Legislators in the Alaska House have rejected changes made by the State Senate to pending legislation aimed at halting the state’s practice of paying cash to the oil and gas industry for tax credits.
In a 17-22 vote on the evening of May 16, the House failed to concur with changes to House Bill 111, which passed the House in April, on grounds that Senate changes had significantly weakened the bill.
The bill will now be assigned to a conference committee.
“The Senate version of the bill follows the lead of the House in stopped the unsustainable practice of the state of Alaska paying cash for tax credits,” said Rep. Geran Tarr, D-Anchorage, co-chair of the House Resources Committee. “This is a good thing that is long overdue.
“However, the Senate version of the bill has major problems that we just could not accept… I’m discouraged that the Senate version of the bill is worse than the status quo and appears to only work for oil companies,” she said.
“The best course of action is to take this bill to a conference committee, where an acceptable compromise can be reached that protects the state during these low oil prices, while still keeping Alaska competitive as a place for future oil industry investments,” said Rep. Andy Josephson, D-Anchorage, the other co-chair of the House Resources Committee. The Senate version of the bill “continues many of the flaws that have placed Alaska in our current precarious financial position,” Josephson said.
The House version of HB 111 reduces the base tax rate on oil from 35 percent to 25 percent in an effort to spur increased exploration and development on Alaska’s North Slope. The House version also protects the state by hardening the minimum four percent tax floor, which will ensure some production tax revenue during periods of low oil prices. The Senate version creates additional opportunities for oil tax credits to be used to reduce tax payments below the four percent minimum floor, which will cost the state between $10 million and $45 million a year, the House Majority said in a statement released late that evening.
The House version of HB 111 is projected to bring into state coffers an additional $20 million in new revenue in fiscal year 2018 and an estimated $75 million a year by fiscal year 2027.
The Senate version, by contrast, is forecasted to bring in no additional revenue in fiscal year 2018 and only $145 million a year by fiscal year 2027.