05/08/2018 01:30 PM Senate FINANCE

CS FOR HOUSE BILL NO. 331(FIN)                                                                                                
                                                                                                                                
     "An Act establishing the  Alaska Tax Credit Certificate                                                                    
     Bond Corporation; relating to  the issuance of bonds by                                                                    
     the  Alaska Tax  Credit  Certificate Bond  Corporation;                                                                    
     relating to  purchases of  tax credit  certificates and                                                                    
     refunds and  payments of tax  credits; relating  to the                                                                    
     oil  and gas  tax credit  fund; relating  to overriding                                                                    
     royalty   interest   agreements;   providing   for   an                                                                    
     effective  date  by  repealing the  effective  date  of                                                                    
     secs. 2, 5,  8, 10, 31, 37, and 40,  ch. 3, SSSLA 2017;                                                                    
     and providing for an effective date."                                                                                      
                                                                                                                                
Co-Chair MacKinnon relayed that HB  331 was heard during the                                                                    
morning  Senate Finance  Committee  meeting (May  8, 2018  -                                                                    
9:40 a.m.) and  the bill hearing would  continue with public                                                                    
testimony.                                                                                                                      
                                                                                                                                
Co-Chair MacKinnon OPENED public testimony.                                                                                     
                                                                                                                                
2:05:52 PM                                                                                                                    
                                                                                                                                
BEN MULLIGAN, VICE-PRESIDENT,  THE ALASKA CHAMBER, ANCHORAGE                                                                    
(via  teleconference),  spoke in  support  of  the bill.  He                                                                    
related  that the  Alaska Chamber  supported efforts  by the                                                                    
state to pay the credit  obligations. He felt that the state                                                                    
had taken too long in  paying off the credit obligations and                                                                    
opined  that   the  action  created  a   "negative  business                                                                    
climate,  which  damaged   its  reputation"  and  threatened                                                                    
future investment.  The chamber encouraged the  committee to                                                                    
support the  measure as a  way to restore  credibility among                                                                    
the business community.                                                                                                         
                                                                                                                                
2:07:10 PM                                                                                                                    
                                                                                                                                
ED  KING,  PRINCIPAL   ECONOMIST,  KING  ECONOMICS,  JUNEAU,                                                                    
voiced  support for  the bill.  He discussed  that currently                                                                    
four projects  were stalled by the  financial constraints of                                                                    
the companies  involved. He believed that  the projects were                                                                    
"constrained" due  in part by  the expectation  of receiving                                                                    
their earned tax credit. The  companies invested in marginal                                                                    
oil  fields due  to the  credit program  and the  investment                                                                    
capital  was not  available from  the  market. He  indicated                                                                    
that the projects  would remain idle until  the credits were                                                                    
paid. He thought  that evidence supported the  idea that the                                                                    
obligations  "must"  be paid.  He  believed  that the  state                                                                    
never  had a  statutory obligation  to pay  the credits  but                                                                    
thought  that legal  grounds existed  to demand  payment and                                                                    
litigation  would stall  the projects  longer. He  supported                                                                    
paying  the   credits  from  the  perspective   of  resource                                                                    
management; getting  the fields into production  quickly. He                                                                    
felt that  paying all the  credits out of the  state coffers                                                                    
would put the Permanent Fund Dividend (PFD) at risk.                                                                            
                                                                                                                                
2:11:05 PM                                                                                                                    
                                                                                                                                
MARLEANNA  HALL,  EXECUTIVE DIRECTOR,  RESOURCE  DEVELOPMENT                                                                    
COUNCIL,  ANCHORAGE (via  teleconference), spoke  in support                                                                    
of  the bill.  She explained  that the  Resource Development                                                                    
Council  (RDC)   was  a   trade  association   comprised  of                                                                    
individuals  and companies  from  the oil  and gas,  mining,                                                                    
fishing,    forest   products    industries,   and    native                                                                    
corporations.  The  council  believed   that  the  bill  was                                                                    
suitable  and would  help stimulate  the state's  economy by                                                                    
encouraging  investment on  the North  Slope, deliver  state                                                                    
revenue  over  the long-term,  and  provide  more jobs.  She                                                                    
believed  in sustaining  the health  of the  private sector.                                                                    
She  opined  that  the  bill  would  help  restore  Alaska's                                                                    
reputation   as  "a   stable  and   reliable  oil   and  gas                                                                    
jurisdiction." She  remarked that the  uncertainty regarding                                                                    
the payment of the tax  credits has led to stalled projects.                                                                    
The credit payments would help the projects move forward.                                                                       
                                                                                                                                
2:13:49 PM                                                                                                                    
                                                                                                                                
BARBARA   HUFF-TUCKNESS,   DIRECTOR   OF   LEGISLATIVE   and                                                                    
GOVERNMENTAL AFFAIRS, TEAMSTERS LOCAL  959, JUNEAU, spoke in                                                                    
favor of HB 331. She related  that the although the bill was                                                                    
complicated it  provided "much needed capital."  She favored                                                                    
the  changes  made  in  the  House  Finance  Committee  that                                                                    
supported  the  Alaska  workers through  encouraging  Alaska                                                                    
hires.  She  reported  that  recently   many  of  the  small                                                                    
companies were  hiring Alaskans  and were  encouraging their                                                                    
contractors to do the same.                                                                                                     
                                                                                                                                
Co-Chair MacKinnon CLOSED public testimony.                                                                                     
                                                                                                                                
Co-Chair MacKinnon  announced that  amendments were  due the                                                                    
following day by 9am.                                                                                                           
                                                                                                                                
CSHB 331(FIN)  was HEARD and  HELD in committee  for further                                                                    
consideration.