Legislature(2015 - 2016)BUTROVICH 205

04/09/2016 02:30 PM RESOURCES


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02:58:39 PM Start
02:59:54 PM SB130
03:55:50 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ HB 247 TAX;CREDITS;INTEREST;REFUNDS;O & G TELECONFERENCED
<Pending Referral> --Invited Testimony Only--
+= SB 130 TAX;CREDITS;INTEREST;REFUNDS;O & G TELECONFERENCED
Heard & Held
-- Public Testimony --
+ Bills Previously Heard/Scheduled TELECONFERENCED
         SB 130-TAX; CREDITS; INTEREST; REFUNDS; O & G                                                                      
                                                                                                                                
           [Contains discussion relating to HB 247.]                                                                          
                                                                                                                                
2:59:54 PM                                                                                                                    
CHAIR GIESSEL announced the consideration of SB 130.                                                                            
                                                                                                                                
MARGO WARING, representing herself,  Juneau, Alaska, testified in                                                               
support of SB  130. She said Section 2, Article  8, of the Alaska                                                               
Constitution, is about the use,  development, and conservation of                                                               
natural resources  of the  state for the  maximum benefit  of the                                                               
people,  and the  fact is  that elected  officials are  temporary                                                               
custodians  of  those  resources.  She spoke  in  favor  of  full                                                               
transparency  regarding  oil  and   gas  affairs  of  the  state,                                                               
"because  public accountability  has  to be  more important  than                                                               
anything else."                                                                                                                 
                                                                                                                                
She  learned a  couple of  lessons  when she  worked in  Governor                                                               
Hammond's  Office.  One  is about  public  financing  of  private                                                               
corporations and that  there is no excuse for having  oil and gas                                                               
credits,  particularly   production  credits.  They   go  against                                                               
another  lesson  she learned,  which  is  if  a business  is  not                                                               
profitable, then it shouldn't be  propped up by public funds. The                                                               
state needs to be able to sell its  assets at a profit and not at                                                               
a "disguised cost."                                                                                                             
                                                                                                                                
MS. WARING  concluded that  tax rates should  be at  their higher                                                               
previous  rates   to  maximize   the  benefit   the  Constitution                                                               
promises.                                                                                                                       
                                                                                                                                
3:03:55 PM                                                                                                                    
SANDRA   UDELHOVEN,   representing  herself,   Wasilla,   Alaska,                                                               
testified against  SB 130. She  said the  State of Alaska  is not                                                               
keeping its  word. It has  already committed  to pay oil  and gas                                                               
tax  credits  to  corporations  and   not  doing  so  creates  an                                                               
environment   that  is   hostile  to   private  enterprise.   She                                                               
requested the  state to  be truthful and  honest in  its dealings                                                               
with the oil and gas industry  and not change its tax policies so                                                               
frequently.                                                                                                                     
                                                                                                                                
3:05:31 PM                                                                                                                    
CARL PORTMAN, representing  himself, Anchorage, Alaska, testified                                                               
in  opposition to  SB 130.  He  was concerned  about the  state's                                                               
current fiscal situation. He said  the current oil tax policy has                                                               
encouraged new  industry investment, which has  stabilized a long                                                               
steep slide  in production. In fact,  it was up 1  percent in the                                                               
past  12  months, the  first  increase  since  2002. He  did  not                                                               
support  raising taxes  on the  oil and  gas industry  as SB  130                                                               
would  do.  "Alaska cannot  increase  oil  production by  raising                                                               
taxes,"  he said,  "especially considering  that North  Slope oil                                                               
now sells for less than it costs to produce."                                                                                   
                                                                                                                                
He said  the industry is  losing hundreds of millions  of dollars                                                               
annually in  this downturn and  is being  forced to cut  jobs and                                                               
expenses. Any  tax increase will  have a direct impact  on future                                                               
investment in  Alaska and, therefore, future  production. Even at                                                               
today's low oil  prices, most of Alaska's revenues  come from the                                                               
oil  industry  through  various  industry  taxes  and  royalties.                                                               
Clearly, the industry  continues to pay the  majority of Alaska's                                                               
bills. He  suggested that the legislature  continue cutting state                                                               
spending  to  a more  affordable  level,  because despite  recent                                                               
cuts, the state's  operating budget is still  on an unsustainable                                                               
path.                                                                                                                           
                                                                                                                                
In addition,  he supported coming  to terms with  using Permanent                                                               
Fund earnings to  help fill the fiscal gap. The  earnings need to                                                               
be part of the long term  solution, and the Permanent Fund is the                                                               
biggest tool in the box to  help solve the state's fiscal crisis.                                                               
He  recalled that  Governor Hammond's  vision  for the  Permanent                                                               
Fund included the  eventual use of fund earnings to  help pay for                                                               
essential government services. He believes that day is here.                                                                    
                                                                                                                                
3:08:32 PM                                                                                                                    
MICHAEL  FOSTER,  representing  himself, Mat-Su  Valley,  Alaska,                                                               
testified  in  opposition to  SB  130.  He  spoke in  support  of                                                               
extending tax credits  in the Copper River Basin,  because it and                                                               
many other places in Alaska  need affordable and reliable energy.                                                               
Ahtna is  trying to do this  by exploring for natural  gas within                                                               
the  basin.  One  of  his  companies,  North  Star  Trucking,  is                                                               
currently  working  for  them  on   the  Tolsona  1  natural  gas                                                               
exploration  well. They  have 14  employees on  site and  another                                                               
four  employees supporting  that project.  They are  all Alaskans                                                               
and all  support families in  Anchorage, Wasilla  and Glennallen.                                                               
If  it  wasn't  for  this  project,  these  workers  wouldn't  be                                                               
employed. These are Alaskan projects for Alaskan workers.                                                                       
                                                                                                                                
If not  for the current  tax credits,  this project would  not be                                                               
going forward.  This is not Prudhoe  Bay or Cook Inlet.  The risk                                                               
of exploring in areas like the  Copper River Basin is high. There                                                               
are  a lot  of unknowns  and little  infrastructure available  to                                                               
support  these exploration  projects. He  urged the  committee to                                                               
extend the  Frontier Basin tax credits  to the year 2022  to help                                                               
companies  like  Ahtna  to  investigate  underexplored  areas  in                                                               
locations that they don't have  infrastructure and energy for the                                                               
supporting population.                                                                                                          
                                                                                                                                
3:10:49 PM                                                                                                                    
CHAIR  GIESSEL welcomed  Senator Wielechowski  to the  committee.                                                               
She noted the  presence of Jerry Burnett,  Deputy Commissioner of                                                               
the Department of Revenue.                                                                                                      
                                                                                                                                
3:11:10 PM                                                                                                                    
BRAD FAULKNER, representing himself,  Homer, Alaska, testified in                                                               
support  of SB  130. He  has worked  in and  out of  the oil  and                                                               
fishing industries all his life.                                                                                                
                                                                                                                                
One of the reasons he supports SB  130 is because an oil rig from                                                               
Asia is tied to the dock  right outside his house and 100 percent                                                               
of the  people on it  are from Louisiana.  And of the  100 people                                                               
doing  seismic work  near  Anchor  Point only  five  of them  are                                                               
Alaskan. So,  the tax credits  are not jobs-related,  because the                                                               
jobs aren't going to Alaskans.                                                                                                  
                                                                                                                                
Cook Inlet  tax credits were  paying up  to 65 percent  of costs,                                                               
and at  best, if oil is  discovered many years down  the road, it                                                               
will  only bring  in 12.5  percent royalty  into the  state. It's                                                               
just not a  good deal. Production tax credits on  the North Slope                                                               
are entirely different, because  that production gets taxed. This                                                               
is not a good  deal for the state and it  hasn't done anything to                                                               
increase production. Production will go  up when the price of oil                                                               
goes up, he said.                                                                                                               
                                                                                                                                
3:13:19 PM                                                                                                                    
BRENDON HOPKINS,  representing himself, Homer,  Alaska, testified                                                               
in  opposition to  SB  130.  Testifying from  work  on the  North                                                               
Slope, Mr. Hopkins  said he is a lifelong Alaskan.  He has had to                                                               
take a significant  cut in his income as a  result of the current                                                               
business  environment, but  he is  happy to  work for  a well-run                                                               
company.                                                                                                                        
                                                                                                                                
He   pointed  out   that  the   state's   budget  has   increased                                                               
significantly over the  years; in 2000 it was  roughly $2 billion                                                               
and now it is $8.6 billion. He  said the fiscal problem has to be                                                               
solved  now  and  by  using a  balanced  approach.  Cook  Inlet's                                                               
success in increasing  production and jobs over  the last several                                                               
years is due in  large part to some of the  credits. If they want                                                               
to repeat the situation of  companies shutting down and job loss,                                                               
taking those credits away is a first step.                                                                                      
                                                                                                                                
He  agreed  with  Article  8  of  the  Alaska  Constitution  that                                                               
provides for maximizing the state's  resources for the benefit of                                                               
its  people,  but "benefit"  should  not  be measured  in  purely                                                               
revenue or  the size  of the  bank account.  He closed  in saying                                                               
that he appreciated all the hard work the legislature is doing.                                                                 
                                                                                                                                
3:16:32 PM                                                                                                                    
CHAIR GIESSEL  thanked him  for taking  the time  to call  in and                                                               
asked where Mr. Hopkins lives when he is not on the North Slope.                                                                
                                                                                                                                
MR. HOPKINS answered that he lives on the Kenai Peninsula.                                                                      
                                                                                                                                
CHAIR GIESSEL  thanked him  for traveling  all that  distance for                                                               
work.                                                                                                                           
                                                                                                                                
3:17:15 PM                                                                                                                    
JOHN   STURGEON,   representing   himself,   Anchorage,   Alaska,                                                               
testified in  opposition to  SB 130  and any new  tax on  the oil                                                               
industry. He  acknowledged concern about the  state's deficit but                                                               
added that  a lot is  being done  to resolve the  issue. However,                                                               
the state still  needs an economy after the  fiscal cliff problem                                                               
is solved,  and taxing the industry's  success is not the  way to                                                               
keep industry in Alaska and keep the economy strong.                                                                            
                                                                                                                                
MR. STURGEON  said he  runs the largest  timber operation  in the                                                               
state  and  he  can't  imagine  how he  would  run  that  logging                                                               
operation if  their taxes were  as high and unpredictable  as the                                                               
oil industry's that has changed almost every other year.                                                                        
                                                                                                                                
CHAIR GIESSEL noted Senator Stoltze was present.                                                                                
                                                                                                                                
3:19:14 PM                                                                                                                    
JIM PLAQUET,  representing himself, Fairbanks,  Alaska, testified                                                               
in  opposition  to  SB  130.  He  is  a  42-year  member  of  the                                                               
International Union  of Operating Engineers, Local  302, and said                                                               
that Alaskans  voted for  more oil production  in 2014  and since                                                               
then  the oil  industry has  invested $5  billion and  stabilized                                                               
flow rates through the TAPS.                                                                                                    
                                                                                                                                
Oil tax  policy does not  need to be  changed again, he  said. SB                                                               
130 would  be the  sixth major  oil tax change  in 11  years. "We                                                               
need a  stable tax system....Alaska  needs investment  to achieve                                                               
more through-put in the pipeline."                                                                                              
                                                                                                                                
MR. PLAQUET stated that oil prices  will rise again and when they                                                               
do, Alaska  will be  competing with  shale oil  in the  Lower 48.                                                               
Alaska  is an  expensive place  to do  business and  changing tax                                                               
policy  frequently doesn't  help attract  investment dollars.  It                                                               
doesn't send a message that Alaska is open for business.                                                                        
                                                                                                                                
SB 21  increased production  by 1 percent  compared to  a decline                                                               
average of  6.6 percent  a year  under ACES. Now  is the  time to                                                               
keep Alaska  competitive and open  for business by  maintaining a                                                               
tax policy that is stable and balanced.                                                                                         
                                                                                                                                
3:21:28 PM                                                                                                                    
CATHY   DUXBURY,   representing   herself,   Anchorage,   Alaska,                                                               
testified in opposition  to SB 130. She works in  the oil and gas                                                               
industry  and  was  opposed  to  changing the  oil  and  gas  tax                                                               
structure. "Higher taxes only discourages investment," she said.                                                                
                                                                                                                                
She suggested finding  ways to increase throughput  as opposed to                                                               
increasing taxes. The private sector  is holding its breath every                                                               
day wondering  which jobs are going  to go next or  what pay cuts                                                               
are  coming. It  will just  get worse  if the  industry is  taxed                                                               
more. Let  it be and  use the  earnings from the  Permanent Fund;                                                               
that is  what it is there  for. She said  it was never set  up to                                                               
just hand out money to people.                                                                                                  
                                                                                                                                
3:23:45 PM                                                                                                                    
JAMES   MCMILON,   representing   himself,   Fairbanks,   Alaska,                                                               
testified  in opposition  to  SB 130.  He said  he  is a  30-year                                                               
resident of Fairbanks and is  currently a business representative                                                               
for Teamsters Local 959. He  noted the wide variety of industries                                                               
his union represents including the  Usibelli Coal Mine, the North                                                               
Slope, the TAPS,  and the Port of Anchorage.  They understand the                                                               
challenges facing Alaska and the  tough decisions that need to be                                                               
made, and  support the governor  and legislature in  reducing the                                                               
operating budget,  using some of  the Permanent Fund  earnings to                                                               
help balance the budget, and instituting new taxes.                                                                             
                                                                                                                                
They are  concerned with  the governor's plan  to change  the oil                                                               
tax structure, however. Since SB  21 passed, the oil industry has                                                               
invested more  into Alaskan projects,  like CD5 and  Shark Tooth,                                                               
that  have put  hundreds of  Alaskans to  work, more  oil in  the                                                               
pipeline, and  billions of dollars  into the  economy. Increasing                                                               
oil taxes  and reducing  credits that  encourage investment  at a                                                               
time  when industry  is struggling  sends the  wrong message.  He                                                               
supported maintaining a healthy oil and gas industry in Alaska.                                                                 
                                                                                                                                
3:26:01 PM                                                                                                                    
DAVE HANSON,  representing himself, Anchorage,  Alaska, testified                                                               
in support  of SB 130. He  said he is a  40-year Alaskan resident                                                               
and a  fiscal conservative. He  has the greatest respect  for the                                                               
oil  industry and  thinks  their  last 40  years  are an  amazing                                                               
success  story. However,  the crash  in  oil prices  is no  one's                                                               
fault. We're all in it together.                                                                                                
                                                                                                                                
MR.  HANSON said  the state  cannot  afford the  current oil  tax                                                               
credit  program. In  FY13 the  program cost  $54 million,  but in                                                               
FY17 it will  cost $825 million or over one-fifth  of the state's                                                               
budget. The  Tax Division  says program  costs are  headed toward                                                               
$1-1.5 billion a year. Who will pay for it?                                                                                     
                                                                                                                                
The  tax credit  program made  great sense  when oil  prices were                                                               
high and oil production taxes  were being paid. But no production                                                               
taxes  are paid  on an  oil price  below $73/barrel  and now  the                                                               
program doesn't make sense.                                                                                                     
                                                                                                                                
The BlueCrest  representative said the  state would get  back its                                                               
tax  credit  money  through oil  royalty  payments,  but  royalty                                                               
payments are  what oil companies pay  the state for its  oil. The                                                               
amount the  state receives  should not be  discounted to  make up                                                               
for its tax credit program that  is related to the oil production                                                               
tax. He  said the credit program  is also the most  effective way                                                               
to increase oil production. Some  credit money has helped produce                                                               
oil, some has helped efforts that  didn't work, and some is being                                                               
used to bail out companies from bankruptcy.                                                                                     
                                                                                                                                
MR. HANSON  said it is time  to work together and  think a little                                                               
differently  and be  creative.  He suggested  a three-point  plan                                                               
that would  be sustainable. Use  part of the  Governor's generous                                                               
SB 130  to pay for credits  through FY16 even though  the credits                                                               
were subject  to appropriation and  not guaranteed. They  need to                                                               
be  followed   through.  Two,  use  Senator   Stedman's  approach                                                               
beginning in FY17  to eliminate oil production  taxes and credits                                                               
until  the price  of oil  reaches $72/barrel.  Three, expand  the                                                               
Alaska  Industrial  Development  and  Export  Authority  (AIDEA)-                                                               
direct loan program so that  all credible oil company efforts can                                                               
get financing at a reasonable cost during these tough times.                                                                    
                                                                                                                                
3:29:26 PM                                                                                                                    
KATE  BLAIR, representing  herself, Anchorage,  Alaska, testified                                                               
in opposition  to SB 130. She  said she and her  family had lived                                                               
in Alaska  for 10 years  and have  learned what an  important and                                                               
interesting  relationship the  oil industry  has with  the state.                                                               
She spoke of her family's  involvement with the community and the                                                               
state and said it is their permanent home.                                                                                      
                                                                                                                                
She  works in  the oil  and  gas industry  and her  husband is  a                                                               
police  officer. They  are acutely  aware of  the state's  budget                                                               
shortfall, but  they are also  very aware  of the effect  the low                                                               
price  of oil  has  on  private industry  that  has already  seen                                                               
layoffs, project  and drilling delays, and  companies starting to                                                               
leave the state.  These all affect families such as theirs.                                                                     
                                                                                                                                
The oil  industry is  in the  red; they have  paid the  bills for                                                               
years,  built   infrastructure  across  the  state,   donated  to                                                               
communities,  universities  non-profits, schools  and  buildings,                                                               
and now the  state is going to ask for  "another pound of flesh."                                                               
Raising oil taxes or cutting  tax credits will force companies to                                                               
get their  money from capital  spend, which will  jeopardize even                                                               
more jobs.  She didn't  understand why  they would  even consider                                                               
cutting Cook Inlet  tax credits and sending  the Mat-Su Anchorage                                                               
and  Kenai Peninsula  Boroughs back  to the  energy shortages  of                                                               
2009.                                                                                                                           
                                                                                                                                
MS.  BLAIR supported  the state  reducing  its operating  budget,                                                               
using the Permanent Fund, and  instituting a broad-based tax, but                                                               
she will not  support going back to a single  industry year after                                                               
year when prices go up or down.                                                                                                 
                                                                                                                                
3:33:13 PM                                                                                                                    
MARLEANNA HALL, Executive  Director, Resource Development Council                                                               
(RDC), Anchorage, Alaska, testified in  opposition to SB 130. She                                                               
said  increasing taxes  on our  natural resource  industries will                                                               
decrease  production   through  the   TAPS,  not   encourage  the                                                               
development  of new  mines in  Alaska; it  will not  attract more                                                               
tourists  or increase  more investment  in the  fishing industry.                                                               
Higher  taxes  in  this low  priced  commodity  environment  will                                                               
likely deter  investment and lead  to lower state revenues  and a                                                               
weaker  private  sector  over  the long  run.  Changing  the  tax                                                               
structure now will make a bad situation worse.                                                                                  
                                                                                                                                
3:35:58 PM                                                                                                                    
SCOTT  HAWKINS, President,  Advanced  Supply Chain  International                                                               
(ASCI), Anchorage, Alaska, testified in  opposition to SB 130. He                                                               
is a 33-year resident of  Anchorage who co-founded his company 17                                                               
years ago. There are three  reasons he opposed SB 130: incentives                                                               
matter in  encouraging investment.  For example, his  FedEx Cargo                                                               
hub development  agreement included incentives to  reduce some of                                                               
the  disadvantages Anchorage  had at  that time  and his  Alyeska                                                               
Resort  agreement   included  state  investments  in   water  and                                                               
wastewater infrastructure  in Girdwood. Another example  is eight                                                               
years ago,  Southcentral Alaska was practicing  for brownouts due                                                               
to energy  shortages. Then the  legislature adopted a  package of                                                               
incentives for  Cook Inlet and production  turned around becoming                                                               
a tremendous success story.                                                                                                     
                                                                                                                                
There  is an  old principal  in economics:  if you  want more  of                                                               
something, incentivize it.  If you want less  of something, raise                                                               
taxes on it.                                                                                                                    
                                                                                                                                
Reason two is that the  state's tax policy "desperately" needs to                                                               
be stabilized.  It has  changed about  five different  times over                                                               
the  past 10  years. That  many changes  in that  period of  time                                                               
looks more like a "Banana  Republic" than a mature, stable taxing                                                               
jurisdiction,  Mr. Hawkins  said. Strengthening  that point  even                                                               
further is that Alaskans voted for  the current tax policy at the                                                               
ballot  box. They  were  given the  choice of  voting  for a  tax                                                               
environment that stimulates production or overturning it.                                                                       
                                                                                                                                
Thirdly, Mr.  Hawkins pointed  out that  increasing taxes  on oil                                                               
and  gas at  a  time like  this  would be  going  in exactly  the                                                               
opposite direction.  His company, an oil  field services company,                                                               
had to  cut about 20  percent of its  workforce over the  past 18                                                               
months and  is looking at  cutting about another 20  percent over                                                               
the  next  12  months.  Many other  companies  have  had  similar                                                               
experiences. In fact, his is probably "one of the lucky ones."                                                                  
                                                                                                                                
So, industry  is making  hard decisions,  but by  contrast, state                                                               
government doesn't  appear to be  making similar  hard decisions.                                                               
The  budget  is  going  in  the right  direction,  but  it's  not                                                               
decisive enough in adopting a sustainable spending pattern.                                                                     
                                                                                                                                
3:40:20 PM                                                                                                                    
CURTIS  THAYER,  President &  CEO,  Alaska  Chamber of  Commerce,                                                               
Anchorage, Alaska,  testified in opposition  to SB 130.  He spoke                                                               
of the  numerous changes in  oil taxes and credits  and described                                                               
the benefits  of credits and  a stable tax environment.  He urged                                                               
them  to avoid  changing  any  current tax  policy.  It has  been                                                               
changed over 30  times since oil was first discovered  in 1969 on                                                               
the North Slope.                                                                                                                
                                                                                                                                
He mentioned the threatened brownouts  in Southcentral Alaska for                                                               
a lack of natural gas. There  were only two players in Cook Inlet                                                               
and they  were harvesters who had  the sense to leave  the state.                                                               
When the  state put incentives  in place, multiple  new companies                                                               
started  drilling for  natural gas  in Cook  Inlet. Now  a stable                                                               
supply  of natural  gas is  delivered to  Homer and  to Fairbanks                                                               
Natural Gas.                                                                                                                    
                                                                                                                                
Southcentral has also seen additional  jobs and two new gas-fired                                                               
power plants  have come on line,  because the natural gas  is now                                                               
available. When the voters reaffirmed  SB 21, new players came to                                                               
the North Slope and new fields are being discovered there.                                                                      
                                                                                                                                
3:44:12 PM                                                                                                                    
TOM  LAKOSH, representing  himself, Anchorage,  Alaska, testified                                                               
in support  of SB 130.  He said the bill  does not go  far enough                                                               
toward cutting  tax credits.  He referred  to an  Alaska Dispatch                                                             
story  about  how  the  current tax  credits  subsidize  the  oil                                                               
companies. He said not to give money away to the oil industry.                                                                  
                                                                                                                                
3:47:35 PM                                                                                                                    
FAITH   MARTINEAU,  representing   herself,  Anchorage,   Alaska,                                                               
testified in  opposition to SB  130. She  said she had  worked in                                                               
the  oil industry  for over  a year  and explained  how the  bill                                                               
hurts her  family because her  employer, Caelus Energy,  has just                                                               
announced  a 25  percent  reduction in  workforce. Caelus  Energy                                                               
came  to Alaska  because of  the benefits  offered by  SB 21  and                                                               
these  benefits are  being retroactively  revoked  under SB  130.                                                               
Also, in  order for  Caelus to  return to  its previous  level of                                                               
employment the  price of oil would  have to be much  higher under                                                               
SB 130.                                                                                                                         
                                                                                                                                
She  addressed  how the  bill  would  negatively affect  Alaska's                                                               
businesses by  presenting "yet another change"  in a jurisdiction                                                               
recognized as one of the most  unpredictable in the world for how                                                               
it  taxes   oil  and  gas.   She  asked  them  to   consider  the                                                               
advancements  that businesses  have made  under the  existing tax                                                               
regime.  SB  21  attracts  investment which  allows  the  current                                                               
system  to work  especially in  a time  of crisis.  Enalytica has                                                               
testified that  stability is  the most  important element  in any                                                               
legal  system   to  fostering   steady  investment   and  healthy                                                               
businesses.                                                                                                                     
                                                                                                                                
How would  SB 130  affect Alaska jobs?  She has  never personally                                                               
known so  many people  who have lost  their jobs  since commodity                                                               
prices  have  plunged.  Multiple  communities  and  organizations                                                               
suffer in the  face of layoffs. The proposed  bill would increase                                                               
taxes   on  an   industry  that   already  contributes   more  to                                                               
unrestricted  general  fund  revenue  than  any  other  industry.                                                               
Because more than one-third of Alaska's  jobs are tied to oil and                                                               
gas, those  e additional  taxes represent  dollars that  can't be                                                               
spent   creating  jobs   through   exploration,  development   or                                                               
production.                                                                                                                     
                                                                                                                                
3:50:50 PM                                                                                                                    
JEREMY PRICE, representing  himself, Anchorage, Alaska, testified                                                               
in opposition to SB 130. He  disclosed that he is the director of                                                               
Americans  for Prosperity.  He maintained  that SB  130 is  a tax                                                               
increase on  the oil and  gas industry,  an industry that  is now                                                               
losing money.  If the commercial  fishing industry was  cash flow                                                               
negative,  would they  raise  taxes on  it?  Would they  consider                                                               
raising taxes on the timber industry? No.                                                                                       
                                                                                                                                
He  believes that  taxes are  being  raised on  oil, because  the                                                               
public perception is that big  oil can afford it. The legislature                                                               
and the governor would never think  of raising taxes on any other                                                               
industry in this low price  environment, which is ironic, because                                                               
this  is the  one  industry that  pays for  most  of the  state's                                                               
services. The message  in the press is that  these state services                                                               
are so sacred that they cannot be eliminated.                                                                                   
                                                                                                                                
He noted layoffs  in the oil industry are  occurring even without                                                               
this legislation. He  said the bill will  not increase production                                                               
or jobs  or provide certainty  and predictability in  the private                                                               
sector. It  is not  in our  best interests.  He cautioned  to not                                                               
pass   something  that   has  short-term   gain  with   long-term                                                               
repercussions.                                                                                                                  
                                                                                                                                
MR. PRICE  said he used to  work for Flint Hills  Refinery and no                                                               
one  thought  it  would  close,   but  it  did,  because  of  the                                                               
combination  of bad  economic conditions  and poor  public policy                                                               
that drove it into the ground. Now it is going to be sold for                                                                   
scrap metal. He cautioned to not rush the decision.                                                                             
                                                                                                                                
3:54:29 PM                                                                                                                    
SENATOR WIELECHOWSKI asked if Alaskans for Prosperity believes                                                                  
the state should decrease oil taxes.                                                                                            
                                                                                                                                
MR. PRICE answered yes and added that the oil tax burden, as                                                                    
with any other industry, should be stable and predictable.                                                                      
                                                                                                                                
3:55:38 PM                                                                                                                    
CHAIR GIESSEL found no further comments, closed public testimony                                                                
and held SB 130 in committee.                                                                                                   

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