HB 331 Takes Innovative Approach to Paying Off Outstanding Oil Tax Credits
Juneau – Today, the Alaska House of Representatives passed legislation proposed by Governor Bill Walker to issue bond debt to pay off the more than $800 million balance the state owes for oil and gas tax credits. House Bill 331 would discount the tax credit payments to more than cover the additional cost to the state of interest on the bond debt, which the state will then pay down over the next decade. In this manner, companies owed credits receive cash they can reinvest in additional development today while keeping the measure revenue neutral or revenue positive for the State of Alaska.
“The uncertainty around these tax credit payments has led to projects being stalled and credit being frozen. HB 331 says, ‘let’s find a way to solve this problem.’ Let’s do it in a way that directly addresses the uncertainty, particularly for small, independent oil and gas exploration companies,” said(I-Anchorage) who carried the bill on the House floor. “Getting these tax credits off our books on a defined timeline will allow the 37 small exploration companies impacted to receive payment almost immediately, giving them much-needed capital for additional investment and exploration when our economy needs it most.”
HB 331 creates a State corporation authorized to issue up to $1 billion in bonds for the sole purpose of purchasing outstanding oil and gas tax credits. The bill would also provide incentives for companies to receive a smaller discount on their credits if companies share seismic data with the state, agree to a larger royalty share for the state from some fields, or commit to reinvest the funds back into Alaska within two years.
“The State of Alaska actively courted oil and gas exploration investment by promising cash reimbursable tax credits. I was raised to follow through on commitments, and I believe HB 331 is the best solution for the state to make good on its responsibility to those who’ve invested in Alaska’s oil and gas future,” said Rep. John Lincoln (D-Kotzebue) “I commend the administration for developing a responsible solution to our debts and the House leadership for moving this bill to the floor.”
House Bill 331 passed the Alaska House by a vote of 23-15. HB 331 now heads to the Alaska Senate for consideration.
For more information, please contact Alaska House Majority Coalition Deputy Press Secretary Drew Cason at (907) 575-2068.