Special session called after legislature fails to pass oil tax changes

It was a wild ride on the last day of the 2012 legislative session, and now Gov. Sean Parnell has called lawmakers back to take care of unfinished business – changes to the state’s oil and gas production tax.

On its closing day the Senate attempted to insert language reducing taxes on new oil developed on the North Slope into other bills, but the House balked and senators ultimately backed off.

The Legislature did pass a bill extending a generous set of investment tax credits and a reduced rate of tax for new oil and gas found in unexplored Interior and western Alaska basins, but the kind of comprehensive change Parnell wanted was not accomplished.

The bill for Interior basins, dubbed the “middle earth” incentive by legislators, was attached to a bill extending the state’s film tax credit program and another bill granting special tax treatment for new small business startups that emphasize new technologies.

All of these are now in Senate Bill 23, which passed in the closing hours of the session on Sunday.

Another bill that passed important to health care providers was House Bill 78, extending incentives to help recruit health care professionals in certain critical fields including primary care physicians to the state.

The bill provides for assistance in repayment of medical school loans and for grants to experienced professionals who agree to work in underserved communities, such as rural villages.

The state capital and operating budgets passed on the final day of the session, which is customary. There were few last-minute surprises in either bill.

The House added a set of its priority projects to additions the Senate had made earlier to SB 160, both on top of the governor’s capital requests which were in the bill he originally introduced. Parnell said he had left “room” in the bill for legislators to add projects but said he wanted the overall cost of the bill to be similar to that for the current year, about $2.9 billion including federal funds.

If the total cost of the bill as passed by the Legislature exceeds that Parnell may veto items to bring the pricetag down.

The capital budget contains a wide range of new construction around the state, but two significant projects are two major new engineering buildings, one for University of Alaska Anchorage and the other for University of Alaska Fairbanks.

Also in the capital budget is $25 million for Alaska Aerospace Corp. as the state’s contribution toward a project expanding the Kodiak Launch Facility owned and operated by the state space corporation.

Contingent on the state funds, Lockheed Martin Corp. is raising about $100 million in financing for the project. The company wants to use Kodiak for launches of satellites with its Athena III rocket. At present the launch facility is too small to handle the Athena rocket.

Construction is due to begin this summer on the expanded launch project. 

In the operating budget, House Bill 284, the only significant difference between the House and Senate versions was money for tourism promotion. In the end the budget conference committee opted for the higher amount as proposed by the House, $16 million for tourism marketing.

Parnell also supports that amount for tourism promotion.

Another important bill that passed was House Bill 250, extending the state’s renewable energy grant program for 10 years, until 2024. The current five-year program winds down next fiscal year, FY 2013.

Lawmakers also appropriated $25 million for new renewable energy projects in the Fiscal 2013 budget. So far the state has spent about $179 million to fund 310 projects, mostly small wind, biomass, small-scale hydro, heat recovery and geothermal projects.

Most of the projects serve small rural communities.

04/20/2012 - 6:16am