Oil and gas tax bill clears legislature, heads to governor's desk

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JUNEAU, Alaska (KTUU) - Alaska legislators in separate votes Monday approved an overhaul of the state's oil and gas tax credit system, a key proposal taking aim at state government's financial problems, one issue of many that has stretched the lawmaking session well beyond the voter-approved limit.

Just a few weeks ago, the House rejected a nearly identical proposal, 14 to 24.

But after intense bargaining, the vote on H.B. 247 flipped, though it remained so close in the House -- 21 to 19 -- that Rep. Mike Hawker, R-Anchorage, had to fly into town and vote yes for the plan to pass. The longtime representative has been excused from legislative activities for most of this year while battling cancer.

Hawker could not immediately be reached for comment.

Senators had an easier time approving changes that came from a House-Senate conference committee, formed to sort out differences between conflicting plans that previously passed each chamber, and the revised bill cleared 13 to 9.

In its current form, the bill would eliminate credits that subsidize companies operating in Cook Inlet. However, it does not eliminate credits given to North Slope companies that are losing money, something that has been championed by the governor, Democrats, and some moderate Republicans.

During a conference committee hearing on the bill, one of its architects, Sen. Cathy Giessel, said that other debates like the one over North Slope credits can wait until later.

"Certainly, we can have a discussion about tax policy sometime in the future," she said. "This year, we're focused on tax credit reform."

But Rep. Geran Tarr, D-Anchorage, said the North Slope credits need to be overhauled now. She said most companies become eligible for the credits when oil prices dip below $40 per barrel and that the upward trend has left some of her GOP colleagues counting on prices staying at least as high as they are.

"We didn't model Senate Bill 21 under anything less than $60 a barrel," Tarr said. "We should have learned our lesson. We're very bad at predicting the price of oil."

An oil production tax increase advocated by the governor is also absent in the Legislature approved bill.

While the governor's original bill was projected to positively impact the state's bottom line by $700 million during the next two fiscal years, the Legislature's plan would save $115 million.

Other reforms called for include requiring public release of information about which companies receive credits, prioritizing credits to go to companies that employ 80 percent or more Alaska residents, and continuation of credits of so-called "middle earth" tax credit given to companies operating in places other than the North Slope and Cook Inlet.

Gov. Bill Walker has final say over the bill. He could sign the measure into law, reject some of the funds needed to pay companies credits during the fiscal year that starts in three weeks, or veto the entire bill.

Walker was unavailable to comment Monday evening.

"It's my hope that he would go forward with it and sign off on it," said Rep. Dave Talerico, a Healy Republican who advocated the compromise bill. "I'm not sure where his decision will land, but I'm really hoping we can advance this."

Whatever the governor does, Tarr says the way the bill passed is an act of desperation.

"What a dismal state of affairs if the Republican majority has to bring someone who's battling cancer, compromise their immune system by putting them on a plane, to be the deciding vote," she said.

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