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Governor calls special session
The special session of the Alaska Legislature ended June 19 when the Alaska Senate gaveled out, following a House exodus June 18.
Gov. Bill Walker immediately called another special session for July 11. Three items are on the call: use of the Alaska Permanent Fund for state government; a tax bill, including proposals for a personal income tax and a sales tax, as well as other taxes Walker has proposed; and an oil and gas production tax credit bill.
The Legislature failed to pass a bill requested by the governor to allow use of Permanent Fund earnings for state government. It also failed to pass various tax measures proposed by the administration, but did pass an amended version of the governor’s oil and gas production tax credit bill, House Bill 247. That bill went to the governor June 14.
Walker said in a June 19 press availability not to read too much into the inclusion of the tax credit bill on the call for the special session because the proclamation had to be done before all of the bills had been received. There was some good work done on that bill, he said.
Walker has until June 30 to sign or veto HB 247, or allow it to become law without his signature.
There is a link between HB 247 and the governor’s plan to use earnings from the Permanent Fund to help finance state government. A number of legislators said in voting against the Permanent Fund bill that they couldn’t agree to that without more changes in what the oil industry pays.
And while House Democrats supported the original version of HB 247 passed by the House, the House minority, the Alaska Independent Democratic Coalition, called the conference committee version of the bill flawed.
“The subsidies and incentives included in this bill makes it impossible for the Alaska Legislature to pass any version of a fiscal plan that is fair to the people of Alaska,” House Minority Leader Chris Tuck, D-Anchorage, said in a statement after the bill passed.
While the Senate passed an amended version of the governor’s Permanent Fund proposal, the bill failed to move out of the House Finance Committee and never received a floor vote in that body.
Primarily Cook Inlet The Legislature was in general agreement on HB 247 changes for Cook Inlet where the state receives no production tax on oil and a minimal tax on natural gas. Incentives were created for exploration and production in Cook Inlet when Southcentral Alaska faced natural gas shortages and utilities were exploring the cost of importing liquefied natural gas to meet the need for power generation and home heating.
Companies have brought enough natural gas online in Cook Inlet since incentives were passed to meet Southcentral’s immediate needs but have also earned credits for oil exploration and development.
The Legislature’s consultants characterized the credits in Cook Inlet as unsustainable and there was enough agreement among legislators on that portion of the bill.
General agreement was never reached on North Slope changes.
Resolution of an issue which only became apparent after the administration’s bill was introduced - operating losses by major producers on the North Slope - became a source of contention. The version of HB 247 originally passed by the House eliminated net operating loss credits on the North Slope. The Senate version did not include that provision and it was not part of the bill crafted by the conference committee which passed June 6.
The administration’s bill also hardened the North Slope production tax floor and raised it from 4 percent to 5 percent; those provisions were not part of the conference committee bill.
Impact of low oil prices The conference committee version of the bill easily passed the Senate - and had enough changes favored by House members to pass that body 21 to 19. The bill attempts to address some of the problems caused by the impact of low oil prices on state finances, but doesn’t meet the goal of the administration and many legislators to produce a substantial increase in state revenues.
Elements adopted from the House version include making available names as well as amounts for those from whom the state purchases tax credits, and an extension of an allowance for credits for refinery work through the end of 2019.
The conference committee also adopted a provision from the House bill requiring preference in allocating available monies for credit repurchase to applicants based on Alaska hire and an extension of credits for Middle Earth drilling from January 2017 to July 2017.
One North Slope change on which both bodies agreed was limiting the gross value reduction - a benefit for new oil - to seven years, and both bodies agreed that GVR can’t be used to increase the size of a net operating loss.
- KRISTEN NELSON
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