Committee Rundown
The Resources Committee this week moved the Governor’s carbon storage bill, House Bill 50. As the bill stands now, the Governor’s carbon bill serves as yet another giveaway of Alaska’s resources.
The bill that the governor introduced would have had the state collect $2.50/ton of carbon injected on state lands and $20/acre/year for state lands leased for carbon storage. That pencils out to roughly a 4% revenue share for the state when you factor in the federal tax credits that subsidize this activity. By contrast Alaska gets 12.5% of all oil extracted on state lands as a royalty, to say nothing of production taxes.
It got worse though—the Resource Committee’s new version strips out those minimum revenue terms and leaves it entirely up to DNR to figure out later in regulation. To be clear, this bill amounts to a giveaway to the oil companies, at least in the short term, because their operations on the north slope are just about the only significant sources of emissions that are located near the required drilling and injection infrastructure. This bill just provides them a framework to pull down newly enhanced federal tax credits.
I offered an amendment that would have ensured that Alaskans got something for these carbon storage leases—4% of gross revenue from carbon credit sales—but the majority voted in lock step to reject it. I offered another amendment to clarify that companies shouldn’t be able to write off their development expenses for carbon dioxide injection against their oil production taxes. That amendment was rejected as well.
There will be plenty more chances to fix it, and I’d be supportive of the bill if Alaskans got their fair share, but as is, this is a bad deal for Alaskans.
We also moved quickly through HB 49, the governor’s proposal to use state lands for forestry projects to generate carbon credits. Although this bill, the “trees bill” as it’s called, is less complicated than its counterpart, its revenue prospects are no clearer. Like HB 50, this bill punts all the revenue questions to later, this time to the terms of individual leases, as opposed to regulation, where the public has even less input.
This bill is being pitched—along with HB 50—as a financial savior of Alaska. The governor’s budget claimed $300 million in revenue this fiscal year from these proposals. However, the governor’s representatives and members of the majority seem more focused on “maintaining flexibility” for DNR and “ensuring project viability” rather than making sure that Alaskans are made better off. This bill moved from Resources with unanimous support from the majority, but less than unanimous understanding.
Finance Subcommittees wrapped up this past week. These subcommittees review the budget requests of each executive department and vote on each of the governor’s changes to the prior year’s budget. I sat on the budget subcommittees for the Departments of Corrections, Public Safety, and Natural Resources.
In the Natural Resources Finance Subcommittee last week, I offered an amendment to add nearly $350,000 to the budget for Chugach State Park, taking those funds from proceeds of the vehicle rental tax. The park, which has long brought in more revenue than it spends, has seen use increase dramatically in recent years. Increased use means increased needs for things like facilities maintenance (bathrooms and trash cans) and trail upkeep, and inflation has meant higher fuel costs. My amendment would have addressed all of these issues. Unfortunately my amendment was rejected and the bill was reported out to the full Finance Committee without that funding.
That wasn’t surprising given that I’m in the minority on the subcommittee, so I’m working with members of the majority to get this funding inserted into the budget in the full finance committee, or, failing that, on the Floor in the coming weeks.
