Legislature(2013 - 2014)HOUSE FINANCE 519

04/09/2013 05:00 PM FINANCE


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05:08:12 PM Start
05:08:17 PM SB21
09:44:03 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Continued Immediately After Sesssion --
+= SB 21 OIL AND GAS PRODUCTION TAX TELECONFERENCED
Heard & Held
-- Public Testimony <Time Limit 2 min. each> --
** Sign in to testify no later than 8:00 p.m. **
+= SB 18 BUDGET: CAPITAL TELECONFERENCED
Scheduled But Not Heard
+ Bills Previously Heard/Scheduled TELECONFERENCED
                  HOUSE FINANCE COMMITTEE                                                                                       
                       April 9, 2013                                                                                            
                         5:08 p.m.                                                                                              
                                                                                                                                
                                                                                                                                
5:08:12 PM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair  Austerman  called   the  House  Finance  Committee                                                                    
meeting to order at 5:08 p.m.                                                                                                   
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Alan Austerman, Co-Chair                                                                                         
Representative Bill Stoltze, Co-Chair                                                                                           
Representative Mark Neuman, Vice-Chair                                                                                          
Representative Mia Costello                                                                                                     
Representative Bryce Edgmon                                                                                                     
Representative Les Gara                                                                                                         
Representative Lindsey Holmes                                                                                                   
Representative Scott Kawasaki, Alternate                                                                                        
Representative Cathy Munoz                                                                                                      
Representative Steve Thompson                                                                                                   
Representative Tammie Wilson                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative David Guttenberg                                                                                                 
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Joe Hegna, Juneau; Dixie Hood,  Juneau; Bill Corbus, Juneau;                                                                    
Gary  Miller,  Juneau;  Aves Thompson,  Executive  Director,                                                                    
Alaska   Trucking   Association;    Blyth   Campbell,   Nana                                                                    
Development;  Patrick  Race,  Juneau; Kim  Metcalf,  Juneau;                                                                    
Lance Stevens,  Juneau Chamber of Commerce,  Juneau; Barbara                                                                    
Huff  Tuckness,  Teamsters   Local,  Juneau;  Senator  Peter                                                                    
Micciche;   Deacon   Charles  Rohrbacher,   Juneau;   Jackie                                                                    
Stewart,  Juneau;  Phoebe  Rohrbacher; Andy  Rogers,  Alaska                                                                    
State Chamber of Commerce, Juneau.                                                                                              
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Jake Jacobson, Kodiak; Karl  Gohlke Frontier Plumbing Supply                                                                    
Co.,  Fairbanks;  Jim   Plaquet,  Alaska  Supports  Industry                                                                    
Alliance,   Fairbanks;  Tim   Tilsworth,  Fairbanks;   Roger                                                                    
Burggraff,  Fairbanks;   Richard  Fineberg,   Fairbanks;  PJ                                                                    
O'Riley,  Fairbanks;  David  Delong,  Fairbanks;  Ken  Hall,                                                                    
Fairbanks;  Randy   Griffin,  Fairbanks;  Dave   Cruz,  Cruz                                                                    
Companies, Dead  Horse; Jim Sykes, Mat-Su;  Tim Smith, Nome;                                                                    
Kate  Veh,  Kenai;  Maynard  Tapp,  Anchorage;  Tom  Lakosh,                                                                    
Anchorage;   Jerry  Ahwinona,   Anchorage;  Scott   Thorson,                                                                    
Anchorage;  Kelly Walters,  Sand Lake;  Jeffrey Todd  Brown,                                                                    
Anchorage;  Tom  Maloney,   Anchorage;  Lynn  Johnson,  make                                                                    
Alaska  Competitive Coalition,  Anchorage;  Ben Mohr,  Eagle                                                                    
River;   Rick   Rogers,    Resource   Development   Council,                                                                    
Anchorage;   John  Dickens,   Self,  Bethel;   Shay  Foster,                                                                    
Anchorage; Paula Hite, Kenai;  Carl Portman, Anchorage; Pete                                                                    
Stokes,  Anchorage;  Beau  Obrigewitch,  Eagle  River;  Gail                                                                    
Boerwinkle,   Anchorage;   Michael   Jesperson,   Anchorage;                                                                    
Richard  Evans,  Anchorage;  John  Maltas,  Anchorage;  John                                                                    
Shively,  Anchorage;   Deantha  Crockett,   Anchorage;  John                                                                    
Sturgeon,  Anchorage;  Marleanna   Hall,  Anchorage;  Daniel                                                                    
Donkel,  Donkel  Oil  and   Gas,  Florida;  Merrick  Pierce,                                                                    
Ninilichik;  Kathleen M.  Kennedy,  Ninilichik; Alan  Parks,                                                                    
Homer;  Larry Smith,  Homer; Pamela  Brodie, Homer;  Roberta                                                                    
Highland, Homer;  Ken Landfield, Homer; Bjorn  Olson, Homer;                                                                    
Valerie  Brooks,  Ketchikan;  Libby Stortz,  Sitka;  William                                                                    
Stortz,  Sitka;  Ward   Eldridge,  Sitka;  Ray  Friedlander,                                                                    
Sitka;   Joan  Franz,   Fairbanks;  Lisa   Herbert,  Greater                                                                    
Fairbanks Chamber of  Commerce, Fairbanks; Elizabeth Siegel,                                                                    
Fairbanks;  Reed   Christensen,  Anchorage;   Ray  Metcalfe,                                                                    
Anchorage; Keith Silver,  Anchorage; Rick Button, Anchorage;                                                                    
Michael Dzurisin,  Anchorage; Brian Hove,  Anchorage; Rachel                                                                    
Petro,   President,  Alaska   State  Chamber   of  Commerce,                                                                    
Anchorage;  Lillian  Koneig,   Anchorage;  Jessica  Ullrich,                                                                    
Anchorage;  Caroline Bolar,  Anchorage;  Dirk Nelson,  Rosie                                                                    
Creek; Jerry Ahwinona, Anchorage.                                                                                               
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
CSSB 21 (FIN) am(efd fld)                                                                                                       
          OIL AND GAS PRODUCTION TAX                                                                                            
                                                                                                                                
          CSSB 21 (FIN) am(efd fld) was HEARD and HELD in                                                                       
          committee for further consideration.                                                                                  
                                                                                                                                
CS FOR SENATE BILL NO. 21(FIN) am(efd fld)                                                                                    
                                                                                                                                
     "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;                                                                    
     providing a  tax credit against the  corporation income                                                                    
     tax  for   qualified  oil  and  gas   service  industry                                                                    
     expenditures; relating  to the  oil and  gas production                                                                    
     tax rate; relating  to gas used in  the state; relating                                                                    
     to  monthly installment  payments  of the  oil and  gas                                                                    
     production tax; relating to oil  and gas production tax                                                                    
     credits for  certain losses and  expenditures; relating                                                                    
     to  oil and  gas  production  tax credit  certificates;                                                                    
     relating  to  nontransferable   tax  credits  based  on                                                                    
     production;  relating to  the  oil and  gas tax  credit                                                                    
     fund; relating  to annual  statements by  producers and                                                                    
     explorers;    establishing    the     Oil    and    Gas                                                                    
     Competitiveness  Review  Board; and  making  conforming                                                                    
     amendments."                                                                                                               
                                                                                                                                
5:08:17 PM                                                                                                                    
                                                                                                                                
Co-Chair Austerman OPENED public testimony.                                                                                     
                                                                                                                                
JUNEAU                                                                                                                        
                                                                                                                                
JOE  HEGNA,  JUNEAU,  testified   on  behalf  of  his  eight                                                                    
grandchildren.  He hoped  that  the  legislature would  take                                                                    
action  to  preserve the  future  of  his grandchildren.  He                                                                    
stated that  ACES was detrimental  to the future  of Alaska,                                                                    
but  felt  that the  proposed  legislation  was optimal.  He                                                                    
worked with  consultants and understood the  value of proper                                                                    
information. He  voiced that  taking action  was imperative.                                                                    
Delays would result in loss of oil and revenue.                                                                                 
                                                                                                                                
5:11:23 PM                                                                                                                    
                                                                                                                                
DIXIE HOOD,  JUNEAU, stated  that she  was disturbed  by the                                                                    
lack  of  funding  for  education   and  health  and  social                                                                    
services  coinciding  with  tax  reductions  for  large  oil                                                                    
companies. She  would like to  see the oil  companies commit                                                                    
to a timeline for development.  She stated that the internal                                                                    
rate of return in North Dakota  was equal to that of Alaska.                                                                    
She added  that the net  present value was higher  in Alaska                                                                    
than in North Dakota, Texas  or Louisiana. She noted that an                                                                    
international  oil consultant  reported  that  Alaska had  a                                                                    
higher government take than the other states.                                                                                   
                                                                                                                                
5:12:47 PM                                                                                                                    
                                                                                                                                
BILL CORBUS,  JUNEAU, stated that he  served as Commissioner                                                                    
of the Department  of Revenue (DOR) and  participated in the                                                                    
formulation  of  Petroleum  Production   Tax  (PPT)  and  he                                                                    
watched with  dismay when the legislature  passed the Alaska                                                                    
Clear  and  Equitable  Share  (ACES).  He  opined  that  the                                                                    
extreme tax  increase in ACES  was disruptive.  He supported                                                                    
HCS  CSSB 21(RES)  and the  progressive feature  for credit-                                                                    
per-barrel. He  urged the  committee to pass  the bill  in a                                                                    
version that  would be accepted  by the Senate.  He believed                                                                    
that  the regime  change would  increase  investment by  the                                                                    
petroleum industry and stem the declining oil production.                                                                       
                                                                                                                                
Representative Gara replied  that he had to pass  out a bill                                                                    
that he believed in rather than one the Senate would like.                                                                      
                                                                                                                                
Representative Costello asked Mr.  Corbus to project the oil                                                                    
decline rate under ACES.                                                                                                        
                                                                                                                                
Mr.  Corbus  responded  that  production  was  projected  to                                                                    
decrease at  an average  of 5.5  percent per  barrel through                                                                    
2022. Unrestricted revenues were  predicted to decrease from                                                                    
$7.5  billion to  $6 billion  by  2022. He  stated that  the                                                                    
decrease would  impact Alaskans by lowering  the standard of                                                                    
living.                                                                                                                         
                                                                                                                                
5:17:19 PM                                                                                                                    
                                                                                                                                
GARY MILLER,  JUNEAU, opposed  the proposed  legislation. He                                                                    
stated that  British Petroleum (BP)  made poor  decisions in                                                                    
April  2010 while  cementing the  oil well  involved in  the                                                                    
abnormally  large  oil  spill.  He noted  that  BP  violated                                                                    
federal regulations and ignored  crucial warnings. He stated                                                                    
that he  did not trust  the oil companies. He  mentioned the                                                                    
Exxon  Valdez oil  spill. He  understood  that the  industry                                                                    
profited by $35  billion under ACES. He stated  that the oil                                                                    
industry  spent  approximately  $730  thousand  annually  on                                                                    
lobbyists.                                                                                                                      
                                                                                                                                
5:19:42 PM                                                                                                                    
                                                                                                                                
AVES   THOMPSON,   EXECUTIVE   DIRECTOR,   ALASKA   TRUCKING                                                                    
ASSOCIATION, testified  in support of  SB 21. He  noted that                                                                    
the difficult decisions required  action. He stated that the                                                                    
legislature  received plenty  of  information  to help  make                                                                    
their decision. The  greatest risk would be  lack of action.                                                                    
The legislature  must take bold  steps and make  Alaska more                                                                    
competitive.                                                                                                                    
                                                                                                                                
5:21:08 PM                                                                                                                    
                                                                                                                                
BLYTH CAMPBELL,  NANA DEVELOPMENT,  testified in  support of                                                                    
oil tax  reform. She  and her daughter  had both  worked for                                                                    
the oil industry.  She noted that many  people realized that                                                                    
the importance  of the oil  industry in Alaska. She  urged a                                                                    
vote for HCS CSSB 21(RES).                                                                                                      
                                                                                                                                
5:22:26 PM                                                                                                                    
                                                                                                                                
PATRICK RACE,  JUNEAU, testified  in opposition to  HCS CSSB                                                                    
21(RES).  He  advocated  for  changing  the  current  system                                                                    
(ACES) in a different manner.  He felt that the oil industry                                                                    
provided  employment  and  other advantages,  but  were  not                                                                    
operating in Alaska with  altruistic intentions. He demanded                                                                    
that Alaska  receive the most  revenue for  their resources.                                                                    
He  mentioned   a  proposed   amendment  allowing   the  oil                                                                    
companies to determine their own  deductions, which would be                                                                    
retroactive to 2007.                                                                                                            
                                                                                                                                
5:24:17 PM                                                                                                                    
                                                                                                                                
KIM METCALF, JUNEAU,  testified in opposition to  SB 21. She                                                                    
opined that the legislation would  result in funding cuts to                                                                    
education.  She believed  that the  bill would  lead to  the                                                                    
loss of  jobs and minimize infrastructure  improvements. She                                                                    
did not  understand why Alaska legislators  would give money                                                                    
back to  the oil companies.  She requested a  guarantee that                                                                    
the state would benefit  from the legislation. She mentioned                                                                    
the  governor's hopes  for the  legislation. She  noted that                                                                    
the bill should allow the  state to be more competitive. She                                                                    
wished for  a guarantee that  the oil companies  intended to                                                                    
invest.                                                                                                                         
                                                                                                                                
5:26:50 PM                                                                                                                    
                                                                                                                                
LANCE   STEVENS,  JUNEAU   CHAMBER   OF  COMMERCE,   JUNEAU,                                                                    
testified in  support of  the legislation.  He noted  that a                                                                    
strong  and  healthy  oil industry  was  important  for  the                                                                    
state.                                                                                                                          
                                                                                                                                
5:27:32 PM                                                                                                                    
                                                                                                                                
BARBARA HUFF TUCKNESS,  TEAMSTERS LOCAL, JUNEAU, represented                                                                    
union  members in  the private  and the  public sector.  She                                                                    
supported  the proposed  legislation.  She  opined that  the                                                                    
changes  provided the  opportunity for  new production.  She                                                                    
believed that  the private sector  deserved the  increase in                                                                    
production.  She   understood  that  the  changes   and  the                                                                    
fairness in  the system would allow  for consideration given                                                                    
as  the  issue moved  forward.  She  encouraged action.  The                                                                    
current tax system was faulty  and she appreciated the ideas                                                                    
presented in HCS CSSB 21(RES).                                                                                                  
                                                                                                                                
KODIAK                                                                                                                        
                                                                                                                                
5:31:07 PM                                                                                                                    
                                                                                                                                
JAKE  JACOBSON, KODIAK  (via  teleconference), testified  in                                                                    
opposition  to the  legislation. He  stated that  Alaska was                                                                    
behind with  accounting for the  current tax system,  and he                                                                    
wondered  how a  new system  might  catch up  and adapt.  He                                                                    
recalled many millions  of dollars spent on  studies for the                                                                    
Susitna  hydro  project.  He recalled  other  projects  with                                                                    
similar outcomes.  He suggested that  the oil in  the ground                                                                    
would  eventually  be  extracted  and  he  advocated  for  a                                                                    
judicious process  that would benefit  the future.  He noted                                                                    
that 90  percent of  the state's  revenue resulted  from oil                                                                    
taxes, yet  the legislature  considered cutting  the revenue                                                                    
drastically.                                                                                                                    
                                                                                                                                
FAIRBANKS                                                                                                                     
                                                                                                                                
5:35:26 PM                                                                                                                    
                                                                                                                                
KARL  GOHLKE FRONTIER  PLUMBING SUPPLY  CO., FAIRBANKS  (via                                                                    
teleconference),   stated   that   Alaska  was   no   longer                                                                    
attracting investment  in Alaska.  He noted that  Alaska was                                                                    
at risk of  falling behind other states in the  Lower 48. He                                                                    
testified in support of HCS  CSSB 21(RES) and policy reforms                                                                    
for  Alaska.  He  believed  that  the  maximization  of  the                                                                    
resources was crucial presently.  He stated that the private                                                                    
sector  investment   was  important   and  tax   reform  was                                                                    
essential.                                                                                                                      
                                                                                                                                
5:37:31 PM                                                                                                                    
                                                                                                                                
JIM  PLAQUET, ALASKA  SUPPORTS INDUSTRY  ALLIANCE, FAIRBANKS                                                                    
(via  teleconference),  testified  in support  of  HCS  CSSB                                                                    
21(RES).  He  noted  that  an  increase  in  investment  was                                                                    
essential to changing the tax  structure. He stated that the                                                                    
tax change would allow for further investment.                                                                                  
                                                                                                                                
5:39:34 PM                                                                                                                    
                                                                                                                                
TIM TILSWORTH, FAIRBANKS  (via teleconference), testified in                                                                    
opposition  to  HCS CSSB  21(RES),  but  agreed that  a  tax                                                                    
change  was  necessary. He  stated  that  the oil  companies                                                                    
neglected to  provide insurance that  they would  invest. He                                                                    
stated that the  three large oil companies  were earning the                                                                    
greatest amounts of money.                                                                                                      
                                                                                                                                
5:41:51 PM                                                                                                                    
                                                                                                                                
ROGER BURGGRAFF,  FAIRBANKS (via  teleconference), testified                                                                    
in support  of HCS  CSSB 21(RES). He  believed that  the oil                                                                    
companies  would  invest in  Alaska  and  keep the  pipeline                                                                    
full.  He  noted  that  tax  reform  was  necessary  if  the                                                                    
investment was to be attractive to the oil companies.                                                                           
                                                                                                                                
5:43:41 PM                                                                                                                    
                                                                                                                                
RICHARD FINEBERG, FAIRBANKS  (via teleconference), testified                                                                    
in opposition to the legislation.  He opined that the slides                                                                    
provided  by  the  large oil  companies  in  committee  were                                                                    
misleading and inaccurate. He  advocated for using calendar-                                                                    
year data  versus fiscal-year  data for  increased accuracy.                                                                    
He opined that the audits  were also inaccurate. He stressed                                                                    
that  the legacy  fields  were located  far  from the  areas                                                                    
requiring oil.  He stressed that  the charts created  by the                                                                    
industry   were  oversimplified   and  poorly   sourced.  He                                                                    
provided a  documented report to the  committee. He asserted                                                                    
that good policy could not be created from bad numbers.                                                                         
                                                                                                                                
5:47:19 PM                                                                                                                    
                                                                                                                                
PJ O'RILEY, FAIRBANKS (via  teleconference), stated that she                                                                    
saw nothing  in the  bill that  required oil  through-put or                                                                    
Alaska  hire.   She  added  that   the  bill   contained  no                                                                    
requirement that dollars be spent  in Alaska. She understood                                                                    
the need for changes to the  tax system. She did not see the                                                                    
benefit of the  tax break, which would  eliminate 10 percent                                                                    
of the state revenue. She  asked how the budgetary shortfall                                                                    
would  be  addressed.  She   recommended  holding  HCS  CSSB                                                                    
21(RES)  until  an  industry   guarantee  was  received  via                                                                    
provision.                                                                                                                      
                                                                                                                                
5:49:53 PM                                                                                                                    
                                                                                                                                
DAVID DELONG,  FAIRBANKS (via teleconference),  testified in                                                                    
opposition to  HCS CSSB  21(RES). He  stated that  the money                                                                    
saved by  the oil  companies would not  be spent  in Alaska.                                                                    
The  state's  savings account  would  be  drained. He  spoke                                                                    
about  Prudhoe Bay  and added  that  the oil  in the  ground                                                                    
would only become more valuable.  He noted that employees of                                                                    
ConocoPhillips were legislators voting on the bill.                                                                             
                                                                                                                                
5:52:25 PM                                                                                                                    
                                                                                                                                
KEN  HALL,  FAIRBANKS  (via  teleconference),  testified  in                                                                    
support of HCS CSSB 21(RES). He  opined that ACES was a poor                                                                    
idea as it provided a  punitive tax against the industry. He                                                                    
mentioned the  comments made by industry  and he appreciated                                                                    
the benefits  offered by a  change in policy.  He understood                                                                    
that the improvements were necessary.                                                                                           
                                                                                                                                
5:54:34 PM                                                                                                                    
                                                                                                                                
RANDY GRIFFIN, FAIRBANKS  (via teleconference), testified in                                                                    
support of HCS CSSB 21(RES).  He advocated for the long-term                                                                    
future of  Alaskans. He stated that  the Alaska constitution                                                                    
encouraged development  of resources to the  maximum benefit                                                                    
of  the people.  He stated  that  taxes were  raised by  the                                                                    
Murkowski administration  and PPT. He mentioned  Sarah Palin                                                                    
and her  proposal of ACES.  He noted  that the issue  of the                                                                    
royalties was a  large issue. He commented on  the high cost                                                                    
of living in Alaska.                                                                                                            
                                                                                                                                
5:57:05 PM                                                                                                                    
                                                                                                                                
OFFNET                                                                                                                        
                                                                                                                                
DAVE CRUZ, CRUZ COMPANIES,  DEAD HORSE (via teleconference),                                                                    
testified  in  support of  HCS  CSSB  21(RES). He  discussed                                                                    
competition  with states  in  the Lower  48.  He noted  that                                                                    
wells in  North Dakota were  drilled at much  lower expense.                                                                    
He  stated that  a change  in the  oil tax  would allow  the                                                                    
state to  attract multiple companies.  He advocated  for the                                                                    
encouragement of development.                                                                                                   
                                                                                                                                
Vice-Chair Neuman  asked how many  men in his  company moved                                                                    
to North Dakota.                                                                                                                
                                                                                                                                
Mr. Cruz replied that his  company had 150 employees working                                                                    
in North  Dakota. He added  that 21 different  oil companies                                                                    
were competing for development in North Dakota.                                                                                 
                                                                                                                                
5:59:27 PM                                                                                                                    
                                                                                                                                
JIM  SYKES,   MAT-SU  (via  teleconference),   testified  in                                                                    
opposition  to HCS  CSSB 21(RES).  He stated  that the  bill                                                                    
lacked mandate for  oil companies to explore  and produce in                                                                    
Alaska. He  added that the current  administration neglected                                                                    
to audit ACES. He pointed  out that the return on investment                                                                    
seen by  the industry  for the fees  spent on  lobbyists was                                                                    
quite positive. He noted that  the imminent shortages in the                                                                    
state budget would  lead to state income  taxes or depletion                                                                    
of the permanent  fund. A change in tax  structure would not                                                                    
modify another jurisdiction's oil boon.                                                                                         
                                                                                                                                
6:02:16 PM                                                                                                                    
                                                                                                                                
TIM SMITH,  NOME (via  teleconference), spoke  in opposition                                                                    
to the legislation.  He did not believe oil was  taxed at an                                                                    
unreasonably  high  rate  in   comparison  to  other  global                                                                    
locations. He  stated that the  oil would be needed  at some                                                                    
point, so he encouraged  waiting for further development. He                                                                    
suggested  a   sunset  provision  if  the   tax  reform  was                                                                    
implemented; a way  to get back to the current  point if the                                                                    
change was unsuccessful.                                                                                                        
                                                                                                                                
6:04:06 PM                                                                                                                    
                                                                                                                                
KATE VEH,  KENAI (via teleconference),  vocalized opposition                                                                    
to the bill. She spoke on  behalf of her father in Ketchikan                                                                    
as  well. She  stated  that  she was  part  of an  organized                                                                    
opposition  event in  Soldotna with  60 other  Alaskans. She                                                                    
read  from the  Alaska  Constitution an  excerpt related  to                                                                    
making resources  available for  the maximum benefit  of the                                                                    
state's  residents.  She  wondered  if  the  bill's  passage                                                                    
required  a constitutional  amendment with  a vote  from the                                                                    
people of  Alaska. She  stated that  if the  legislature did                                                                    
not require the  companies to provide proof  that they would                                                                    
increase  production  or hire  Alaskans.  She  spoke to  the                                                                    
benefit of economic diversification for Alaska.                                                                                 
                                                                                                                                
ANCHORAGE                                                                                                                     
                                                                                                                                
6:06:11 PM                                                                                                                    
                                                                                                                                
MAYNARD TAPP,  ANCHORAGE (via teleconference),  testified in                                                                    
favor of the  legislation. He opined that  the bill adjusted                                                                    
the overzealous government  taxing of investment capability.                                                                    
He advocated  for an investment environment  that focused on                                                                    
long-term revenue for the state.                                                                                                
                                                                                                                                
6:08:12 PM                                                                                                                    
                                                                                                                                
TOM  LAKOSH,  ANCHORAGE  (via teleconference),  opposed  the                                                                    
legislation. He  stated that the bill  was unconstitutional.                                                                    
He stressed  that the bill  could cost the state  $6 billion                                                                    
without  any increase  in production.  He stated  that there                                                                    
was  no evidence  that the  bill would  result in  increased                                                                    
production. He  stressed that there  was clearly no  need to                                                                    
produce  any more  oil, as  the legislature  was willing  to                                                                    
approve a  loss of $6  billion in revenue. He  advocated for                                                                    
pacing  the production  of  oil  to obtain  a  ratio to  the                                                                    
consumption  of oil  products in  Alaska. He  suggested that                                                                    
those opposing  the bill should  organize a suit  against SB                                                                    
21 as unconstitutional.                                                                                                         
                                                                                                                                
6:12:56 PM                                                                                                                    
                                                                                                                                
JERRY  AHWINONA,  ANCHORAGE   (via  teleconference),  voiced                                                                    
opposition  to the  legislation.  He stated  that state  tax                                                                    
returns   showed  massive   revenue   increases  since   the                                                                    
inception  of  ACES.  He  stated  that  the  profits  earned                                                                    
belonged  to the  state and  its  citizens and  not the  oil                                                                    
companies.                                                                                                                      
                                                                                                                                
SCOTT  THORSON,  ANCHORAGE  (via teleconference),  spoke  in                                                                    
support  of the  bill. He  was concerned  about the  state's                                                                    
economic structure  if nothing  was done to  change Alaska's                                                                    
economic   future.  He   believed   that   Alaska  must   be                                                                    
competitive with Canada and other  locations. He opined that                                                                    
the state's only  lever to make a change was  in relation to                                                                    
its tax rates.  He believed the important  question was what                                                                    
would happen if  nothing was done. He believed  it would not                                                                    
take  long to  deplete the  state's revenue  if nothing  was                                                                    
done.  He opined  that the  bill may  not go  far enough  to                                                                    
increase Alaska's competitiveness.                                                                                              
                                                                                                                                
6:17:06 PM                                                                                                                    
                                                                                                                                
KELLY WALTERS, SAND LAKE  (via teleconference), testified in                                                                    
opposition to  the bill. He understood  that Alaskans wanted                                                                    
more  oil in  the pipeline.  He  pointed out  the last  time                                                                    
taxes were raised and the  indictment of former legislators.                                                                    
He stated  that throughout  decades of oil  taxation, Alaska                                                                    
allowed  15 -19  fields to  pay zero  taxes, yet  production                                                                    
continued   to  decline.   The  organization   for  economic                                                                    
cooperation forecasted  crude oil at $270  per barrel within                                                                    
the next  seven years. At  that forecasted price,  the state                                                                    
would lose $23.5 billion in  a single year. He advocated for                                                                    
a  sunset  clause  on  the  bill  to  determine  whether  an                                                                    
increase in production was proven.                                                                                              
                                                                                                                                
6:20:30 PM                                                                                                                    
                                                                                                                                
JEFFREY   TODD   BROWN,   ANCHORAGE   (via   teleconference)                                                                    
testified  against  the  legislation.  He  agreed  that  the                                                                    
progressivity  aspect of  ACES  required  change. He  stated                                                                    
that  SB 21  represented a  "whole-sale giveaway"  of Alaska                                                                    
resource  wealth to  oil company  shareholders. He  wondered                                                                    
how many  restricted shares legislators and  employees held.                                                                    
He was  suspicious of  the market  hegemony. He  opined that                                                                    
Alaska must  begin thinking and  acting like an  oil company                                                                    
and major owner of their resources.                                                                                             
                                                                                                                                
6:23:41 PM                                                                                                                    
                                                                                                                                
TOM MALONEY, ANCHORAGE (via  teleconference), spoke in favor                                                                    
of  the legislation.  He  spoke about  the  decrease in  oil                                                                    
production. He pointed out that  the highest producing month                                                                    
in 2012 was  lower than the lowest producing  month in 2007.                                                                    
He stated  that increased  production would  generate higher                                                                    
royalties, which  increased the  permanent fund  for Alaskan                                                                    
residents. He urged the passage of the bill.                                                                                    
                                                                                                                                
Representative Gara  noted that everyone in  the legislature                                                                    
agreed that production decline was not acceptable.                                                                              
                                                                                                                                
6:26:45 PM                                                                                                                    
                                                                                                                                
LYNN JOHNSON,  MAKE ALASKA COMPETITIVE  COALITION, ANCHORAGE                                                                    
(via teleconference), spoke  in favor of the  bill. He spoke                                                                    
to the  formation of  the coalition as  a result  of concern                                                                    
over  production decline.  He  pointed  out the  coalition's                                                                    
website.  He thanked  the  legislature  for recognizing  the                                                                    
declining  production problem,  recognizing  that no  action                                                                    
was a significant  risk to the state. He  furthered that the                                                                    
decline curve  had been presented  from various  sources. He                                                                    
pointed  to  business opportunities  occurring  out-of-state                                                                    
while   Alaska's  industry   declined.  He   spoke  to   the                                                                    
importance of implementing a change  in the current year. He                                                                    
stated that SB 21 was the right answer.                                                                                         
                                                                                                                                
6:29:56 PM                                                                                                                    
                                                                                                                                
BEN MOHR,  EAGLE RIVER (via teleconference),  voiced support                                                                    
for the  bill. He  opined that  the penalizing  structure of                                                                    
progressivity  in ACES  could "sink"  the  oil industry.  He                                                                    
stated that the  slowdown in oil production  was not healthy                                                                    
for the  state's economy. He  relayed that the bill  may not                                                                    
be perfect, but it was a step in the right direction.                                                                           
                                                                                                                                
6:31:07 PM                                                                                                                    
                                                                                                                                
RICK  ROGERS, RESOURCE  DEVELOPMENT COUNCIL,  ANCHORAGE (via                                                                    
teleconference) urged  support for  the bill. He  pointed to                                                                    
concern  about  balancing  the   short-term  impact  to  the                                                                    
treasury  and the  long-term benefits  to  the economy.  The                                                                    
short-term focus  could distract  from the ultimate  goal of                                                                    
stemming the Trans-Alaska  Pipeline System (TAPS) throughput                                                                    
decline. He highlighted a lack  in infrastructure needed. He                                                                    
stated that  the discussion was  not about  helping industry                                                                    
but  about  providing  the  state  with  a  more  profitable                                                                    
future.  He furthered  that the  real giveaway  was the  oil                                                                    
left in the ground with no  benefit to Alaskans. He spoke to                                                                    
conversations  about a  potential  need  for amendments.  He                                                                    
thanked the committee for its work.                                                                                             
                                                                                                                                
6:34:02 PM                                                                                                                    
                                                                                                                                
JOHN  DICKENS, SELF,  BETHEL (via  teleconference) testified                                                                    
in favor  of the bill. He  stated that ACES was  a threat to                                                                    
the state. He  stated that the country had  given money away                                                                    
to  other countries  because capital  invested to  receive a                                                                    
return.  He   stated  that  there  were   better  investment                                                                    
opportunities in  other countries.  He urged  the importance                                                                    
of increasing  the states revenue to  support the outrageous                                                                    
budgets.                                                                                                                        
                                                                                                                                
6:36:30 PM                                                                                                                    
                                                                                                                                
SHAY  FOSTER,  ANCHORAGE   (via  teleconference),  spoke  in                                                                    
support of the legislation. He  spoke about the industry and                                                                    
its  value  to future  generations.  He  did not  know  what                                                                    
Alaska held for  his daughter's future, but he  did know she                                                                    
would  move  to a  location  where  work was  available.  He                                                                    
furthered that  the oil industry  was not growing.  He noted                                                                    
that  his  company's  competitiveness   did  not  matter  if                                                                    
customers left the state.                                                                                                       
                                                                                                                                
6:38:35 PM                                                                                                                    
                                                                                                                                
PAULA HITE,  KENAI (via teleconference), voiced  support for                                                                    
the legislation.  She spoke to  family members' work  in the                                                                    
area  for  the  oil  and  gas industry.  She  spoke  to  the                                                                    
importance of  a healthy  economy and the  need for  jobs in                                                                    
the state. She understood that  the legislature had a chance                                                                    
to fix the "awful wrong" that was ACES.                                                                                         
                                                                                                                                
6:40:32 PM                                                                                                                    
                                                                                                                                
CARL  PORTMAN,  ANCHORAGE  (via  teleconference),  spoke  in                                                                    
favor  of  the  bill.  He   pointed  to  the  importance  of                                                                    
positioning the  state for  increased investment  that would                                                                    
lead  to additional  state revenue.  He  furthered that  the                                                                    
state  was  guaranteed  a   weaker  economy  from  decreased                                                                    
production under  the ACES regime.  He believed it  was time                                                                    
to make  a change to  the current system. He  encouraged the                                                                    
committee to pass the legislation.                                                                                              
                                                                                                                                
6:42:40 PM                                                                                                                    
                                                                                                                                
PETE  STOKES,  ANCHORAGE   (via  teleconference),  vocalized                                                                    
support  for the  legislation that  he opined  would attract                                                                    
increased investment  and North  Slope production.  He urged                                                                    
the committee to  pass legislation in the  current year. The                                                                    
current tax  system created throughput decline.  The current                                                                    
bill would  adequately address  the decrease  in production.                                                                    
He applauded the committee on  its efforts to change the tax                                                                    
system. He  stated that efforts  to lower the  decline would                                                                    
not occur without the bill.                                                                                                     
                                                                                                                                
6:45:22 PM                                                                                                                    
                                                                                                                                
BEAU   OBRIGEWITCH,   EAGLE  RIVER   (via   teleconference),                                                                    
testified in support of the  bill. He believed that ACES was                                                                    
intended  to  punish the  oil  companies.  He stressed  that                                                                    
action  needed  to  be  taken  to  address  the  decline  in                                                                    
production. He  discussed operational changes  that occurred                                                                    
on  the   North  Slope,   which  increased   employment  for                                                                    
Alaskans.  He  wondered  where new  exploration  was,  since                                                                    
operational rigs focused on recovering  more of the existing                                                                    
oil. He spoke to  well-established infrastructure. He stated                                                                    
that the  bill may  not be perfect,  but it  would encourage                                                                    
increased production.                                                                                                           
                                                                                                                                
6:48:18 PM                                                                                                                    
                                                                                                                                
GAIL  BOERWINKLE, ANCHORAGE  (via teleconference),  spoke in                                                                    
opposition to  the bill. She  pointed to testimony  from the                                                                    
industry in  the prior year. She  supported putting Alaskans                                                                    
to  work  and  to  increasing  development,  but  she  would                                                                    
appreciate insurance of exploration  and production from the                                                                    
industry. She supported a sunset  clause on the legislation.                                                                    
She noted that industry had  relayed during the prior year's                                                                    
testimony that  they would  "keep an eye  on Alaska"  if the                                                                    
tax system  was altered.  She did not  judge the  comment as                                                                    
assurance that new production or exploration would ensue.                                                                       
                                                                                                                                
6:49:56 PM                                                                                                                    
                                                                                                                                
MICHAEL    JESPERSON,   ANCHORAGE    (via   teleconference),                                                                    
testified  in favor  of the  bill.  He relayed  that he  had                                                                    
urged  the legislature  to make  a tax  change for  the past                                                                    
three years.  He had been told  that he needed to  leave the                                                                    
state if he wanted to advance  in his career. He stated that                                                                    
the fastest way  to improve the economy was to  pass oil tax                                                                    
reform; maximum benefit for the  people did not mean maximum                                                                    
taxation. He urged  the committee to help  his family remain                                                                    
in the state.                                                                                                                   
                                                                                                                                
6:52:11 PM                                                                                                                    
                                                                                                                                
RICHARD EVANS, ANCHORAGE  (via teleconference), testified in                                                                    
opposition  to  the bill.  He  disputed  the idea  that  oil                                                                    
companies would  depart the state if  the investment climate                                                                    
did  not  change.  He  pointed  to  various  countries  with                                                                    
geopolitical  issues as  options for  investment. He  stated                                                                    
that  discontinuing  ACES  and   reducing  tax  credits  for                                                                    
independent companies was  also a bad idea.  He believed the                                                                    
state  should  be  encouraging  independent  industries.  He                                                                    
opined  that the  bill was  moving through  the process  too                                                                    
quickly  and he  advocated  for more  time.  He opined  that                                                                    
Governor  Parnell  was  working  for the  oil  companies  as                                                                    
opposed to the state's people.  He suggested a sunset clause                                                                    
for the bill.                                                                                                                   
                                                                                                                                
6:56:31 PM                                                                                                                    
                                                                                                                                
JOHN  MALTAS, ANCHORAGE  (via teleconference),  testified in                                                                    
support of oil tax reform,  but opposed HCS CSSB 21(RES). He                                                                    
reminded  the legislature  about Alaska  history. He  stated                                                                    
that  the federal  decision to  allow off-shore  exploration                                                                    
was positive. If  fracking was seen as  a valuable practice,                                                                    
the  state would  benefit. He  opined  that the  legislature                                                                    
heard  what the  petroleum industry  wanted it  to hear.  He                                                                    
wished to  hear a  commensurate commitment by  the petroleum                                                                    
industry to merit the extent  of the proposed changes to the                                                                    
current tax  structure. He supported a  cautious incremental                                                                    
adjustment to the tax rate.  He suggested a sunset provision                                                                    
for HCS CSSB 21(RES).                                                                                                           
                                                                                                                                
7:02:07 PM                                                                                                                    
                                                                                                                                
JOHN SHIVELY,  ANCHORAGE (via teleconference),  testified in                                                                    
support  of HCS  CSSB  21(RES) and  understood  the need  to                                                                    
increase oil production.  He stated that the  decline in oil                                                                    
production required  action by  the legislature.  He pointed                                                                    
out that other jurisdictions  faced similar issues and their                                                                    
decisions to modify the situation were profitable.                                                                              
                                                                                                                                
7:03:39 PM                                                                                                                    
                                                                                                                                
DEANTHA   CROCKETT,   EXECUTIVE  DIRECTOR,   ALASKA   MINERS                                                                    
ASSOCIATION,  ANCHORAGE (via  teleconference), testified  in                                                                    
support of HCS  CSSB 21(RES). She stated that  a healthy oil                                                                    
and gas industry  was good for the mining  industry as well.                                                                    
She noted  that the  costs of energy  were important  to all                                                                    
industries and  Alaska was an  expensive state.  She pointed                                                                    
out that  the infrastructure  for rural areas  was essential                                                                    
and a change in tax regimes would promote growth in Alaska.                                                                     
                                                                                                                                
7:05:45 PM                                                                                                                    
                                                                                                                                
JOHN STURGEON, ANCHORAGE  (via teleconference), testified in                                                                    
support  of HCS  CSSB 21(RES).  He understood  the value  of                                                                    
competition  and its  effect on  investment. He  stated that                                                                    
there was no  shortage of oil in Alaska, only  a shortage of                                                                    
incentive  for extraction.  He  appreciated the  committee's                                                                    
work on the bill.                                                                                                               
                                                                                                                                
7:07:04 PM                                                                                                                    
                                                                                                                                
MARLEANNA  HALL, ANCHORAGE  (via teleconference),  testified                                                                    
that HCS CSSB  21(RES) was a great beginning  for Alaska oil                                                                    
reform.  She stated  that she  was a  lifelong Alaskan.  She                                                                    
encouraged the  passage of HCS  CSSB 21(RES) and  hoped that                                                                    
the committee  would consider the  long-term impacts  of the                                                                    
bill.                                                                                                                           
                                                                                                                                
7:08:08 PM                                                                                                                    
                                                                                                                                
DANIEL   DONKEL,   DONKEL   OIL  AND   GAS,   FLORIDA   (via                                                                    
teleconference), testified  in favor of the  legislation. He                                                                    
stated that he had 200  thousand acres in Alaska and planned                                                                    
to utilize the area if  the competition could be eliminated.                                                                    
He noted that  the three majors were the only  ones making a                                                                    
profit  on the  North Slope.  He spoke  fondly of  the small                                                                    
petroleum producers.                                                                                                            
                                                                                                                                
7:13:17 PM                                                                                                                    
                                                                                                                                
MERRICK  PIERCE, NINILICHIK  (via teleconference),  credited                                                                    
Governor  Sarah Palin  for helping  Alaska avoid  the United                                                                    
States recession.  If passed, HCS CSSB  21(RES) would affect                                                                    
capital outlay  spending and damage the  Alaskan economy and                                                                    
cripple the  economy of the  Interior. He stressed  that the                                                                    
bill  was  unconstitutional. He  commented  on  the lack  of                                                                    
affordable energy  in Alaska. He testified  in opposition to                                                                    
the legislation. He  noted that the state was  linked to oil                                                                    
revenue and he  stated that a prudent  investor would invest                                                                    
correctly.  He  criticized  the   lack  of  comparative  due                                                                    
diligence   of   the   value   of   the   investment   under                                                                    
consideration.                                                                                                                  
                                                                                                                                
7:16:23 PM                                                                                                                    
                                                                                                                                
KATHLEEN  M.   KENNEDY,  NINILICHIK   (via  teleconference),                                                                    
testified in  opposition to HCS  CSSB 21(RES).  She believed                                                                    
that the  bill was  unconstitutional. She realized  that the                                                                    
oil  industry  contributed  to  the  state's  treasury.  She                                                                    
proposed the use of alternative energy.                                                                                         
                                                                                                                                
7:18:53 PM                                                                                                                    
                                                                                                                                
ALAN  PARKS,   HOMER  (via  teleconference),   testified  in                                                                    
opposition  to  HCS CSSB  21(RES)  because  of the  lack  of                                                                    
guarantee of increased oil  production with the legislation.                                                                    
He  stated that  Senator Micciche  wished for  the important                                                                    
guarantee  from the  oil companies  during his  campaign. He                                                                    
wondered how  to pay  for education  and public  safety with                                                                    
the  loss  in revenue.  He  requested  that the  legislature                                                                    
spend additional time on the bill.                                                                                              
                                                                                                                                
7:21:10 PM                                                                                                                    
                                                                                                                                
LARRY   SMITH,  HOMER   (via  teleconference)   opposed  the                                                                    
legislation. He  discussed the  publication of  Governor Jay                                                                    
Hammond's last  book about oil policy  titled "Diapering the                                                                    
Devil." He  believed that Alaska  managed to  avoid multiple                                                                    
short falls seen in other areas of the world.                                                                                   
                                                                                                                                
7:23:22 PM                                                                                                                    
                                                                                                                                
PAMELA  BRODIE,  HOMER  (via teleconference),  testified  in                                                                    
opposition   to   the   legislation.  She   understood   the                                                                    
importance of declining oil production  and the need to coax                                                                    
oil companies into  more drilling. She disliked  the lack of                                                                    
guarantee  on behalf  of the  oil companies  despite the  $1                                                                    
billion per year gift from the legislature.                                                                                     
                                                                                                                                
7:25:12 PM                                                                                                                    
                                                                                                                                
ROBERTA  HIGHLAND,  HOMER  (via  teleconference),  spoke  in                                                                    
opposition   to  the   legislation.  She   hoped  that   the                                                                    
legislature  had  the  backbone  to  stand  up  to  the  oil                                                                    
companies.   She  expressed   concern   about  the   state's                                                                    
connection to the oil companies.                                                                                                
                                                                                                                                
7:27:30 PM                                                                                                                    
                                                                                                                                
KEN  LANDFIELD,  HOMER  (via teleconference),  testified  in                                                                    
opposition  to  the  legislation.  He  described  SB  21  as                                                                    
welfare for the oil  conglomerates. He advocated for written                                                                    
promises  from  the  oil industry  of  investment  upon  tax                                                                    
structure change.  He noted that  the existing  reserves and                                                                    
infrastructure should  be backed by  a guarantee by  the oil                                                                    
companies. He opined that ACES  was functioning properly. He                                                                    
begged for a sunset clause for the bill.                                                                                        
                                                                                                                                
7:29:22 PM                                                                                                                    
                                                                                                                                
BJORN  OLSON,  HOMER   (via  teleconference),  testified  in                                                                    
opposition to  the legislation. He  noted that  fossil fuels                                                                    
worked   to  alter   the  earth's   atmosphere  and   marine                                                                    
chemistry. He  advocated for a  move away from  fossil fuels                                                                    
and   toward   more   sustainable   economies   and   energy                                                                    
production. He  stated that  climate change  was a  fact and                                                                    
that alternative  legislation was  essential. He  stated the                                                                    
revenue derived via ACES ought  to help work toward Alaska's                                                                    
long-term future.                                                                                                               
                                                                                                                                
KETCHIKAN                                                                                                                     
                                                                                                                                
7:30:46 PM                                                                                                                    
                                                                                                                                
VALERIE  BROOKS, KETCHIKAN  (via teleconference),  testified                                                                    
in opposition to HCS CSSB  21(RES). She stated that the lack                                                                    
of  focus on  education funding  was unfortunate.  She noted                                                                    
the lack  of increase to  the Base Student  Allocation (BSA)                                                                    
for the  fourth year in a  row. She opined that  the state's                                                                    
priority  must  be education  funding.  She  noted that  the                                                                    
profits earned  by the oil  companies did not  indicate that                                                                    
they required additional money from Alaska.                                                                                     
                                                                                                                                
SITKA                                                                                                                         
                                                                                                                                
7:32:37 PM                                                                                                                    
                                                                                                                                
LIBBY  STORTZ,  SITKA  (via  teleconference),  testified  in                                                                    
opposition  to  the legislation.  She  believed  that SB  21                                                                    
provided  an enormous  give-away to  the oil  companies. She                                                                    
stated that  oil production was  in decline due to  peak oil                                                                    
production  and  easy accessibility  in  the  Lower 48.  She                                                                    
noted that  the tax  break provided  no guarantees  of gains                                                                    
for  Alaskans  and would  lead  to  major losses  in  needed                                                                    
services throughout the state.                                                                                                  
                                                                                                                                
7:34:20 PM                                                                                                                    
                                                                                                                                
WILLIAM  STORTZ, SITKA  (via  teleconference), testified  in                                                                    
opposition to HCS  CSSB 21(RES). He explained that  he was a                                                                    
lifelong  Alaskan  who made  his  money  via production.  He                                                                    
argued that  the state was  willing to provide money  to the                                                                    
oil  industry  without  guarantee of  production,  which  he                                                                    
found unconscionable.  He stated  that he  was looking  at a                                                                    
photograph  of Ben  Grussendorf  who always  fought for  the                                                                    
state's resources.                                                                                                              
                                                                                                                                
7:35:21 PM                                                                                                                    
                                                                                                                                
WARD  ELDRIDGE,  SITKA  (via teleconference),  testified  in                                                                    
opposition to the  legislation. He believed that  the oil in                                                                    
the ground belonged to the  people of Alaska. He interpreted                                                                    
the tax  as a method for  the industry to pay  the people of                                                                    
Alaska for their oil. He saw  the bill as robbing the common                                                                    
Alaskan to give to the rich.                                                                                                    
                                                                                                                                
7:36:34 PM                                                                                                                    
                                                                                                                                
RAY  FRIEDLANDER, SITKA  (via  teleconference) testified  in                                                                    
opposition to the  legislation. She stated that  she was one                                                                    
of 75 people  who attended a rally in Sitka  opposing SB 21.                                                                    
She saw the legislation as  a giveaway. She mentioned that a                                                                    
petition with  64 signatures opposing  the bill was  sent to                                                                    
the finance  committee. She  expressed discontent  about the                                                                    
lack of  guarantee on behalf of  the industry to act  in the                                                                    
public's best  interest. She noted that  funding for schools                                                                    
and critical services would be diminished.                                                                                      
                                                                                                                                
7:37:53 PM                                                                                                                    
                                                                                                                                
JOAN  FRANZ, FAIRBANKS  (via  teleconference), testified  in                                                                    
opposition to the legislation. She  pointed out that the oil                                                                    
industry paid the salaries of  two legislators voting on the                                                                    
bill,  which she  opined  was a  conflict  of interest.  She                                                                    
noted that  the analysis by  Joe Paskvan was  independent of                                                                    
oil  company  influence. She  noted  that  the oil  industry                                                                    
profits were soaring  and she wished to see  a commitment to                                                                    
increase production.                                                                                                            
                                                                                                                                
7:40:17 PM                                                                                                                    
                                                                                                                                
LISA  HERBERT,   GREATER  FAIRBANKS  CHAMBER   OF  COMMERCE,                                                                    
FAIRBANKS  (via teleconference),  spoke  in  support of  the                                                                    
bill. She  wondered how  not making  a change  would improve                                                                    
the  state's  financial  situation. She  stressed  that  the                                                                    
state  required increased  oil  production immediately.  She                                                                    
discussed    the   importance    of   increasing    Alaska's                                                                    
competitiveness. She  encouraged the  committee to  pass the                                                                    
bill.                                                                                                                           
                                                                                                                                
7:42:38 PM                                                                                                                    
                                                                                                                                
ELIZABETH SIEGEL, FAIRBANKS  (via teleconference), testified                                                                    
in opposition to the bill.  She understood the importance of                                                                    
the complex issue, however, she  advocated for the inclusion                                                                    
of requirements  for increased oil production.  She stressed                                                                    
that the oil  industry should be required to  sign a written                                                                    
agreement  that production  would  increase  under a  stated                                                                    
time limit.  She opined  that the  oil companies  should not                                                                    
control any aspect of state  auditing. She was outraged that                                                                    
two  senators had  been able  to vote  on the  bill as  they                                                                    
worked for  oil companies benefitting from  its passage. She                                                                    
urged the committee to not pass the bill.                                                                                       
                                                                                                                                
ANCHORAGE                                                                                                                     
                                                                                                                                
7:44:32 PM                                                                                                                    
                                                                                                                                
REED CHRISTENSEN, ANCHORAGE  (via teleconference), testified                                                                    
in support of  the bill. He expressed  that opinions seeking                                                                    
guarantees for oil production  were short-sighted. He listed                                                                    
guarantees the  state should provide  the oil  companies. He                                                                    
equated  the issue  to investing  in his  children's college                                                                    
education.  He stressed  that the  reform was  the necessary                                                                    
investment in the state's future  that could not be ignored.                                                                    
He encouraged the committee to vote in favor of the bill.                                                                       
                                                                                                                                
RAY  METCALFE, ANCHORAGE  (via  teleconference) referred  to                                                                    
testimony  by  Mr.  Donkel who  had  testified  against  the                                                                    
legislation. He  stated that Mr. Donkel's  greatest asset in                                                                    
attracting business to Alaska was  the ACES system. He spoke                                                                    
to the common desire  for increased production. He discussed                                                                    
that oil companies  had not provided a  commitment under the                                                                    
current  legislation.  He   believed  that  the  independent                                                                    
companies were  willing and able to  provide commitments for                                                                    
exploration  with  a  properly  structured  tax  system.  He                                                                    
stated  that Mr.  Donkel's recommendation  was to  set up  a                                                                    
fund with $1  billion for use outside  of existing producing                                                                    
areas.                                                                                                                          
                                                                                                                                
7:50:54 PM                                                                                                                    
                                                                                                                                
KEITH  SILVER,  ANCHORAGE  (via  teleconference),  spoke  in                                                                    
favor of  the bill. He stated  that he and other  former oil                                                                    
industry  employees were  victims  of ACES.  He opined  that                                                                    
three  years  of vetting  was  sufficient  for the  new  oil                                                                    
taxation   proposed  in   SB  21.   He  wondered   what  the                                                                    
legislature and Governor Palin gave  to the oil companies in                                                                    
return for  increased taxes.  He stated  that the  state was                                                                    
rapidly approaching  the point  of operational  problems for                                                                    
the pipeline. He urged the committee to pass the bill.                                                                          
                                                                                                                                
7:52:37 PM                                                                                                                    
                                                                                                                                
RICK  BUTTON, ANCHORAGE  (via teleconference),  testified in                                                                    
support of the legislation. He  stated that it was important                                                                    
to take action to reduce  or reverse oil production decline.                                                                    
He advocated for  the removal of the  progressive portion of                                                                    
the tax code. He did not  believe that SB 21 went far enough                                                                    
to  reduce taxes.  He would  prefer  a 30  percent base  tax                                                                    
rate.   He  furthered   that  capital   budgets  had   grown                                                                    
unsustainably and  ACES rates  were justified  to compensate                                                                    
for  the  unrealistic  budgets.  He  added  that  the  state                                                                    
operated  under a  capitalist  system  unlike the  socialist                                                                    
system in Norway.                                                                                                               
                                                                                                                                
7:55:21 PM                                                                                                                    
                                                                                                                                
MICHAEL DZURISIN,  ANCHORAGE (via teleconference),  spoke in                                                                    
opposition  to the  bill. He  opined that  SB 21  was a  tax                                                                    
giveaway to the large oil  producers. He cited Mr. Donkel as                                                                    
an  independent oil  producer. He  stated that  Mr. Donkel's                                                                    
selling point was the credit  and profit guaranteed by ACES.                                                                    
He  pointed  to  excessive charges  charged  to  independent                                                                    
producers  by   the  major   producers  for   feeder  lines,                                                                    
conditioning  facilities and  other  contracts. He  believed                                                                    
the bill  was a  deal killer. He  discussed that  Mr. Donkel                                                                    
had been  in the business for  30 years. He believed  it was                                                                    
important to take  to heart the testimony of  Mr. Donkel. He                                                                    
reiterated his opposition to the bill.                                                                                          
                                                                                                                                
7:58:05 PM                                                                                                                    
                                                                                                                                
BRIAN  HOVE,   ANCHORAGE  (via   teleconference),  vocalized                                                                    
support for  the bill. He  was hopeful that the  state could                                                                    
move forward and  pass the bill allowing  the legislature to                                                                    
focus on  other important  matters. He believed  the framers                                                                    
of the  state constitution  had future generations  in mind.                                                                    
He urged the passage of the bill.                                                                                               
                                                                                                                                
7:59:51 PM                                                                                                                    
                                                                                                                                
RACHEL PETRO,  PRESIDENT, ALASKA STATE CHAMBER  OF COMMERCE,                                                                    
ANCHORAGE (via  teleconference), testified  in favor  of the                                                                    
legislation.  She   pointed  to  a  diverse   population  of                                                                    
businesses  in the  chamber.  She  supported the  governor's                                                                    
guiding  principles  of the  bill.  She  pointed to  various                                                                    
scenarios that could  take place related to  the tax system.                                                                    
She  stated that  tweaking  taxes would  put  Alaska in  the                                                                    
middle  of the  pack. She  asked the  committee to  consider                                                                    
whether being  in the  middle of the  pack would  be enough.                                                                    
She would like to see the bill's competitiveness increased.                                                                     
                                                                                                                                
8:03:25 PM                                                                                                                    
                                                                                                                                
LILLIAN  KONEIG, ANCHORAGE  (via  teleconference), spoke  in                                                                    
support  of  the  legislation with  constraints  that  would                                                                    
allow for  reinvestment in Alaska.  She was sick  of hearing                                                                    
about oil. She  stated that money should be  invested in the                                                                    
state and not  in other areas. She furthered  that money was                                                                    
leaving the state.  She wondered why people  wanted to leave                                                                    
when they retired. She believed  Fairbanks was a dying city.                                                                    
She stated  that 35 years  of drilling  was a long  time and                                                                    
she encouraged a change in Alaska's vision.                                                                                     
                                                                                                                                
8:06:18 PM                                                                                                                    
RECESSED                                                                                                                        
                                                                                                                                
9:14:55 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Vice-Chair Neuman noted that the public testimony.                                                                              
                                                                                                                                
DEACON  CHARLES ROHRBACHER,  JUNEAU, spoke  about the  value                                                                    
and dignity of every human  being. He noted that working for                                                                    
the common good addressed  both economic and social justice.                                                                    
He  added that  the poor  in  Alaska were  affected on  many                                                                    
different levels. The greatest  problem that the state faced                                                                    
was the crisis in rural Alaska.  He noted that the damage of                                                                    
development  for native  people  of  rapid and  uncontrolled                                                                    
social  and economic  change. He  urged  the legislators  to                                                                    
view the impact of the  legislation on the poorest people in                                                                    
the state. He added that there  was not a guarantee that the                                                                    
oil companies would invest in  our state, but when the money                                                                    
was  transferred out  of the  state, it  would no  longer be                                                                    
available  for  social  necessities.   He  pointed  out  his                                                                    
devastating experience supporting  those affected by suicide                                                                    
in rural areas.                                                                                                                 
                                                                                                                                
9:19:42 PM                                                                                                                    
                                                                                                                                
Vice-Chair Neuman struggled with  the decline in the revenue                                                                    
with  throughput declining  in Trans-Alaska  Pipeline System                                                                    
(TAPS) equated to approximately  40 thousand barrels per day                                                                    
or $40  million per  day. He noted  that the  revenue stream                                                                    
was less  than what the needs  of the state were.  He agreed                                                                    
that  he  shared the  same  concerns  regarding funding  for                                                                    
social necessities  and education. He expressed  the goal of                                                                    
protecting Alaska's future.                                                                                                     
                                                                                                                                
9:20:45 PM                                                                                                                    
                                                                                                                                
Representative Edgmon thanked the  Deacon for coming forward                                                                    
and he appreciated the struggle  of the issue. He noted that                                                                    
the  primary  source  of  revenue  was  declining.  He  also                                                                    
struggled   with  short   and   long-term  consequences   of                                                                    
declining  revenue  on rural  Alaska.  He  hoped to  find  a                                                                    
solution for the rural areas.                                                                                                   
                                                                                                                                
9:22:31 PM                                                                                                                    
                                                                                                                                
JACKIE  STEWART, JUNEAU,  stated  that she  lived in  Alaska                                                                    
since  1975. She  reported that  she  worked many  different                                                                    
jobs  in Alaska.  She retired  from  state appointment.  She                                                                    
also helped  people with mental illnesses  start businesses.                                                                    
She  noted that  the  Alaska Mental  Health Trust  Authority                                                                    
(AMHTA) was a collaborating entity  for her. She stated that                                                                    
before  ACES  was  passed,  the  oil  companies  sought  tax                                                                    
breaks. She advocated for focus  on renewable resources. She                                                                    
testified in opposition  to HCS CSSB 21(RES).  She hoped for                                                                    
a focus on renewable resources.                                                                                                 
                                                                                                                                
9:26:50 PM                                                                                                                    
                                                                                                                                
PHOEBE  ROHRBACHER,  testified  in opposition  to  HCS  CSSB                                                                    
21(RES).  She  testified  on  behalf   of  her  brother  who                                                                    
believed  that SB  21 was  immoral and  did not  support the                                                                    
poor and vulnerable people in Alaska.                                                                                           
                                                                                                                                
9:27:57 PM                                                                                                                    
                                                                                                                                
ANDY  ROGERS,  ALASKA  STATE CHAMBER  OF  COMMERCE,  JUNEAU,                                                                    
testified  as an  Alaskan. He  testified in  support of  HCS                                                                    
CSSB 21(RES)  and hoped that  the legislature would  pass it                                                                    
out of committee. He stated that  ACES might undo all of his                                                                    
hard work.  He worried  that his family  might lose  more if                                                                    
the price  of oil falls.  He believed that ACES  made Alaska                                                                    
an unattractive partner.                                                                                                        
                                                                                                                                
9:30:54 PM                                                                                                                    
                                                                                                                                
JESSICA ULLRICH,  ANCHORAGE (via  teleconference), testified                                                                    
in opposition  to HCS  CSSB 21(RES) as  a social  worker who                                                                    
witnessed  the  effect  of  funding  cuts  on  children  and                                                                    
families.  She  noted  that  the  changes  would  negatively                                                                    
impact social services in Alaska.  She urged the legislature                                                                    
to vote no on SB 21.                                                                                                            
                                                                                                                                
9:33:19 PM                                                                                                                    
                                                                                                                                
CAROLINE  BOLAR, ANCHORAGE  (via teleconference),  testified                                                                    
in opposition  to the  legislation. She  read a  letter from                                                                    
the  Anchorage  Daily  News.  She  discussed  the  ten  year                                                                    
dispute settled  for ten cents  on the dollar and  the Exxon                                                                    
Valdez  oil  spill.  She   suggested  hiring  the  Norwegian                                                                    
government  to  help  Alaska control  and  profit  from  our                                                                    
resources.                                                                                                                      
                                                                                                                                
9:36:22 PM                                                                                                                    
                                                                                                                                
DIRK NELSON, ROSIE CREEK  (via teleconference), testified in                                                                    
opposition to the  legislation. He opined that SB  21 was an                                                                    
irresponsible scandal  that lacked a guarantee  of increased                                                                    
production  or revenue.  He stated  that  the United  States                                                                    
Department  of Interior  stated that  Alaska's oil  revenues                                                                    
were low on the international  market. He noted that the oil                                                                    
facilities were  limited by the larger  producers. He stated                                                                    
that Alaska  was an  excellent place  for excess  cash flow,                                                                    
but  the  profits  would  not be  reinvested  in  state.  He                                                                    
claimed  that ConocoPhillips  had a  net profit  of $28  per                                                                    
barrel.  Under  ACES, if  the  oil  companies did  not  earn                                                                    
money, they  did not  pay taxes. He  challenged the  idea of                                                                    
tying oil  decline to tax  rates. He suggested  tackling the                                                                    
issue  of  undeveloped leases  as  a  solution to  declining                                                                    
production. He saw the bill as highly irresponsible.                                                                            
                                                                                                                                
9:40:42 PM                                                                                                                    
                                                                                                                                
JERRY  AHWINONA, ANCHORAGE  (via teleconference),  suggested                                                                    
structuring  the tax  credits  differently.  He praised  the                                                                    
efforts of the committee. He  testified in opposition to the                                                                    
legislation.                                                                                                                    
                                                                                                                                
9:42:35 PM                                                                                                                    
                                                                                                                                
Vice-Chair Neuman CLOSED public testimony.                                                                                      
                                                                                                                                
Co-Chair Stoltze announced the schedule.                                                                                        
                                                                                                                                
CSSB 21  (FIN) am(efd fld)  was HEARD and HELD  in committee                                                                    
for further consideration.                                                                                                      
                                                                                                                                
9:44:03 PM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
The meeting was adjourned at 9:44 p.m.                                                                                          

Document Name Date/Time Subjects
SB 21 Support Letters.pdf HFIN 4/9/2013 5:00:00 PM
SB 21
SB 21 Opposition Letters.pdf HFIN 4/9/2013 5:00:00 PM
SB 21