The Senate Resources Committee introduced a substitute version of Gov. Sean Parnell’s oil tax bill Friday, the third major proposal before the Legislature this year attempting to stimulate declining production while giving the state a fair share of petroleum revenue.
Under the new measure, the state’s base oil tax rate would rise from its current 25 percent to 35 percent, with oil companies receiving a $5 tax credit for every barrel of oil produced.
Mike Pawlowski, with the Alaska Department of Revenue, didn’t have immediate comment on the proposal’s effects.
“The fiscal impact of the changes to (the governor’s) Senate Bill 21 are still being analyzed,” Pawlowski said.
Other subsitutes include a Competitiveness Review Board offered by Senator Lesil McGuire (R-Anchorage) and a increases the gross revenue exclusion for new oil discoveries from 20 percent to 30 percent.
"It's closer to the governor's plan, but it's definitely not nearly as high as ACES, which has been the problem," said Senator Cathy Giessel (R-Anchorage). "The ACES tax structure has simply been to high of a tax."
"We're trying to achieve more of a balance, we're looking at a 1/3 for producers, 2/3 for government," said Giessel, who chairs the Senate Resources Committee.
The committee's only Democrat, Hollis French, was not at Friday's meeting. Giessel says French is expected to introduce amendments to the bill on Monday.
As proposed, Senate Bill 21 does away with a progressivity surcharge that taxes oil at higher rates when oil prices are high. Under the governor’s proposal, the state’s oil tax credits would be refocused on incentives for North Slope oil production.
Earlier this month, the Legislature’s Democratic minorities introduced a tax bill competing with Parnell’s in the House and Senate. Their tax system would exempt 20 percent of oil produced from new fields from taxation for seven years, with new production from old fields allowing companies to choose from several forms of tax credits.
The Senate saw deeply divisive battles with Parnell over oil taxation last year, with Sen. Gary Stevens (R-Kodiak) -- then the head of the bipartisan coalition in control of the chamber -- at one point declaring that Parnell’s proposal “will not be the vehicle” of reform. Matters came to a head during a special session called by Parnell in April, when the Senate refused to take up the governor’s plan and he subsequently removed oil taxes from the agenda.
With 59 of the Legislature’s 60 seats on the ballot in November’s general elections due to redistricting, many new senators were seated, paving the way for a new Republican-led majority to form in the Senate.
Channel 2’s Adam Pinsker contributed information to this report.
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