Legislature(2011 - 2012)SENATE FINANCE 532
03/19/2012 09:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB192 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 192 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
SENATE FINANCE COMMITTEE
March 19, 2012
9:05 a.m.
9:05:03 AM
CALL TO ORDER
Co-Chair Stedman called the Senate Finance Committee
meeting to order at 9:05 a.m.
MEMBERS PRESENT
Senator Lyman Hoffman, Co-Chair
Senator Bert Stedman, Co-Chair
Senator Lesil McGuire, Vice-Chair
Senator Johnny Ellis
Senator Dennis Egan
Senator Donny Olson
Senator Joe Thomas
MEMBERS ABSENT
None
ALSO PRESENT
Senator Thomas Wagoner; Senator Cathy Giessel;
PRESENT VIA TELECONFERENCE
Maynard Tapp, Self, Anchorage; Brad Lipscomb, Self,
Anchorage; Keith Silver, Self, Anchorage; Ben Packa, Self,
Wasilla; Carl Portman, Self, Anchorage; Beau Obrigewitch,
Self, Eagle River; Tim Coe, CH2MHill, Anchorage; Ginger
Kane, Project Engineer, CH2MHill, Anchorage; Dave
Hopkinson, Vice President of Construction, CH2MHill,
Anchorage; Jim Plaquet, Self, Fairbanks; Barbara Gazaway,
Self, Anchorage; Hal Gazaway, Self, Anchorage; Javen Ose,
Self, Anchorage; James Garhart, Self, Matsu; Tom Maloney,
Alaska Area Manager, CH2MHill, Anchorage; Kati Capozzi,
Self, Anchorage; Jeff Lentfer, Self, Anchorage; Winston
Burbank, Self, Anchorage; Renee Schofield, Self, Ketchikan;
Joe Beedle, President, Alaska Bankers Association,
Anchorage; David Sterin, Self, Anchorage; Ken Hall, Self,
Fairbanks; Tara Sweeney, Senior Vice President, Arctic
Slope Regional Corporation, Anchorage; Rod McCoy, Self,
Anchorage; Charles Norton, Self, Anchorage; Jim Udelhoven,
Self, Kasilof; Mary Nanuwork, Self, Anchorage; Cathy
Duxbury, Anchorage, Self; Buzz Otis, Self, North Pole;
Caroline Bolar, Self, Anchorage;
SUMMARY
SB 192 OIL AND GAS PRODUCTION TAX RATES
SB 192 was HEARD and HELD in committee for
further consideration.
SENATE BILL NO. 192
"An Act relating to the oil and gas production tax;
and providing for an effective date."
9:06:12 AM
Co-Chair Stedman noted that public testimony would be
limited to two minutes per testifier and should address SB
192 in a succinct manner.
9:08:00 AM
MAYNARD TAPP, SELF, ANCHORAGE (via teleconference),
testified against ACES. He did not think it was fair to
take billions of dollars from the oil producers and
observed that constitution required the development of
Alaska's resources. He urged that the problem facing the
state was not short-term gains, but long-term fiscal
health.
9:09:30 AM
BRAD LIPSCOMB, SELF, ANCHORAGE (via teleconference),
expressed the need for new oil production and related a
story from his youth about jobs that were created by the
oil industry in Anchorage. He shared that he had a degree
in global logistics management and that it had been
challenging to find employment with the oil industry in
Alaska. The lack of new oil production made him fear for
the future of Alaska's job force. Without new oil
production in the state, he would be forced to seek
employment in places like North Dakota. He concluded that
the state could not have the highest oil taxes in North
America and still expect to attract new capital.
9:12:05 AM
KEITH SILVER, SELF, ANCHORAGE (via teleconference),
testified against SB 192 and in support of HB 110. He
stated that the bill did not make meaningful changes in the
progressivity formula. He related that the government take
remained too high under the new CS for SB 192 and was
worried that it would discourage investment; the oil
industry would simply invest in other places that offered a
better return. He urged that the current tax structure was
designed to make the state competitive when oil was at $60
to $80 per barrel and warned that ACES needed to be fixed.
9:14:25 AM
BEN PACKA, SELF, WASILLA (via teleconference), testified
against SB 192 and discussed the challenges of entering the
job market in Alaska; it had been hard to find employment
as an engineer. The current and proposed oil tax policies
made him concerned for the state's financial health.
9:15:52 AM
CARL PORTMAN, SELF, ANCHORAGE (via teleconference),
testified against SB 192 and urged the passage of
legislation that would result in meaningful reform to
Alaska's oil tax regime. He defined meaningful reform as a
significant change that would improve Alaska's global
position in attracting the investment needed to stem
decline and increase long-term production. He shared that
he was willing to accept short-term losses for long-term
gains and hoped that the committee would listen to the
investors.
9:17:25 AM
BEAU OBRIGEWITCH, SELF, EAGLE RIVER (via teleconference),
testified against SB 192 and wanted meaningful tax reform.
He noted that the paid consultants Pedro Van Meurs and
Gerald Kepes had both recommended tax reductions and was
concerned that public did not fully understand the positive
impact that the oil industry had on the state. He spoke
about the growing operating budget and pointed out that the
oil industry funded upwards of 90 percent of the state's
budget.
9:19:53 AM
TIM COE, CH2MHILL, ANCHORAGE (via teleconference), voiced
his opposition of SB 192 in its current form and urged the
committee to amend the bill. He shared concern that Alaska
relied so heavily on oil for its revenue, but that the
state's oil production continued to decline. He urged the
need to make Alaska competitive in attracting new
investments and reverse the declining oil flow. He stated
that Alaska needed to increase production for our future,
even if it sacrificed short-term fiscal gains.
9:21:04 AM
GINGER KANE, PROJECT ENGINEER, CH2MHILL, ANCHORAGE (via
teleconference), expressed opposition to SB 192 and related
a personal story about her families' connection with the
oil industry. She pointed out that it was becoming more
difficult to find work in Alaska. The lack of new North
Slope production related projects was her main concern; in
5 years with CH2MHill she had worked on a number of oil
related projects, but none of them included a new pipeline
or a new production project.
9:22:54 AM
DAVE HOPKINSON, VICE PRESIDENT OF CONSTRUCTION, CH2MHILL,
ANCHORAGE (via teleconference), spoke against SB 192 and
shared that he had been working in the oil industry in
Alaska since 1974. During that time, he had worked on a
vast majority of the major North Slope projects and noted
that the current outlook for new construction work in
fabrication and field installation was the lowest he had
seen in Alaska. A year ago CH2MHill had over 500 people
working on new oil field projects in Alaska, but today they
had no personnel working on new oil projects; furthermore,
there were no new oil project developments in Alaska to
deploy their long-term employees to. CH2MHill was being
forced to redeploy personnel outside of Alaska in order to
keep them employed. He concluded that increased drilling
would be beneficial to production.
9:25:34 AM
JIM PLAQUET, SELF, FAIRBANKS (via teleconference),
testified against SB 192 and stated that it did not
encourage new production. He agreed with Governor Parnell
that the legislature needed to address production taxes in
order to spur investment. He said that today's high oil
prices should be leading to new investment, but that
investment was not occurring because ACES did not
incentivize new investment when the price of oil was high.
He was worried that the government take remained too high
under the new CS for SB 192 and that it would deter
investment.
9:28:09 AM
BARBARA GAZAWAY, SELF, ANCHORAGE (via teleconference),
expressed her support of amending SB 192 and stated that
ACES was not performing as it should. She urged the
committee to spend as much time as was necessary on SB 192
to make well informed, reasonable changes that were fair to
both the state and industry.
9:30:10 AM
HAL GAZAWAY, SELF, ANCHORAGE (via teleconference),
testified in support of SB 192 and offered that it more
than adequately addressed the criticism of progressivity in
ACES at higher oil prices. He stated that other criticisms
were false or fabricated by oil producers. He said that
under ELF, the rate of oil production decline had continued
and pointed out that even under the proposed HB 110 the oil
companies would not agree to stop the rate of production
decline; furthermore, decline was a natural phenomenon in
oil fields and was a result of the lack in development.
9:33:11 AM
JAVEN OSE, SELF, ANCHORAGE (via teleconference), testified
against SB 192 and stated that ACES was working. He
remarked that Alaska should exercise its sovereignty.
9:34:11 AM
JAMES GARHART, SELF, MATSU (via teleconference), expressed
his support for rebates to oil producers and that the
rebates could be a percentage that was dependent on the
producers reaching a certain level of production.
9:36:55 AM
TOM MALONEY, ALASKA AREA MANAGER, CH2MHILL, ANCHORAGE (via
teleconference), testified for the passage of legislation
that encouraged new production and stated that in the past,
DOR had been frequently over estimating income and under
estimating expenses. He indicated that in Alaska's current
investment climate the investors took nearly all the risk
and downside, while the state took almost all the upside.
He urged the need for more oil production.
9:40:02 AM
KATI CAPOZZI, SELF, ANCHORAGE (via teleconference),
expressed opposition of SB 192 and stated that it did not
make the meaningful changes that the state needed. She
pointed out that the evidence showed that SB 192 was not
the answer.
9:41:20 AM
JEFF LENTFER, SELF, ANCHORAGE (via teleconference),
testified against SB 192 as it was written and stated that
other business owners were concerned that it did not
achieve the type of tax reforms necessary to stimulate
investment. He observed that the film tax credit had been
effective in increasing film activities in Alaska and
thought the same concept also applied to oil production. He
was in favor of amending SB 192 to increase development or
"better yet" supported HB 110.
9:43:35 AM
WINSTON BURBANK, SELF, ANCHORAGE (via teleconference),
urged the need to incentivize oil corporations to increase
production. He stated that an oil company's main objective
was to gain profit for its shareholders; companies
evaluated the economics on a global level and Alaska was
less competitive when compared other areas.
9:45:45 AM
RENEE SCHOFIELD, SELF, KETCHIKAN (via teleconference),
testified against SB 192 and related the need to encourage
new development and maintain oil revenue. She pointed out
that oil revenue enabled many of the essential services
that she and her family enjoyed in Ketchikan.
9:46:58 AM
JOE BEEDLE, PRESIDENT, ALASKA BANKERS ASSOCIATION,
ANCHORAGE (via teleconference), urged support of amendments
to SB 192 that would motivate oil producers increase
investment. He stated that normally, he was an optimist
about Alaska's business and growth potential. He was
cautious about the future of Alaska's sustained economic
growth and warned that SB 192 needed amendments to
incentivize oil production. He stressed the importance of
the oil industry to Alaska's economy and hoped the
legislature would prioritize the long-term health of
Alaska.
9:50:10 AM
DAVID STERIN, SELF, ANCHORAGE (via teleconference),
expressed his opposition of SB 192 and offered that the
state was only in harvest mode because legislation like SB
192 and ACES forced the oil producers to grab all the oil
while they could. He said that members of the Alaska
Legislature had asserted that there was nothing the state
could do to stem decline; however, he pointed out that
Texas had slowed, reversed, and had plateaued their
production curve. He discussed all the government services
that were enabled by oil money and warned that the oil
industry employed one third of state.
9:52:43 AM
KEN HALL, SELF, FAIRBANKS (via teleconference), testified
against SB 192 and urged that the state needed meaningful
legislation that would capitalize on the industry. He felt
that SB 192 fell short in increasing exploration,
development, and production of oil. He warned that real
changes need to be made, but did not want to sacrifice
short-term investment for long-term gains for the state.
9:55:10 AM
TARA SWEENEY, SENIOR VICE PRESIDENT, ARCTIC SLOPE REGIONAL
CORPORATION, ANCHORAGE (via teleconference), expressed her
opposition of SB 192 and shared the importance of the
Arctic Slope Regional Corporation's partnership with the
oil and gas industry. She pointed out that the bill did not
go far enough to stimulate new investment. She urged the
need for training and employment opportunities for all
Alaskans and stated that HB 110 was the only bill that had
the industry's support.
9:58:51 AM
AT EASE
10:05:39 AM
RECONVENED
10:06:20 AM
ROD MCCOY, SELF, ANCHORAGE (via teleconference), expressed
his support of SB 192 and said that he did not support HB
110. He stated that our taxes were right in the middle when
compared to other regimes and warned that the political
climate in Alaska was heavily controlled by high money
interests.
10:09:19 AM
CHARLES NORTON, SELF, ANCHORAGE (via teleconference),
voiced his support of SB 192 and offered that HB 110 gave
away too much money to the oil corporations.
10:10:05 AM
AT EASE
10:23:14 AM
RECONVENED
10:23:42 AM
JIM UDELHOVEN, SELF, KASILOF (via teleconference),
testified in opposition of SB 192 and shared his belief
that the legislation would not create jobs. He supported HB
110 and thought that it would stimulate new development and
would result in more jobs. He observed that this was a very
important decision for Alaska's future.
10:25:14 AM
MARY NANUWORK, SELF, ANCHORAGE (via teleconference), voiced
his opposition to SB 192 and pointed out that lawmakers
spent too much time trying to solve oil related problems
that were not getting solved. She shared that in the past
the state had not worked well with native peoples and urged
lawmakers to do a better job with that aspect. She noted
that native peoples were in touch with the land and were
more aware of problems on the North Slope; she hoped they
would be consulted more in the future.
10:29:44 AM
CATHY DUXBURY, ANCHORAGE, SELF (via teleconference),
testified in opposition of SB 192 and urged the passage of
HB 110. She thought that supporting the producers would
encourage long-term growth for Alaska and mentioned the
need for more jobs in the state.
10:31:30 AM
AT EASE
10:48:05 AM
RECONVENED
10:48:14 AM
Co-Chair Stedman reminded the public that testimony would
resume in the afternoon meeting.
10:48:36 AM
BUZZ OTIS, SELF, NORTH POLE (via teleconference), testified
in opposition of SB 192 and stated that Alaska was at a
crossroads; the interior of the state was suffering from a
loss of jobs, high electrical costs, and high fuel costs.
He said that Alaska was a resource state and stressed the
need for tax legislation that encouraged development in an
environmentally friendly way. He suggested that any new
legislation should encourage more production.
10:51:03 AM
CAROLINE BOLAR, SELF, ANCHORAGE (via teleconference),
expressed her support of maintaining ACES and pointed out
that the state needed assurances from the oil and mining
industries that they would produce. She noted that many
Alaskans did not understand that oil was a resource that
belonged to the whole state and urged that the oil
companies did not own the resource.
10:54:33 AM
SB 192 was HEARD and HELD in committee for further
consideration.
ADJOURNMENT
10:54:42 AM
The meeting was adjourned at 10:54 AM.
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