Legislature(2015 - 2016)
2016-01-19 House JournalFull Journal pdf
2016-01-19 House Journal Page 1436 HB 247 HOUSE BILL NO. 247 by the House Rules Committee by request of the Governor, entitled: "An Act relating to confidential information status and public record status of information in the possession of the Department of Revenue; relating to interest applicable to delinquent tax; relating to disclosure of oil and gas production tax credit information; relating to refunds for the gas storage facility tax credit, the liquefied natural gas storage facility tax credit, and the qualified in-state oil refinery infrastructure expenditures tax credit; relating to the minimum tax for certain oil and gas production; relating to the minimum tax calculation for monthly installment payments of estimated tax; relating to interest on monthly installment payments of estimated tax; relating to limitations for the application of tax credits; relating to oil and gas production tax credits for certain losses and expenditures; relating to limitations for nontransferable oil and gas production tax credits based on oil production and the alternative tax credit for oil and gas exploration; relating to purchase of tax credit certificates from the oil and gas tax credit fund; relating to a minimum for gross value at the point of production; relating to lease expenditures and tax credits for municipal entities; adding a definition for "qualified capital expenditure"; adding a definition for "outstanding liability to the state"; repealing oil and gas exploration incentive credits; repealing the limitation on the application of credits against tax liability for lease expenditures incurred before January 1, 2011; repealing provisions related to the monthly installment payments for estimated tax for oil and gas produced before January 1, 2014; 2016-01-19 House Journal Page 1437 repealing the oil and gas production tax credit for qualified capital expenditures and certain well expenditures; repealing the calculation for certain lease expenditures applicable before January 1, 2011; 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. Zero, Dept. of Natural Resources 2. Fiscal, Dept. of Revenue The Governor's transmittal letter dated January 15, 2016, follows: "Dear Speaker Chenault: Under the authority of Article III, Section 18 of the Alaska Constitution, I am transmitting a bill relating to oil and gas tax credits and the minimum tax amount for certain oil and gas production. This bill proposes through four elements to protect the State's fiscal future while instituting cautious reforms to the oil and gas tax credit system. First, the bill would simplify the oil and gas tax credit system by repealing numerous narrowly targeted credits. The bill would repeal the 20 percent tax credit under AS 43.55.023(a) for qualified capital expenditures incurred for exploration, development, or production of oil and gas south of 68 degrees North latitude and the 40 percent well lease expenditure credit under AS 43.55.023(l) for well lease expenditures incurred south of 68 degrees North latitude. The oil and gas tax credit system with the changes in the bill would move towards a system based on nontransferable production-based credits and transferable credits based on carried-forward annual losses. The bill would repeal unused exploration incentive credits under AS 38.05.180(i) and AS 41.09. Also, the bill would limit the lease expenditures and tax credits available to municipal entities in proportion to the taxable production of the municipal entity. 2016-01-19 House Journal Page 1438 Second, the bill would strengthen the minimum tax amount for certain oil and gas produced north of 68 degrees North latitude ("North Slope") to protect the State's tax revenue stream. The bill would require the minimum tax amount on certain oil and gas produced on the North Slope to equal at least five percent of the gross value at the point of production regardless of the price of the oil and gas. The oil and gas tax credits would no longer be able to reduce the tax levied in AS 43.55.011(e) below the minimum amount calculated in AS 43.55.011(f). This credit limitation would take effect on January 1, 2016. Third, the bill would reinvigorate the State's investment strategy in purchases of oil and gas tax credit certificates under AS 43.55.028(e) to focus on small companies that hire state residents. The State would only purchase tax credit certificates from an applicant with revenues of less than $10,000,000,000 from its oil and gas business during the previous calendar year. The State would not purchase a certificate from an applicant with an outstanding liability to the State. Outstanding liabilities to the State would include unpaid taxes, penalties, royalties, rental, interest, and fees. The State's purchases from each applicant would be limited to $25,000,000 a year. The bill would limit the percentage of the State's purchase of a tax credit certificate to the percentage of the applicant's workforce in the state, in the previous calendar year, that were resident workers. This builds on my commitment to promote healthy and safe communities by encouraging employment of state residents in the state's vital natural resources industry. Finally, the bill would institute a number of changes to promote good governance in tax administration. The bill would delete a number of inapplicable provisions from the tax statutes to provide greater clarity. The bill would increase the interest rate applicable to delinquent taxes. The bill would make public more information about taxpayers that claim oil and gas production tax credits. Most provisions of the bill would take effect on July 1, 2016. The bill is an integral component of the New Sustainable Alaska Plan to provide a balanced and sustainable budget for Alaska's long-term fiscal stability. 2016-01-19 House Journal Page 1439 I urge your prompt and favorable action on this measure. Sincerely, /s/ Bill Walker Governor"