Legislature(2017 - 2018)BARNES 124

01/26/2018 01:00 PM RESOURCES

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Audio Topic
01:03:29 PM Start
01:06:13 PM HB288
02:58:17 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= HB 288 OIL AND GAS PRODUCTION TAX TELECONFERENCED
Heard & Held
-- Testimony <Invitation Only> --
**Streamed live on AKL.tv**
                    ALASKA STATE LEGISLATURE                                                                                  
               HOUSE RESOURCES STANDING COMMITTEE                                                                             
                        January 26, 2018                                                                                        
                           1:03 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Andy Josephson, Co-Chair                                                                                         
Representative Geran Tarr, Co-Chair                                                                                             
Representative Harriet Drummond                                                                                                 
Representative Justin Parish                                                                                                    
Representative Chris Birch                                                                                                      
Representative DeLena Johnson                                                                                                   
Representative George Rauscher                                                                                                  
Representative David Talerico                                                                                                   
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Mike Chenault (alternate)                                                                                        
Representative Chris Tuck (alternate)                                                                                           
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
HOUSE BILL NO. 288                                                                                                              
"An Act relating to the minimum tax imposed on oil and gas                                                                      
produced from leases or properties that include land north of 68                                                                
degrees North latitude; and providing for an effective date."                                                                   
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HB 288                                                                                                                  
SHORT TITLE: OIL AND GAS PRODUCTION TAX                                                                                         
SPONSOR(s): REPRESENTATIVE(s) TARR                                                                                              
                                                                                                                                
01/16/18       (H)       READ THE FIRST TIME - REFERRALS                                                                        
01/16/18       (H)       RES, FIN                                                                                               
01/22/18       (H)       RES AT 1:00 PM BARNES 124                                                                              
01/22/18       (H)       Heard & Held                                                                                           
01/22/18       (H)       MINUTE(RES)                                                                                            
01/26/18       (H)       RES AT 1:00 PM BARNES 124                                                                              
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
KEN ALPER, Director                                                                                                             
Tax Division                                                                                                                    
Department of Revenue                                                                                                           
Juneau, Alaska                                                                                                                  
POSITION   STATEMENT:     Provided   a  PowerPoint   presentation                                                             
entitled,  "Analysis of  HB 288  Increase to  Gross Minimum  Tax"                                                               
dated 1/16/18.                                                                                                                  
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
1:03:29 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  GERAN   TARR  called   the  House   Resources  Standing                                                             
Committee meeting  to order at  1:03 p.m.   Representatives Tarr,                                                               
Parish,  Birch,   Johnson,  Rauscher,  Talerico,   Drummond,  and                                                               
Josephson were present at the call to order.                                                                                    
                                                                                                                                
               HB 288-OIL AND GAS PRODUCTION TAX                                                                            
                                                                                                                                
1:06:13 PM                                                                                                                    
                                                                                                                                
CO-CHAIR TARR announced that the  only order of business would be                                                               
HOUSE BILL NO.  288, "An Act relating to the  minimum tax imposed                                                               
on oil  and gas produced  from leases or properties  that include                                                               
land north  of 68  degrees North latitude;  and providing  for an                                                               
effective date."                                                                                                                
                                                                                                                                
CO-CHAIR TARR  provided the following information  related to the                                                               
previous  hearing  of HB  288  on  1/22/18:   a  corrected  slide                                                               
entitled,  "Other  Possible  Considerations,"  and  a  new  slide                                                               
entitled, "Taxable Barrels Plus Royalty Barrels Value."                                                                         
                                                                                                                                
1:09:43 PM                                                                                                                    
                                                                                                                                
KEN  ALPER,  Director,  Tax   Division,  Department  of  Revenue,                                                               
provided a PowerPoint presentation  entitled, "Analysis of HB 288                                                               
Increase to  Gross Minimum Tax"  dated 1/16/18.  He  informed the                                                               
committee  the definitions  of Alaska's  four major  oil and  gas                                                               
revenue sources are as follows (slide 2):                                                                                       
                                                                                                                                
    · property tax:  ad valorem tax on the value of oil and gas                                                                 
      property,  pipelines, equipment,  and  facilities, most  of                                                               
      which is shared with local  government where the assets are                                                               
      located and  which garners  approximately $100  million per                                                               
      year                                                                                                                      
    · royalty:  landowner's share of taxes, generally 12.5                                                                      
      percent, and one quarter of which must go to the corpus of                                                                
      the Alaska Permanent Fund                                                                                                 
    · production tax:  profits-based tax that garners most                                                                      
      conflict and is based on various complicated calculations                                                                 
    · corporate income tax:  collected on remaining profits after                                                               
      production tax for oil and gas taxpayers at a typical                                                                     
      effective rate of 7 percent                                                                                               
                                                                                                                                
MR. ALPER  continued to  slide 3,  which illustrated  the state's                                                               
oil and  gas revenue from  fiscal years 2012-2017 (FY  12-17) and                                                               
the average  price of Alaska  North Slope  oil for the  same time                                                               
period.   He pointed out  although the  average price of  oil was                                                               
the same in  2013 and 2014, a lower production  tax rate caused a                                                               
reduction  in the  tax revenue.   All  four revenue  sources have                                                               
declined,  with the  most reduction  to  production tax  revenue,                                                               
which is based on profits.                                                                                                      
                                                                                                                                
1:14:29 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  PARISH   asked  for  a  further   explanation  of                                                               
corporate income tax.                                                                                                           
                                                                                                                                
MR. ALPER  explained corporate income  tax is based  on estimated                                                               
taxes  which  are tied  to  previous  years; therefore,  in  2015                                                               
companies paid large estimates based  on past profits thus at the                                                               
end of  the year  the state  refunded overpaid  taxes.   Also, in                                                               
error, some  revenue from  corporate taxes  was not  deposited to                                                               
the Constitutional  Budget Reserve  Fund (CBRF),  and corrections                                                               
were made, resulting in a negative tax flow in FY 16 and FY 17.                                                                 
                                                                                                                                
REPRESENTATIVE  RAUSCHER  noted  slide  3 does  not  include  the                                                               
amount  of the  deposits to  CBRF and  asked for  the amount  not                                                               
included.                                                                                                                       
                                                                                                                                
MR. ALPER said generally deposits  to CBRF are payments on audits                                                               
and range from  $100 million to $125 million; however,  in FY 17,                                                               
the amount was almost $400 million due to [tax] settlements.                                                                    
                                                                                                                                
REPRESENTATIVE  TALERICO  surmised   the  difference  in  revenue                                                               
between  FY 13  and FY  14 -  shown on  slide 3  - was  due to  a                                                               
decline in production.                                                                                                          
                                                                                                                                
MR.  ALPER advised  the decline  was due  to less  production, an                                                               
increase  in spending  by the  companies, and  on 1/1/14  the tax                                                               
system converted  from Alaska's Clear and  Equitable Share (ACES)                                                               
[passed in  the Twenty-Fifth Alaska State  Legislature] to Senate                                                               
Bill 21 (the  More Alaska Production Act) [passed  in the Twenty-                                                               
Eighth  Alaska State  Legislature],  which assesses  a lower  tax                                                               
rate and thereby reduced revenue.                                                                                               
                                                                                                                                
MR. ALPER reviewed previous tax  credit reforms within House Bill                                                               
247  [passed in  the  Twenty-Ninth Alaska  State Legislature]  as                                                               
follows:   phased  out  Cook Inlet  tax  credits; reduced  Middle                                                               
Earth  [land in  Alaska south  of 68  degrees north  latitude and                                                               
outside of Cook  Inlet] tax credits; extended the  Cook Inlet gas                                                               
tax  cap and  added  a $1  per  barrel of  oil  tax that  garners                                                               
approximately $5 million per year  from production in Cook Inlet;                                                               
added sunset  provision to  Gross Value  Reduction (GVR)  for new                                                               
North Slope  oil production; annual cap  on per-company, per-year                                                               
cash   credit   payments;   resident   hire   priority;   limited                                                               
transparency  with  an annual  report  to  reveal companies  that                                                               
receive  cash  for  credits;  interest  rate  change  for  better                                                               
reporting; technical cleanup and  repeal of obsolete language for                                                               
clarity;  regulation  package   proposed  and  adopted  effective                                                               
1/1/17.                                                                                                                         
                                                                                                                                
REPRESENTATIVE  PARISH returned  attention to  slide 3  and asked                                                               
Mr. Alper to explain the decrease in royalty from 2012 to 2017.                                                                 
                                                                                                                                
1:22:08 PM                                                                                                                    
                                                                                                                                
MR. ALPER advised  royalty revenue is a function  of gross value,                                                               
not of  net value; gross value  is the market price  of oil minus                                                               
the cost of getting it to market,  which is around $10.  When the                                                               
price of  oil dropped  from $110  per barrel  to $40  per barrel,                                                               
companies' profits dropped by 90  percent, but the gross value of                                                               
oil  only dropped  by two-thirds,  thus slide  3 illustrates  the                                                               
reduction in the wellhead value of the oil.                                                                                     
                                                                                                                                
REPRESENTATIVE PARISH  inquired as  to when DOR  expects recovery                                                               
in the value of the royalty.                                                                                                    
                                                                                                                                
MR. ALPER said  the official forecast indicates  a small recovery                                                               
in production tax revenue  and royalties in FY 18 and  FY 19 - an                                                               
additional  $200  million  to  $300  million -  if  there  is  an                                                               
increase in the price of oil to approximately $60 per barrel.                                                                   
                                                                                                                                
REPRESENTATIVE  PARISH  turned attention  to  slide  4 and  asked                                                               
about the  impact of the  80-90 percent credits granted  prior to                                                               
the passage of House Bill 247.                                                                                                  
                                                                                                                                
1:23:43 PM                                                                                                                    
                                                                                                                                
MR. ALPER  clarified operating loss  credits were intended  to be                                                               
35-45  percent of  a loss,  which was  valid when  a company  was                                                               
spending  for a  future  field  not yet  in  production, and  was                                                               
designed to  align with the  marginal tax rate paid  by producers                                                               
[that are bringing in profits].   Although not intentional, under                                                               
certain circumstances, when a company  was in production, but was                                                               
operating at  a loss due  to low  prices, its new  oil production                                                               
was  eligible for  gross  value reduction  and  that lowered  the                                                               
rate;  for example,  instead of  $10  million loss  getting a  35                                                               
percent credit of $3.5 million,  the gross value reduction turned                                                               
the  loss into  a  $30 million  paper loss,  resulting  in a  tax                                                               
credit  of  $10.5 million.    Mr.  Alper  stated this  effect  of                                                               
previous   legislation   was   inadvertent  and   was   corrected                                                               
prospectively in House Bill 247.                                                                                                
                                                                                                                                
REPRESENTATIVE PARISH  further asked whether the  credits were to                                                               
be assessed against future taxes.                                                                                               
                                                                                                                                
MR.  ALPER  said  the  credits  were  cashable  certificates  and                                                               
posited this was not wise public policy.                                                                                        
                                                                                                                                
1:26:24 PM                                                                                                                    
                                                                                                                                
MR. ALPER reviewed previous tax  credit reforms within House Bill                                                               
111  [passed  in  the  Thirtieth  Alaska  State  Legislature]  as                                                               
follows:   ends  most cashable  tax credits  for losses  or other                                                               
activities; repealed net operating  loss (NOL) or carried-forward                                                               
annual loss credit statute; replaced  NOL credits with new system                                                               
of carried-forward lease  expenditures.  The new  system is based                                                               
on  the  idea  of  cost recovery  after  production  begins,  and                                                               
established a ringfence to prevent  certain losses, and maximized                                                               
taxpayer flexibility  on use; if unused,  lease expenditures lose                                                               
value after ten years to protect against "downlift" (slide 5).                                                                  
                                                                                                                                
1:29:13 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE RAUSCHER  asked when  the division expects  to see                                                               
changes resulting from House Bill 111.                                                                                          
                                                                                                                                
MR. ALPER said the effective date  of House Bill 111 was [1/1/18]                                                               
and none  of the new credits  will be claimed prior  to the taxes                                                               
that are filed  in March 2019; therefore, a  company losing money                                                               
during construction  in 2018, and  beginning production  in 2019,                                                               
will start  using credits in  2019 and gave  he an example.   Mr.                                                               
Alper continued  with the  features of House  Bill 111:   aligned                                                               
tax interest  rates to  a compromised level;  credits can  now be                                                               
carried back in time and used  against a prior year tax liability                                                               
or can  be sold,  limited by  [payments owned  to] CBRF  after an                                                               
audit  assessment, and  he gave  an example  of funds  owed after                                                               
settlement  of tariff  rate  litigation; conditional  exploration                                                               
credits  granted at  time of  application to  ensure a  company's                                                               
place  in the  queue;  seismic  work in  Middle  Earth no  longer                                                               
eligible after 2017;  exploration credits in Middle  Earth can be                                                               
used to  offset corporate income  tax; delayed repeal of  the tax                                                               
credit  fund   after  all  credits  are   purchased;  established                                                               
legislative working  group to work  on continuing oil  tax issues                                                               
such as incentives for future development (slide 6).                                                                            
                                                                                                                                
REPRESENTATIVE PARISH  inquired as to  the value of  the cashable                                                               
tax credits that may be sold.                                                                                                   
                                                                                                                                
MR. ALPER  was unable  to estimate because  sales of  tax credits                                                               
are  free  market transactions.    Furthermore,  since the  state                                                               
stopped paying  the tax  credits, they are  now on  the secondary                                                               
market,  but  the  market  is  limited, and  the  price  is  low.                                                               
Provisions in  House Bill 111  seek to open the  secondary market                                                               
and major purchases of tax credits  may take place.  He estimated                                                               
there are approximately $800 million  worth of tax credits in the                                                               
hands of industry awaiting purchase; however, bids may be low.                                                                  
                                                                                                                                
1:36:11 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE BIRCH  questioned whether discounting  tax credits                                                               
is common practice in other tax regimes.                                                                                        
                                                                                                                                
MR.  ALPER advised  Alaska's  [entire] concept  of  cash for  tax                                                               
credits is extraordinarily rare in  the world; faced with limited                                                               
funds and  pressure from  industry, the  state seeks  an amicable                                                               
way  to   remove  the  credits  from   the  state's  liabilities.                                                               
Although  current  legislation has  limited  the  burden of  this                                                               
liability, $900  million in outstanding  credits is  certain; the                                                               
goal of  forthcoming legislation is  to offer discounts  equal to                                                               
the state's  cost of the interest  it would pay in  order to sell                                                               
bonds and pay the tax credit liability.                                                                                         
                                                                                                                                
CO-CHAIR TARR asked for clarification  on the amount of the total                                                               
outstanding tax credits.                                                                                                        
                                                                                                                                
MR.  ALPER explained  the biggest  component of  the tax  credits                                                               
will  be 2017  operating loss  credits; House  Bill 111  provides                                                               
that  one-half  of  2017  eligible  operating  loss  credits  are                                                               
eligible for  cash and  one-half are no  longer eligible.   Thus,                                                               
there are upcoming  partial operating loss credits  that could be                                                               
sold or used  to offset taxes; also expected  are credits claimed                                                               
by the  Interior Gas Utility,  refinery credits, and a  few other                                                               
entities.                                                                                                                       
                                                                                                                                
CO-CHAIR TARR  referred to the forthcoming  legislation and asked                                                               
whether the  state would pay full  value for the tax  credits [by                                                               
issuing bonds].                                                                                                                 
                                                                                                                                
1:40:35 PM                                                                                                                    
                                                                                                                                
MR. ALPER cautioned the forthcoming  legislation is being drafted                                                               
and is very complex.  He remarked:                                                                                              
                                                                                                                                
     Imagine ... your company is  holding $100 million worth                                                                    
     of tax,  tax credits.  If  you look at the  formula ...                                                                    
     [DOR]   can  calculate   what   your   share  of   that                                                                    
     appropriation would be for the  next five years.  Let's                                                                    
     say  you stand  to  make  $30 million  in  FY 19,  [$30                                                                    
     million]  in FY  20, [$20  million] in  FY 21  and [$20                                                                    
     million] in  FY 22, ... what  we would do is  take that                                                                    
     cash flow and discount it  at that discount rate ... so                                                                    
     [DOR] would  back that  out to a  present value  at the                                                                    
     discount rate and  offer a lump sum payment  to buy all                                                                    
     of the tax credits at that lump sum.                                                                                       
                                                                                                                                
MR.  ALPER concluded  the company  would receive  less than  face                                                               
value  and the  state would  gain some  value to  use to  pay the                                                               
interest on the money it borrowed to pay the credits.                                                                           
                                                                                                                                
REPRESENTATIVE  PARISH  surmised  the  foregoing  solution  would                                                               
protect  industry  and  asked  for  the  amount  of  the  current                                                               
interest that is due on the outstanding tax credits.                                                                            
                                                                                                                                
MR. ALPER  advised tax  credit obligations  do not  bear interest                                                               
but are subject to appropriation and  can be sold or used against                                                               
tax liability.                                                                                                                  
                                                                                                                                
REPRESENTATIVE PARISH  questioned how,  without knowledge  of the                                                               
market  value,   the  state  can   ensure  it  will   fulfil  its                                                               
responsibility to its citizens.                                                                                                 
                                                                                                                                
MR. ALPER suggested  the forthcoming legislation is  a better way                                                               
to  deal  with  the  tax  credit problem  than  the  status  quo.                                                               
Further, to  benefit the state  and industry, the issue  needs to                                                               
be resolved  without having to  appropriate hundreds  of millions                                                               
of dollars  the state does  not have.   He returned  attention to                                                               
the  presentation and  stressed oil  and gas  tax legislation  is                                                               
often  complex; however,  HB  288 seeks  to  accomplish one  goal                                                               
which is to raise  the minimum tax - known as the  floor - from 4                                                               
percent to 7  percent when the average price of  oil for the year                                                               
is greater than  $25 per barrel (slide 7).   He explained how the                                                               
minimum tax works:  the production  tax is based on a calculation                                                               
of  net  profits   known  as  production  tax   value  (PTV)  [as                                                               
illustrated on  slide 8].   He  pointed out  produced oil  has at                                                               
least two owners:   landowners who earn royalty  and the producer                                                               
who  profits,  and   only  the  taxable  share   factors  in  the                                                               
calculation  of PTV.   Mr.  Alper  explained gross  value at  the                                                               
point  of production  (GVPP) is  market  price less  the cost  of                                                               
transportation.   From  GVPP is  subtracted lease  expenditures -                                                               
the costs  of operating the  field, and  capital costs -  and the                                                               
remainder  is PTV.   The  final  calculation uses  the higher  of                                                               
either PTV  multiplied by  a 35  percent tax  rate minus  the per                                                               
barrel  credit, or  GVPP multiplied  by a  4 percent  minimum tax                                                               
rate.  [HB  288] would raise the minimum tax  rate from 4 percent                                                               
to 7 percent.   Slide 9 was  a chart of tax increases  based on a                                                               
range of oil prices.                                                                                                            
                                                                                                                                
1:48:28 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  TARR,  as an  aside,  pointed  out differences  between                                                               
slide 9  and information presented  at the  hearing of HB  288 on                                                               
1/22/18.                                                                                                                        
                                                                                                                                
MR. ALPER said companies reacted to  lower oil prices not only by                                                               
doing  less but  by cutting  costs, which  lowered the  breakeven                                                               
price  on a  barrel  of oil.    In  fact, as  shown  on slide  9,                                                               
industry efficiencies  have lowered  the costs  on transportation                                                               
and lease  expenditures on an  average barrel of legacy  oil from                                                               
approximately  $50  to  approximately  $37.    Using  $60  as  an                                                               
example, he  further explained the  calculation to  determine PTV                                                               
and the subsequent tax calculation that  is based on PTV:  PTV is                                                               
taxed  at 35  percent, and  after  subtracting an  $8 per  barrel                                                               
credit, the production tax is  $0.17; however, when a minimum tax                                                               
of 4 percent is assessed, the tax  at $60 per barrel oil would be                                                               
$2.01.   Mr. Alper  concluded at lower  prices industry  pays the                                                               
minimum  tax and  at around  $65 per  barrel and  above, industry                                                               
pays  the net  tax.   Also shown  on slide  9 was  the effect  of                                                               
proposed HB 288, which is to  raise the minimum tax to 7 percent,                                                               
which at  $60 per barrel oil  would be $3.51.   Another aspect of                                                               
increasing the  minimum from 4 percent  to 7 percent is  that the                                                               
industry  will   pay  a   gross  tax   until  oil   prices  reach                                                               
approximately $72  per barrel.   Further, the impact of  the bill                                                               
is a  function of price  and he  provided the increases  in taxes                                                               
derived  from 170  million  taxable  barrels at  a  range of  oil                                                               
prices  (slide 9).    He pointed  out  the effect  of  HB 288  to                                                               
increase tax revenue  stops when oil prices reach  $80 per barrel                                                               
and above.                                                                                                                      
                                                                                                                                
MR. ALPER,  in response to Representative  Rauscher's question as                                                               
to the  effect [of HB  288 on  production tax today],  said there                                                               
would  be an  increase of  $0.54 per  taxable barrel  at $70  per                                                               
barrel oil.   In further response to  Representative Rauscher, he                                                               
said the  $91 million shown  on slide  9 is not  current revenue,                                                               
but additional  revenue from  production tax at  an oil  price of                                                               
$70.                                                                                                                            
                                                                                                                                
1:54:46 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE BIRCH  observed royalty  tax share is  included in                                                               
total revenue  on slide 3 and  opined a true illustration  of oil                                                               
and  gas revenue  to the  state  would include  its 12.5  percent                                                               
royalty share at the different prices shown on slide 9.                                                                         
                                                                                                                                
MR. ALPER said  there is no royalty share on  a taxable barrel of                                                               
oil; further, DOR has not analyzed  the effect of the bill on the                                                               
total  state take  from all  the  aggregated tax  revenue and  he                                                               
offered to do so.                                                                                                               
                                                                                                                                
REPRESENTATIVE  BIRCH  said  he  was interested  in  the  offered                                                               
information.   He  opined anything  that  attracts investment  to                                                               
increase production  and generate  royalty at  12.5 percent  is a                                                               
large and significant  component.  He stressed  the importance of                                                               
inviting investment  and encouraging  production which  will have                                                               
more of an impact on state revenues [than would HB 288].                                                                        
                                                                                                                                
CO-CHAIR TARR observed  slide 9 indicates the  impact of changing                                                               
the percentage  [of tax  revenue] regardless  of what  happens to                                                               
[levels of] production.                                                                                                         
                                                                                                                                
REPRESENTATIVE BIRCH  advised at  $40 [per  barrel of  oil], 12.5                                                               
percent of  170 million barrels  would result in $850  million in                                                               
royalty, which  increases to  $1.5 billion  at [$70  per barrel].                                                               
He restated royalty share is  a significant amount of revenue and                                                               
deserving of the legislature's focus.                                                                                           
                                                                                                                                
MR. ALPER  recalled royalty  collected in  2012 was  $2.9 billion                                                               
when oil  price was $110 per  barrel.  He reminded  the committee                                                               
three-quarters of  royalty is  available for  the state  to spend                                                               
and one-quarter is deposited to the Alaska Permanent Fund.                                                                      
                                                                                                                                
REPRESENTATIVE  PARISH asked  how the  forecast revenue  shown on                                                               
slide 9 would change with GVR oil.                                                                                              
                                                                                                                                
1:59:55 PM                                                                                                                    
                                                                                                                                
MR. ALPER  said line 2, identified  by GVPP, would be  reduced by                                                               
20  percent  thus  at  $60  oil, PTV  would  be  $13  instead  of                                                               
[$23.35].    Further, the  minimum  tax  does  not apply  to  GVR                                                               
eligible  oil; in  fact, the  tax on  GVR eligible  oil does  not                                                               
apply  until the  price of  oil approaches  $70 per  barrel.   He                                                               
directed attention to slide 10, which  was a graph of forecast FY                                                               
20 production  tax revenue at net,  a 4 percent minimum,  and a 7                                                               
percent minimum as proposed in HB  288.  Mr. Alper, speaking from                                                               
his experience as the director  of the Tax Division, informed the                                                               
committee auditors at the tax  division have a difficult task and                                                               
he described  several features  of Alaska's  complex oil  and gas                                                               
tax  law.   However, [should  HB 288  become law]  at almost  all                                                               
circumstances, industry would pay a  zero tax on GVR eligible oil                                                               
and  7  percent  tax on  legacy  oil.    He  urged for  a  simple                                                               
solution:  eliminate other taxes  and instigate a 7 percent gross                                                               
tax.                                                                                                                            
                                                                                                                                
CO-CHAIR TARR  pointed out the  increase brought by HB  288 would                                                               
primarily affect legacy oil.                                                                                                    
                                                                                                                                
MR. ALPER  restated the  actual effect  of HB  288, for  the most                                                               
part,  is that  industry would  pay a  7 percent  gross tax.   He                                                               
turned  attention  to  slide  12  and  said  further  issues  for                                                               
consideration  are  related  to oil  profitability  at  different                                                               
prices, such as:                                                                                                                
                                                                                                                                
    · current 4 percent minimum tax is applicable at $25 per                                                                    
      barrel oil as is the proposed increase to 7 percent                                                                       
    · the average breakeven point was reduced to $37 for FY 19 as                                                               
      a result of industry cutting cost                                                                                         
    · a producer may survive a tax increase when oil prices are                                                                 
      $70 per barrel but not when oil prices are $30 per barrel                                                                 
      thus the price at which the minimum tax applies may need                                                                  
      to change                                                                                                                 
    · the $25 per barrel price was set in 2006                                                                                  
    · raising the minimum tax would increase the breakeven price                                                                
      of a typical field by about $1 per barrel                                                                                 
    · oil profitability estimates are up dramatically since last                                                                
      spring:  increased production and reduced spending,                                                                       
      production tax forecast increased $40 million, tax credit                                                                 
      increased $150 million                                                                                                    
                                                                                                                                
MR. ALPER  continued to slide  13 and restated  oil profitability                                                               
estimates  are  up  from  earlier  forecasts  due  to  additional                                                               
production and reduced spending, which  has added $2.1 billion in                                                               
industry divisible profits; however,  the production tax share of                                                               
$2.1  billion  is  $40  million  and  the  statutory  tax  credit                                                               
appropriation increased by $150 million.                                                                                        
                                                                                                                                
REPRESENTATIVE TALERICO asked whether  DOR has an amended Revenue                                                               
Forecast Fall 2017.                                                                                                             
                                                                                                                                
MR.  ALPER  said  a  Revenue   Forecast:  Preliminary  Fall  2017                                                               
[10/25/17]   was  issued   for   the   [Thirtieth  Alaska   State                                                               
Legislature  Fourth  Special   Session  10/23/17-11/21/17].    He                                                               
acknowledged  there  were  minor  changes  from  the  preliminary                                                               
forecast to the Revenue Forecast  Revenue Sources Book (RSB) Fall                                                               
2017 [12/31/17], but the big  changes were from Revenue Forecast:                                                               
Spring  2017 [4/14/17].   In  further response  to Representative                                                               
Talerico, he  agreed there  was a change  in the  production tax,                                                               
not from the tax calculation, but due to one-time events.                                                                       
                                                                                                                                
2:11:03 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE PARISH  returned attention  to slide 13  and asked                                                               
when  industry made  the investments  that resulted  in increased                                                               
production of $1 billion.                                                                                                       
                                                                                                                                
MR.   ALPER  advised   industry  has   been  continually   making                                                               
investments since the  '70s and has made  considerable efforts to                                                               
slow production decline and to increase volume.                                                                                 
                                                                                                                                
CO-CHAIR  JOSEPHSON asked  whether an  increase in  oil price  is                                                               
factored  into  the  increased production  value  of  $1  billion                                                               
(slide 13).                                                                                                                     
                                                                                                                                
MR. ALPER said  no.  The spring forecast indicated  $60 oil price                                                               
thus  the  value  is  based  on  a  lower  price  assumption  and                                                               
dramatically  larger volumes.   In  further response  to Co-Chair                                                               
Josephson, he clarified  the increase in oil price  over the last                                                               
12-18 months is not reflected.  He explained:                                                                                   
                                                                                                                                
     What  [DOR   is]  illustrating  to  do   this  was  the                                                                    
     estimated aggregated  profit that's  subject to  the 35                                                                    
     percent tax  because that's the calculation  that feeds                                                                    
     into  the tax  credit statutory  formula.   That number                                                                    
     has  been adjusted  upward by  $2.1 billion  and almost                                                                    
     none  of it  -  in fact  it's a  negative  impact -  is                                                                    
     related to  the price  because the spring  forecast was                                                                    
     based on $60 oil and the  fall forecast on ... $56 oil.                                                                    
     ... The  reduction in company spending  of $1.1 billion                                                                    
     is dramatic ...  and that's nothing that  the state did                                                                    
     per se,  [the industry] simply spent  a billion dollars                                                                    
      less than they thought they were going to and by the                                                                      
     nature of a profits tax, what you don't spend ends up                                                                      
     getting added to your profits.                                                                                             
                                                                                                                                
CO-CHAIR JOSEPHSON  asked for  the amount  of federal  income tax                                                               
assessed on the industry.                                                                                                       
                                                                                                                                
MR. ALPER said the federal income  tax rate until 12/31/17 was 35                                                               
percent of  profits after deductions,  including state  taxes; as                                                               
of 1/1/18, the federal income tax rate is 21 percent.                                                                           
                                                                                                                                
CO-CHAIR JOSEPHSON  said at an  oil price  of $70 per  barrel, HB                                                               
288 would generate approximately $200  million more to the state,                                                               
but questioned  whether the  increase is  fair and  affordable by                                                               
industry.   He said he  was unsure how  to value $2.1  billion in                                                               
divisible profits.                                                                                                              
                                                                                                                                
MR. ALPER  said "... I'm  not quite sure  how to answer  that and                                                               
the,  the key  is going  back  to the  slide  I had  a couple  of                                                               
minutes ago:   this  all changes dramatically  if the  price goes                                                               
back down to [$50 or $40], or something like that."                                                                             
                                                                                                                                
REPRESENTATIVE PARISH  returned attention  to slide 13  and asked                                                               
for  an estimate  on  how much  of the  $1.1  billion in  reduced                                                               
spending is reduced investment.                                                                                                 
                                                                                                                                
2:16:03 PM                                                                                                                    
                                                                                                                                
MR. ALPER  observed the  price dynamics of  the oil  industry are                                                               
complex; during  periods of  high demand  subcontractors received                                                               
premium  prices   for  services  but  as   the  demand  subsided,                                                               
subcontractors also  reduced their costs,  "so how much of  it is                                                               
getting the same amount of work  done for less money and how much                                                               
of it is doing less work, it's  some combination of the two and I                                                               
don't know that I could  answer definitively."  Slide 14 referred                                                               
to the  period of time from  1977 to April 2006,  when the Alaska                                                               
oil and gas  tax system was a  gross tax and was tied  to a value                                                               
similar  to  GVPP  known  as  the  economic  limit  factor  (ELF)                                                               
[enabling   legislation  passed   in  the   Tenth  Alaska   State                                                               
Legislature  and  modified  in  2005], which  was  subject  to  a                                                               
multiplier that varied  from field to field.  Mr.  Alper said the                                                               
formula  to determine  the  tax  was "exotic"  and  based on  the                                                               
profitability of each field.  Over  time, the tax rate declined -                                                               
because average  production declined in individual  fields - from                                                               
nearly 12  percent in 1995  to 6.7 percent  in 2006.   He pointed                                                               
out in those  years Alaska's oil tax revenue was  garnered from a                                                               
gross tax system, and for the  last three years, the existing tax                                                               
system has functioned as a gross  tax of 4 percent of North Slope                                                               
production.                                                                                                                     
                                                                                                                                
REPRESENTATIVE DRUMMOND  asked whether the tax  rate changed each                                                               
year.                                                                                                                           
                                                                                                                                
MR. ALPER clarified  there was no change in the  tax rate, except                                                               
in 1989 one  of the factors in the calculation  was modified.  He                                                               
further explained  the ELF system  used a formula  with exponents                                                               
tied to  factors related to production  from each field to  set a                                                               
tax  rate; although  tax revenue  was trending  down, there  were                                                               
increases between  2004-2006 due  to a one-time  time event.   In                                                               
further response  to Representative  Drummond he  explained trend                                                               
downward was  due to  the decline in  the average  production per                                                               
well which  is lowered as  new wells  are drilled in  each field,                                                               
even if the level of production is maintained.                                                                                  
                                                                                                                                
REPRESENTATIVE PARISH inquired as  to industry profits during the                                                               
period of time a gross tax system was in effect.                                                                                
                                                                                                                                
2:20:38 PM                                                                                                                    
                                                                                                                                
MR. ALPER said industry profits depended  on the price of oil and                                                               
other factors;  during that time  period DOR did not  have access                                                               
to industry cost data because the  tax was based on gross income.                                                               
He opined the oil industry made  larger profits when the price of                                                               
oil was  higher, regardless  of the  state tax  rate.   Mr. Alper                                                               
acknowledged the  issue of  tax stability is  a valid  concern by                                                               
industry and  slide 15  listed the seven  changes that  have been                                                               
made to  Alaska's production tax within  thirteen years; industry                                                               
will testify  that it is hard  to invest when taxes  are unknown.                                                               
In  2005, by  executive  order, former  Governor Frank  Murkowski                                                               
aggregated   the   Prudhoe   Bay   satellite   fields   for   ELF                                                               
calculations, and the net effect  was a $150 million tax increase                                                               
to the  state.   Subsequent litigation  was resolved  in December                                                               
2016, when the Alaska Supreme  Court upheld the former governor's                                                               
action.  Mr. Alper described the  other changes that were made by                                                               
the legislature  and noted  the high  revenue collected  in 2008-                                                               
2012  has  somewhat  sustained  the state  budget.    Tax  regime                                                               
changes were as follows (slide 15):                                                                                             
                                                                                                                                
     1.  2005:  Prudhoe Bay satellite fields aggregated                                                                         
      2.  2006:  Petroleum Production Tax (PPT) [passed in                                                                      
     the Twenty-Fourth Alaska State Legislature] taxed net                                                                      
     profits                                                                                                                    
        3.  2007:  ACES corrected revenue shortfalls and                                                                        
     instituted an aggressive progressivity measure                                                                             
     4.   2010:  Cook  Inlet Recovery Act "CIRA"  [passed in                                                                    
     the  Twenty-Sixth Alaska  State Legislature]  increased                                                                    
     natural gas supply from Cook  Inlet to Southcentral and                                                                    
     the Interior                                                                                                               
     5.  2013:  Senate Bill 21 eliminated the progressivity                                                                     
        measure, replaced capital credit with per barrel                                                                        
     credit, and lowered tax for new oil by GVR provisions                                                                      
     6.  2016:  House Bill 247 tax credit reform                                                                                
     7.  2017:  House Bill 111 tax credit reform                                                                                
                                                                                                                                
MR. ALPER  turned attention to  how a minimum tax  change impacts                                                               
new  fields under  development  or  to be  developed.   With  the                                                               
current tax regime,  a company can carry forward  its spending to                                                               
develop  a new  field and  reduce its  future taxes  once oil  is                                                               
produced.   Provisions within House  Bill 111 allow a  company to                                                               
only use carry-forward [expenses]  sufficient to reduce its taxes                                                               
down to  the minimum tax, with  the exception of the  time period                                                               
affected by GVR,  when taxes can be zero; however,  after the GVR                                                               
time period of three to seven  years, a company cannot reduce its                                                               
taxes below  the minimum tax.   For  example, if a  company spent                                                               
billions  to  develop  a major  new  oilfield,  after  production                                                               
begins,  the company  would pay  the  minimum tax  no matter  the                                                               
price of  oil because  the past spending  will reduce  its taxes.                                                               
Thus, raising the  minimum tax from 4 percent to  7 percent would                                                               
impact field  economics and thereby  impact decisions  on whether                                                               
to invest in new fields.   In addition, if the higher minimum tax                                                               
causes a company to take too  long to use its lease expenditures,                                                               
it would not  be able to recapture 100 percent  of its investment                                                               
in the field due to downlift (slide 16).                                                                                        
                                                                                                                                
2:29:17 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  RAUSCHER  expressed  concern  about  the  current                                                               
recession in Alaska and projects  that have been lost, noting new                                                               
fields  may  not come  into  production  before the  tax  credits                                                               
apply.  He  questioned whether HB 288 creates risk  at a time the                                                               
state seeks investment and production.                                                                                          
                                                                                                                                
MR. ALPER  said he would not  express an opinion on  risk and his                                                               
intent  is  to  present  facts and  figures;  however,  there  is                                                               
concern  about  how  minimum  tax changes  affect  a  new  field.                                                               
Although  not a  major  change, the  bill  would change  industry                                                               
rates of  return by a fraction  of a percent, which  would impact                                                               
some companies.                                                                                                                 
                                                                                                                                
REPRESENTATIVE TALERICO  surmised a loss  of value occurs  when a                                                               
project is  being developed  over seven or  eight years  and [the                                                               
tax  rate  is  reduced]  by  GVR,  after  production  begins  the                                                               
project's lease expenditures begin to lose value.                                                                               
                                                                                                                                
MR.  ALPER said  yes  and posed  the example  of  a company  that                                                               
invests $1  billion before  first production;  subsequently after                                                               
production  and making  profits, the  company would  want to  use                                                               
$200 million  per year over five  years to get the  tax rate down                                                               
to the  minimum tax.  By  raising the minimum tax  from 4 percent                                                               
to 7 percent,  the company may only need to  use $100 million per                                                               
year to get to the minimum,  and the lease expenditures may reach                                                               
maturity  at ten  years and  lose value,  before the  company has                                                               
used them.                                                                                                                      
                                                                                                                                
CO-CHAIR TARR remarked:                                                                                                         
                                                                                                                                
     ...  for purposes  of  that  ten-year calculation,  for                                                                    
     Department  of Revenue  purposes  for  that "day  one,"                                                                    
     it's when  you go into  production, so it's a  full ten                                                                    
     years  once the  ...  project is  into production  that                                                                    
     those, you know,  that each of those ten  years you can                                                                    
     use your losses against any  taxes and then it would be                                                                    
     in the following year where the downlift would start.                                                                      
                                                                                                                                
MR. ALPER clarified  the timeline is ten years from  the date the                                                               
cost was  incurred; in fact, if  the money was spent  in the five                                                               
years before  first production, the  "year one"  expenditures are                                                               
already  five years  old, and  by  year six  of production,  will                                                               
begin to lose value if not used.                                                                                                
                                                                                                                                
2:34:38 PM                                                                                                                    
                                                                                                                                
CO-CHAIR JOSEPHSON  expressed his  understanding the  ten-year or                                                               
seven-year period  of downlift does  not commence until  the time                                                               
of  production   and  asked  for   further  clarification.     He                                                               
recognized Mr.  Alper's concerns  that a  higher minimum  tax may                                                               
reduce economic  viability for a  new explorer and that  the bill                                                               
may  create an  inability to  recapture the  cost of  development                                                               
because of downlift;  however, he returned attention  to [slide 7                                                               
of a PowerPoint presentation entitled,  "House Bill 288, Fairness                                                               
in Oil Taxes,"  undated, that was provided during  the hearing of                                                               
HB 288 on 1/22/18]  and pointed out at $60 per  barrel oil PTV is                                                               
approximately  $20 and  the gross  tax is  approximately $2.   In                                                               
addition,  PTV is  further reduced  by state  and federal  income                                                               
taxes.    He  acknowledged  royalty  paid to  the  state  is  not                                                               
reflected,  and   royalty  is  directly  related   to  levels  of                                                               
production, but  industry take  is approximately  $18 with  $2 to                                                               
the state as production tax.                                                                                                    
                                                                                                                                
MR.  ALPER  returned  attention to  slide  9,  which  illustrated                                                               
updated estimates  of production tax,  and pointed out  state and                                                               
federal income tax  will be based on  approximately $21, although                                                               
at an  oil price  of $40  per barrel, PTV  is $3.35,  which would                                                               
leave only $2  after the payment of production tax;  in fact, the                                                               
payment of "a  12 percent gross royalty might  actually turn that                                                               
company negative."                                                                                                              
                                                                                                                                
REPRESENTATIVE  BIRCH  said  slide  17  summarized  his  concerns                                                               
regarding HB 288.   He referred to potential  developments in the                                                               
Arctic  National   Wildlife  Refuge   (ANWR)  and   the  National                                                               
Petroleum Reserve-Alaska (NPR-A) and  restated that a minimum tax                                                               
increase  could  reduce  the viability  of  future  projects  and                                                               
stressed the  veracity of  the two other  bullet points  on slide                                                               
17.   He  cautioned the  statements  on the  slide are  masterful                                                               
understatements  of the  impact  of a  75  percent tax  increase,                                                               
particularly  at  a  time  the   state  needs  to  encourage  the                                                               
investment   and  exploration   that   are   essential  for   new                                                               
production.                                                                                                                     
                                                                                                                                
MR.  ALPER said  the  most  important point  on  slide  17 is  to                                                               
understand the  tax.  He  suggested at an  oil price of  $100 per                                                               
barrel,  one  would believe  Alaska's  tax  system is  reasonably                                                               
high; in fact, at high oil  prices, the state garners the minimum                                                               
tax from new fields because  the system has replaced credits with                                                               
"carry forwards" during the early years.  He remarked:                                                                          
                                                                                                                                
     ...   so,  it's   no  longer   ...  just   a  low-price                                                                    
     conversation.   So  yes, it's  a  75 percent  increase,                                                                    
     it's  a   75  [percent]   increase  above  a   sort  of                                                                    
     synthetically low  tax because  we're allowing  them to                                                                    
     buy it down  to the minimum tax  through the recapture.                                                                    
     There  are  regimes  around the  world,  frankly,  that                                                                    
     allow companies to pay zero  during their cost recovery                                                                    
     period.   ...   Alaska  chose not  to go  that way,  we                                                                    
     chose  to   insist  on  the  minimum   tax,  we're  now                                                                    
     discussing what should that minimum tax be.                                                                                
                                                                                                                                
2:41:06 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE PARISH pointed out the  language of the bill calls                                                               
for an  increase from 1 percent  to 2 percent although,  from the                                                               
information presented  on slide 17,  it can be said  the increase                                                               
to the  effective tax  rate is  101 percent;  he urged  for plain                                                               
language in the explanation of the bill.                                                                                        
                                                                                                                                
MR. ALPER stated his testimony  represents various points of view                                                               
on the bill, and from industry's point  of view the tax rate is a                                                               
75  percent increase  to production  tax, which  is approximately                                                               
one-quarter  of industry's  obligation to  the state;  he advised                                                               
both are legitimate  views and urged the  committee to understand                                                               
both definitions.                                                                                                               
                                                                                                                                
REPRESENTATIVE PARISH returned attention  to slide 14, noting the                                                               
average gross tax ranged from  approximately 12 percent [in 1995]                                                               
to approximately  7 percent  [in 2006].   He  questioned why  a 7                                                               
percent  gross  tax  was  "intolerably   low"  in  2006,  but  an                                                               
[effective tax rate of 7 percent] is "impossibly high" in 2018.                                                                 
                                                                                                                                
CO-CHAIR TARR passed the gavel to Co-Chair Josephson.                                                                           
                                                                                                                                
MR.  ALPER recalled  the 4  percent  minimum was  in statute  for                                                               
eight years without  application until the price  of oil dropped;                                                               
however, in the fall of  2014, the minimum tax became applicable.                                                               
Proposed changes  to the  minimum tax on  oil and  gas production                                                               
tax is  one of many issues  that arose out of  the state's fiscal                                                               
crisis.                                                                                                                         
                                                                                                                                
REPRESENTATIVE  TALERICO  stated  his  understanding  that  at  4                                                               
percent,  each percentage  point added  is 25  percent, which  is                                                               
shown very appropriately [on slide 17].                                                                                         
                                                                                                                                
CO-CHAIR JOSEPHSON passed the gavel back to Co-Chair Tarr.                                                                      
                                                                                                                                
2:46:13 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  DRUMMOND   asked  what  Mr.  Alper   meant  by  a                                                               
synthetically low tax.                                                                                                          
                                                                                                                                
MR.  ALPER explained  a company  producing  oil in  a high  price                                                               
environment  would pay  a high  tax on  its profits;  however, in                                                               
order to credit the company for  the billions of dollars it spent                                                               
prior to  production, the  tax system will  allow the  company to                                                               
use  the amount  of its  investment to  reduce its  taxes to  the                                                               
minimum tax.  He said, "In the  context of just that one year, it                                                               
is  an  artificially low  tax  you're  paying -  it's  reasonable                                                               
because  we  are paying  you  back  in  some  way for  that  past                                                               
investment and  we are  doing it  at a later  date than  we would                                                               
have under the  previous law ... the  compensation you're getting                                                               
for no longer having [cashable  tax credits paid] is that reduced                                                               
tax rate during your early years of production."                                                                                
                                                                                                                                
CO-CHAIR TARR said  from the state's perspective,  taxes that are                                                               
reduced to a 7 percent minimum protects the state's interest.                                                                   
                                                                                                                                
MR. ALPER  turned to HB  288's impact specifically on  new fields                                                               
and  directed attention  to the  bill's fiscal  note [identifier:                                                               
HB288-DOR-TAX-1-20-18]  that  estimates   increased  revenues  of                                                               
approximately  $230,000,000.    This estimate  is  calculated  on                                                               
expected  oil  prices  and expected  current  legacy  production;                                                               
however,  the fiscal  note does  not  incorporate [slides  16-18]                                                               
which are  related to new  fields.  For  example, if a  new field                                                               
begins  production in  FY 24-FY  25,  the producer  will pay  the                                                               
minimum tax -  the minimum tax is proposed by  HB 288 to increase                                                               
- and increases  to the minimum would change  the producer's cash                                                               
flow and may change decision-making.   Continuing with issues for                                                               
new  fields, slide  18 illustrated  a life  cycle analysis  for a                                                               
hypothetical new  field.  The model  proposed lifetime production                                                               
of  750  million barrels  -  from  a  project that  required  $10                                                               
billion  in capital  costs -  and  120,000 barrels  per day  peak                                                               
production was used to show  the effect of the proposed increased                                                               
minimum  tax.   Over the  life  of the  model field,  at $60  per                                                               
barrel oil,  production tax  would be  increased by  $375 million                                                               
and at  $80 per barrel oil  production tax would be  increased by                                                               
less than $200  million.  He cautioned that the  internal rate of                                                               
return is an important consideration  to investors:  the internal                                                               
rate of  return would erode  by one-  to two-tenths of  1 percent                                                               
over  the life  of the  project.   Further,  the breakeven  price                                                               
would increase by  $1 per barrel, which the company  would use to                                                               
determine a go, or a no-go decision.                                                                                            
                                                                                                                                
2:52:17 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  TARR suggested  the  committee  review the  information                                                               
presented on  slide 18  as it would  relate to  smaller near-term                                                               
development;  she pointed  out the  difficulty of  assessing [the                                                               
impact  of  revenues  from]  a  development  that  will  not  see                                                               
production in ten or twelve years  on state finances with a near-                                                               
term problem.                                                                                                                   
                                                                                                                                
MR. ALPER  added that  [the impact  of the  bill] on  a near-term                                                               
field  also  differs   in  that  most  of   the  development  was                                                               
accomplished during the previous  tax system, which provided cash                                                               
credits; near-term  fields would not  be as affected  by downlift                                                               
when  production  begins.    However,  later  projects  would  be                                                               
affected by  the time  limit on lease  expenditures.   In further                                                               
response to  Co-Chair Tarr,  he confirmed  because of  the change                                                               
brought  about  by  House  Bill   111,  spending  post-1/1/18  is                                                               
affected.                                                                                                                       
                                                                                                                                
CO-CHAIR TARR advised  the committee must consider  the factor of                                                               
the various timelines of projects.                                                                                              
                                                                                                                                
REPRESENTATIVE  BIRCH asked  whether  the  governor supports  the                                                               
proposed legislation.                                                                                                           
                                                                                                                                
MR. ALPER said the governor has  not taken a position on the bill                                                               
and it is not expected that he will do so.                                                                                      
                                                                                                                                
CO-CHAIR  JOSEPHSON returned  attention  to  new exploration  and                                                               
asked  whether  the  governor's  forthcoming  legislation,  which                                                               
proposes to  sell bonds to  pay owed cash credits,  would satisfy                                                               
DOR's concerns  about carry-forward  losses [that are  delayed by                                                               
an increase to the] minimum tax.                                                                                                
                                                                                                                                
2:56:10 PM                                                                                                                    
                                                                                                                                
MR.  ALPER explained  the carry-forward  statutes  are clear  but                                                               
appropriations to pay the credits  are uncertain and that affects                                                               
the  economic  status   of  the  industry.    The   goal  of  the                                                               
forthcoming   legislation   is   to  eliminate   the   industry's                                                               
uncertainty by taking  away the risk that the state  will not pay                                                               
in a timely manner.                                                                                                             
                                                                                                                                
[HB 288 was held over.]                                                                                                         
2:58:17 PM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no  further business before the  committee, the House                                                               
Resources Standing Committee meeting was adjourned at 2:58 p.m.                                                                 

Document Name Date/Time Subjects
HB288 ver A 1.16.18.PDF HRES 1/22/2018 1:00:00 PM
HRES 1/26/2018 1:00:00 PM
HRES 1/29/2018 1:00:00 PM
HRES 3/30/2018 1:00:00 PM
HRES 4/2/2018 1:00:00 PM
HRES 4/13/2018 1:00:00 PM
HRES 4/14/2018 2:00:00 PM
HRES 4/16/2018 1:00:00 PM
HB 288
HB288 Fiscal Note DOR-TAX 1.20.18.pdf HRES 1/22/2018 1:00:00 PM
HRES 1/26/2018 1:00:00 PM
HRES 1/29/2018 1:00:00 PM
HRES 3/30/2018 1:00:00 PM
HRES 4/2/2018 1:00:00 PM
HRES 4/13/2018 1:00:00 PM
HRES 4/14/2018 2:00:00 PM
HRES 4/16/2018 1:00:00 PM
HB 288
HB288 Sponsor Statement 1.21.18.pdf HRES 1/22/2018 1:00:00 PM
HRES 1/26/2018 1:00:00 PM
HRES 1/29/2018 1:00:00 PM
HRES 3/30/2018 1:00:00 PM
HRES 4/2/2018 1:00:00 PM
HRES 4/13/2018 1:00:00 PM
HRES 4/14/2018 2:00:00 PM
HRES 4/16/2018 1:00:00 PM
HB 288
HB288 Sectional Analysis 1.21.18.pdf HRES 1/22/2018 1:00:00 PM
HRES 1/26/2018 1:00:00 PM
HRES 1/29/2018 1:00:00 PM
HRES 3/30/2018 1:00:00 PM
HRES 4/2/2018 1:00:00 PM
HRES 4/13/2018 1:00:00 PM
HRES 4/14/2018 2:00:00 PM
HRES 4/16/2018 1:00:00 PM
HB 288
HB288 DOR Tax Presentation HRES 1-26-18.pdf HRES 1/26/2018 1:00:00 PM
HRES 4/2/2018 1:00:00 PM
HB 288
HB288 Updated House Resources Sponsor Presentation 1.25.18.pdf HRES 1/26/2018 1:00:00 PM
HB 288