03/08/2017 06:00 PM House RESOURCES

        HB 111-OIL & GAS PRODUCTION TAX;PAYMENTS;CREDITS                                                                    
                                                                                                                                
6:12:14 PM                                                                                                                    
                                                                                                                                
CO-CHAIR TARR announced that the  only order of business would be                                                               
HOUSE  BILL  NO.  111,  "An  Act relating  to  the  oil  and  gas                                                               
production tax,  tax payments, and credits;  relating to interest                                                               
applicable  to  delinquent  oil   and  gas  production  tax;  and                                                               
providing for an effective date."                                                                                               
                                                                                                                                
6:12:26 PM                                                                                                                    
                                                                                                                                
JEREMY   PRICE,  State   Director,   Americans  for   Prosperity,                                                               
testified  in opposition  to HB  111.   He stated  that the  bill                                                               
would increase taxes on an  industry that is critical to Alaska's                                                               
future.  He explained that he grew  up in Alaska and he hopes his                                                               
children will have  the same opportunities within the  state.  He                                                               
said  that the  future of  Alaska depends  on the  decisions made                                                               
regarding bills  like HB 111.   He added  that he wants  a bright                                                               
future for the state and his  family.  He expressed his view that                                                               
a  bright  future  requires a  stable  economic  environment  for                                                               
businesses to succeed, and HB 111 would do the opposite.                                                                        
                                                                                                                                
6:15:15 PM                                                                                                                    
                                                                                                                                
SAM  MALONEY testified  in opposition  to HB  111.   He commented                                                               
that the  proposed bill  is bad  for the  overall economy  of the                                                               
state  and  his  personal  economics.    He  explained  that  his                                                               
associate's  degree in  welding and  nondestructive testing  from                                                               
[University of Alaska Anchorage] (UAA)  helped him find a job and                                                               
purchase  his  first  home.     His  work  led  him  to  Nikiski,                                                               
Anchorage, and  the North Slope.   He stated that despite  a drop                                                               
in oil prices,  oil companies were still investing  in new energy                                                               
in Alaska  leading to more  jobs for  young Alaskans.   He stated                                                               
that in  the summer of  2016 oilfields  were slowing down,  so he                                                               
enrolled in the process technology  program at UAA to establish a                                                               
more  stable  career  for  himself  as  a  plant  operator.    He                                                               
expressed   his  uncertainty   that  there   will  be   a  career                                                               
opportunity  for him  after  he graduates  in  2018, because  oil                                                               
companies may  not continue to  invest in  Alaska.  He  urged the                                                               
committee to  encourage private  investment rather  than increase                                                               
taxes and to vote against HB 111.                                                                                               
                                                                                                                                
6:18:28 PM                                                                                                                    
                                                                                                                                
PAT SCHLICHTING testified  in support of HB 111.   He stated that                                                               
he supports changes  to the current oil and gas  tax.  He offered                                                               
his opinion  that under  the current system,  the state  does not                                                               
get an  equitable return; the  state is paying producers  to take                                                               
its  resources.   He acknowledged  that some  people think  it is                                                               
unfair to  change the tax structure  so often.  He  remarked, "If                                                               
you do  the job  right the first  time, you won't  have to  do it                                                               
over."   He stated his  support for:   an equitable tax  rate for                                                               
the  state's   resources;  reducing  tax  credits;   using  other                                                               
helpful,  productive  and  lucrative  ways  to  incentivize;  and                                                               
expediting audits and collections of  back oil taxes.  He offered                                                               
his  opinion  that the  state  should  be receiving  billions  of                                                               
dollars more  in income.   He compared Alaska's  budget situation                                                               
to a  bleeding trauma victim.   He remarked, "The wound  needs to                                                               
be stopped, but it  seems like ... the demands are  just to go to                                                               
the blood bank and not to  stop the bleeding."  He explained that                                                               
the bleeding is the oil credits that are being banked.                                                                          
                                                                                                                                
6:21:27 PM                                                                                                                    
                                                                                                                                
RICK SOLIE testified  in opposition to HB 111.   He noted that he                                                               
is  a   member  of   the  mining  industry.     He   offered  his                                                               
understanding  that a  stable tax  climate is  important and  the                                                               
changes proposed in  HB 111 would lead to instability.   He noted                                                               
that HB  111 would substantially  increase taxes, and  every time                                                               
there  is a  state  fiscal crisis  there is  a  targeted tax;  he                                                               
expressed  his belief  that  targeted  taxes are  not  fair.   He                                                               
suggested  that  revenue needs  to  be  raised in  a  broad-based                                                               
manner either  through the Alaska  Permanent Fund or  another tax                                                               
mechanism.   He stated that  data shows that state,  federal, and                                                               
local governments  take in more  money than industry at  most oil                                                               
price levels.   He described the current system as  unfair to the                                                               
oil and  gas industry  because the industry  doesn't see  much of                                                               
the result of  its endeavors.  He noted that  profit is good; oil                                                               
companies make  profits to  pay their  shareholders and  taxes to                                                               
the  state.   He recalled  his experience  on a  borough assembly                                                               
that  worked to  support  the community  with  revenues from  the                                                               
state.   He  remarked, "Those  oil taxes,  you can  increase them                                                               
today, but if you don't  have production tomorrow, you won't have                                                               
the ability  to support your schools  and your roads and  to have                                                               
nice ski hills..."  He expressed  that HB 111 is an imprudent tax                                                               
bill  and is  a  "grab" at  an industry  that  has provided  many                                                               
benefits  to the  state for  years.   He urged  the committee  to                                                               
rethink how to create a stable  tax structure for business in the                                                               
state and the oil industry.                                                                                                     
                                                                                                                                
[HB 111 was held over.]