise can be reached that protects the state during these low oil prices, while still keeping Alaska competitive as a place for future oil industry investments.”
The Alaska House of Representatives voted 17-22 in failing to concur with the changes to House Bill 111 made by the Alaska State Senate. The bill will now be assigned to a conference committee.
For more information, please contact Alaska House Majority Coalition Press Secretary Mike Mason at (907) 444-0889.