2011-01-18                     House Journal                      Page 0059
HB 110                                                                                                                        
HOUSE BILL NO. 110 by the House Rules Committee by request of                                                                   
the Governor, entitled:                                                                                                         
                                                                                                                                

2011-01-18                     House Journal                      Page 0060
    "An Act relating to the interest rate applicable to certain amounts                                                         
    due for fees, taxes, and payments made and property delivered to                                                            
    the Department of Revenue; relating to the oil and gas production                                                           
    tax rate; relating to monthly installment payments of estimated oil                                                         
    and gas production tax; relating to oil and gas production tax                                                              
    credits for certain expenditures, including qualified capital credits                                                       
    for exploration, development, and production; relating to the                                                               
    limitation on assessment of oil and gas production taxes; relating                                                          
    to the determination of oil and gas production tax values; making                                                           
      conforming amendments; and providing for an effective date."                                                             
                                                                                                                                
was read the first time and referred to the Resources and Finance                                                               
Committees.                                                                                                                     
                                                                                                                                
The following fiscal note(s) apply:                                                                                             
                                                                                                                                
1.  Fiscal, Dept. of Revenue                                                                                                    
2.  Zero, Dept. of Natural Resources                                                                                            
                                                                                                                                
The Governor's transmittal letter dated January 17, 2011, follows:                                                              
                                                                                                                                
"Dear Speaker Chenault:                                                                                                         
                                                                                                                                
Oil production in Alaska remains the backbone of our economy. As oil                                                            
production declines and as the federal government forbids multiple                                                              
development opportunities we must better incentivize development of                                                             
state lands. To that end, under the authority of Article III, Section 18,                                                       
of the Alaska Constitution, I am transmitting a bill to make Alaska                                                             
more competitive as an oil producing state by proposing amendments                                                              
to Alaska's oil and gas production tax.                                                                                         
                                                                                                                                
The bill would provide tax incentives and credits for the oil and gas                                                           
industry to increase exploration for, and development of, Alaska's oil                                                          
and gas resources at any price range. We must remain focused on                                                                 
getting more oil into the pipeline, and creating jobs for Alaskans.                                                             
                                                                                                                                
The bill accomplishes six primary goals: (1) encourages development                                                             
of new, currently undeveloped leases or properties; (2) encourages                                                              
investment in exploration, development, and production at all price                                                             
ranges; (3) strengthens the minimum tax; (4) extends tax incentives to                                                          

2011-01-18                     House Journal                      Page 0061
North Slope activities and allows producers to apply tax credits in one                                                         
year; (5) limits the time for assessment of additional production taxes;                                                        
and (6) reduces the interest rate on delinquent taxes and refunds. These                                                        
changes would ensure the State continues to receive reasonable                                                                  
revenue and establish a more competitive investment climate for job                                                             
creation.                                                                                                                       
                                                                                                                                
These amendments to Alaska's oil tax regime will foster new                                                                     
production sources to stem the decline in North Slope production.                                                               
More oil means more jobs for Alaskans, more long-term revenue to                                                                
the State, and lower Trans-Alaska Pipeline System tariffs per barrel.                                                           
                                                                                                                                
I urge your prompt and favorable action on this measure.                                                                        
                                                                                                                                
Sincerely,                                                                                                                      
/s/                                                                                                                             
Sean Parnell                                                                                                                    
Governor"