House Resources unveils a version of oil tax bill
JUNEAU (AP) — The House Resources Committee released an oil tax proposal Friday that co-chair Eric Feige said is fair to Alaskans and oil companies.
The proposal, like the version of SB21 that passed the Senate earlier this month, would fix the base tax rate at 35 percent and provide a $5-per-barrel credit for oil produced. But that credit would only apply to what would be considered new oil and production that also would qualify for a 20 percent tax break, known in this version as a gross value reduction rather than a gross revenue exclusion.
Areas that don't qualify for the gross value reduction would have a 35 percent base tax rate and a per-barrel allowance of up to $8 at oil prices around $90 a barrel or less, according to one calculation, and no allowance at higher prices, around $160 or above, according to that same calculation. A fiscal note for the latest version of the bill, which would estimate the impact on the state's finances, hasn't been released.
Feige, R-Chickaloon, said the Resources Committee plans to take public testimony, hear from the industry and consultants, and consider amendments next week before sending the bill to the House Finance Committee. About two weeks remain in the legislative session.
"When it leaves committee, it will be floor-ready, in my opinion," Feige said.
Gov. Sean Parnell has proposed overhauling Alaska's oil tax structure as a way to increase investment and production, which has been declining for years. Higher oil prices in recent years have helped to mask the impact of the decline on the state budget.
Supporters of the tax change say something needs to be done to try to get more oil flowing through the trans-Alaska pipeline. Critics say the approach constitutes a massive giveaway to oil companies with no assurances that they'll invest more in Alaska.
Sen. Bill Wielechowski, who voted against SB21, said the House Resources version of the bill makes some good changes from what narrowly passed the Senate. For example, he said it has clearer language for what would qualify for the gross value reduction, and he said it would be better for the state when oil prices are higher. Under the proposal, the gross value reduction would apply to new fields and new oil from legacy fields.
But Wielechowski said he is concerned about the exposure to the state at lower oil prices — when the per-barrel allowance would be higher — and doesn't think the existing participating areas in the legacy fields need any more help.
"I still think it has a long, long way to go," said the Anchorage Democrat, who was still analyzing the bill. "It's still a big giveaway, but it's mildly better than what the Senate version was, I would say."
Feige said having a "slightly lower" level of government take at lower oil prices "should greatly enhance" the economics for the companies. But he said there's a sense, too, that the state "should have a little bit more of a bite" when prices are higher.
"It's not an onerous extra bite, but we're trying to be fair to the people of Alaska," he said.