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The state Legislature’s Democratic minorities in the House and Senate introduced their answer to the state’s oil-taxation woes Monday, a bill competing with Gov. Sean Parnell’s proposed revision of Alaska’s oil tax regime.
Supporters say the unveiled measure, designated House Bill 111 and Senate Bill 50 in the respective chambers, would make 20 percent of oil production from new fields tax-exempt for seven years. New production from old fields would be rewarded by producers’ choice of lowered tax rates on any increased production from current levels, specific tax breaks on finding new oil, or a tax reduction on heavy-oil production.
“Our proposal walks the walk on increasing production and protecting Alaska,” House Democratic Whip Chris Tuck (D-Anchorage) said in a statement on the bill. “We give benefits to anyone who opens a new field or gets more oil from an existing field, and we offer some new ways to help get more oil out of the ground and into the pipe.”
The Democratic bill, sponsored in the House by Rep. Beth Kerttula (D-Juneau) and in the Senate by Sen. Bill Wielechowski (D-Anchorage), would put a cap on progressivity, the practice of charging higher tax rates at higher oil prices. It wouldn’t eliminate the concept, however -- a key element of Parnell’s tax plan.
Oil and gas leases are also mentioned in the bill, which would require oil and gas lease holders to provide their development plans to the commissioner of the state’s Department of Natural Resources, who would both assess and enforce compliance with those plans.
“The commissioner shall review each plan of development and determine whether the proposed plan of development is reasonably expected to develop the lease in the best interest of the state,” text in Senate Bill 50 states. “The plan of development shall be included in a lease along with penalties for failing to comply with the plan of development and other terms of the lease.”
The commissioner would have the authority to terminate leases that weren’t properly developed -- a major point of contention between the state and ExxonMobil over development work at the Point Thomson oil field.
Governor Sean Parnell's office reacted to the legislation Monday evening.
“We are pleased they agree there is a problem with production under the current system," said Parnell Spokeswoman Sharon Leighhow. "After a cursory look at their proposal, the governor is concerned it simply nibbles at the edges of the problem, while leaving Alaska’s treasury at risk and accepting the status quo production decline.
It’s not clear whether the bill will fare well in the Republican-dominated halls of the Capitol this year, with oil companies saying Parnell’s Senate Bill 21 doesn’t go far enough. So far this session, Democrats’ opposition has been relatively low-key, with Wielechowski challenging Parnell to a debate on oil taxes but few legislative actions taken.
Contact Chris Klint