Legislature(2017 - 2018)SENATE FINANCE 532
04/26/2017 09:00 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB111 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 111 | TELECONFERENCED | |
| + | TELECONFERENCED |
SENATE FINANCE COMMITTEE
April 26, 2017
9:06 a.m.
9:06:38 AM
CALL TO ORDER
Co-Chair MacKinnon called the Senate Finance Committee
meeting to order at 9:06 a.m.
MEMBERS PRESENT
Senator Lyman Hoffman, Co-Chair
Senator Anna MacKinnon, Co-Chair
Senator Click Bishop, Vice-Chair
Senator Shelley Hughes
Senator Peter Micciche
Senator Donny Olson
Senator Natasha von Imhof
MEMBERS ABSENT
None
ALSO PRESENT
Representative Tammie Wilson; Representative Chris Birch;
Representative Geran Tarr, Sponsor; Representative Cathy
Tilton; Senator Cathy Giessel.
SUMMARY
HB 111 OIL & GAS PRODUCTION TAX;PAYMENTS;CREDITS
HB 111 was HEARD and HELD in committee for
further consideration.
CS FOR HOUSE BILL NO. 111(FIN)(efd fld)
"An Act relating to the oil and gas production tax,
tax payments, and credits; relating to interest
applicable to delinquent oil and gas production tax;
relating to carried-forward lease expenditures based
on losses and limiting those lease expenditures to an
amount equal to the gross value at the point of
production of oil and gas produced from the lease or
property where the lease expenditure was incurred;
relating to information concerning tax credits, lease
expenditures, and oil and gas taxes; relating to the
disclosure of that information to the public; relating
to an adjustment in the gross value at the point of
production; and relating to a legislative working
group."
9:07:13 AM
REPRESENTATIVE GERAN TARR, SPONSOR, addressed CSHB 111(FIN)
version L.A. She commented that the House Resources
Committee had observed that the state's oil and gas tax
system was not working well in the low-price environment
over the preceding two years. She recalled that the
committee had looked to minimize the downside risk for the
state. Popular opinion suggested oil would hover at $50 per
barrel (bbl). She discussed the importance of the oil and
gas industry in the state, and the need to remain a
competitive place for investment. She emphasized the fact
that all potential developments and opportunities were not
alike. She pondered how the state could pursue the
opportunities that would help it meet the constitutional
mandate of maximizing the benefit for the people of the
Alaska.
Representative Tarr relayed that the House Resources
Committee wanted to address cash credits, which had become
an untenable situation after the state had accumulated $1.1
billion in obligations. The committee had considered it was
a priority to establish a plan and stabilize the system.
She discussed companies that borrowed from banks and relied
on credits issued by the state. The committee wanted a plan
that was durable along all oil prices and time horizons.
She referred to previous oil and gas tax policies such as
Alaska's Clear and Equitable Share (ACES).
Representative Tarr described that one goal of the
legislation was to have a plan that worked well and could
be set aside for some number of years, rather than taking
more time from the legislature and garnering additional
criticism from the industry. She thought the cash credit
was incentive that was important for new entrants and
companies in exploration. The ability to take the cash
credits to banks for financing was a valuable opportunity.
She referred to the state's tax credit obligation, and
recognized the challenge in meeting the obligation after
greatly reduced production tax.
Representative Tarr detailed that the House Resources
Committee had followed the advice of oil and gas tax
consultant Rich Ruggiero in order to offer something that
would be an incentive for a company, keep the state
competitive, and encourage investment. Mr. Ruggiero had
recommended using operating loss carry-forwards [or net
operating losses (NOLs)]. The bill as it passed the House
allowed for 100 percent of NOLs for 7 years, after which
time there was a 10 percent reduction in the value of the
losses. The 10 percent would be specific to the year.
9:12:12 AM
Co-Chair MacKinnon referred to the 100 percent carry-
forward for seven years, and asked if the provision was a
result of the advice of the consultant.
Representative Tarr stated that the consultant had
recommended a number of things, including an uplift
provision, which was an interest incentive (or an interest
earning loss). She relayed that the version L.A of the bill
contained 50 percent of NOLs with an uplift. The consultant
had recommended against the committee's idea to have the
value to be 100 percent at year 7. He had considered that
not allowing 100 percent carry-forward would be atypical of
what other regimes offered. Subsequently the House Finance
version of the bill was changed, and allowed for 100
percent carry-forward. The consultant did not recommend for
the reduction of 10 percent after 7 years.
Co-Chair MacKinnon relayed that Mr. Ruggiero had presented
to the Senate Finance Committee in a joint meeting with the
Senate Resources Committee the previous weekend. He had
suggested that all around the world, costs for production
were allowable expenses and 100 percent recovery was
available.
Representative Tarr clarified that the House Resources
Committee version of the bill had contained 50 percent loss
carry-forward with uplift; while in the House Finance
Committee it was changed to 100 percent loss carry-forward
for 7 years, with a 10 percent reduction. She considered
that the matter was a policy call for the legislature,
which wanted to encourage getting into production as
quickly as possible. She thought the average time to
production was 7 years. She relayed that there had been
conversation about incidental occurrences such as delays
from federal regulation or permitting. She thought there
was a question of what the state could afford when
considering the accumulation of losses. When a company
transitioned into production, the losses would be applied
to tax revenue and be lost revenue to the state. She
emphasized that the committee had wanted to be careful that
the state wasn't so generous that once a company went into
production, the carry-forward losses could last for
extended years.
9:16:08 AM
Co-Chair MacKinnon commented that Senate Finance was
familiar with the credit mechanism.
Representative Tarr stated that the bill also had the
feature of ring-fencing, through which a loss would apply
to the lease where the loss was incurred. The committee had
considered the per-barrel credit and the base tax rate,
which were features that worked together in SB 21 [oil and
gas tax legislation passed in 2013]. The 35 percent base
rate would be unusually high if it were not offset by the
per-barrel reduction. She thought there were different ways
to approach the matter. The House version repealed the per-
barrel credit altogether, and reduced the base rate from 35
percent to 25 percent. She stated that the rate of 25
percent was chosen because it was the base rate in the
original version of SB 21 as introduced by former Governor
Sean Parnell.
Representative Tarr discussed the per-barrel credit, which
also worked to have reversed progressivity. She specified
that version L.A of the bill contained a 15 percent
bracketed supplemental tax. The consultant had recommended
working from the production tax value (PTV), which was the
gross value less the transportation and lease expenditures;
and was how to truly work with a net-profits-based system.
After the PTV value was $60, it would transition to a
higher bracket with an additional 15 percent added on as a
supplemental tax.
Representative Tarr stated that the bill hardened the
minimum floor at 4 percent, and did not allow any of the
credits to go through the floor. The bill addressed one of
the gross value reduction (GVR) provisions, and would
repeal the extra 10 percent GVR for higher royalty fields.
The bill would repeal the ability to use credits for
financing.
Representative Tarr stated that the bill had a couple of
transparency provisions, one of which was built on a
provision in HB 247, regarding public disclosure for
credits earned and lease expenditures. The bill previously
had several provisions relating to access to information to
legislators, which had been scaled back significantly in
the final version of the bill that left the other body. The
bill also addressed the interest rate, and scaled the rate
to match the number of years needed to complete the state
audit.
9:20:07 AM
Co-Chair MacKinnon thanked Representative Tarr for her
testimony. She thought Representative Tarr had suggested
that the state needed to find a way to pay off tax credit
obligations to the smaller companies. She inquired how the
other body proposed to do so, and asked if Representative
Tarr could cite specific provisions in the bill.
Representative Tarr explicated that the House Resources
Committee version of the bill had intent language that,
contingent upon the passage of a fiscal plan, paid a
significant portion of the state's credit obligation. She
recounted conversations with the Co-Chair, including a 3-
year or 5-year plan. She mentioned seeking feedback from
industry representatives. She had a strong concern about
the state not meeting its obligations, and the ripple
effect to any Alaska businesses that might be impacted. She
stated that the fiscal note attached to the bill only
addressed the revenue and the elimination of credit size,
and did not have additional funding for paying the tax
credit obligations.
Co-Chair MacKinnon asked if it was fair to say that there
was not consensus in the House about the method to pay off
the businesses, but there was consensus to pay off the
obligations over a period of time.
Representative Tarr did not want to characterize the
intentions of others. She restated the idea of paying
credits contingent upon the passage of a fiscal plan. She
stated that based on the House Majority and the four
pillars it had put forward, meeting the obligations would
be considered. She knew that members were concerned about
impacts on Alaska companies, and did not want to see
companies default on any lease payment and then leave the
bank as a lease holder.
Co-Chair Hoffman stated that part of the House fiscal plan
included an income tax. He asked if it could be assumed
that income tax revenues would be used to pay off the tax
credits.
Representative Tarr stated that all the funds would go to
the General Fund (GF), and to the extent that the
obligations would be paid from the GF, the statement was
true. She thought that there were those who were not
willing to pay an income tax or part of a Permanent Fund
Dividend (PFD) if it was going toward a subsidy or credit
to an oil company. She discussed the idea of balancing
competing ideas, and shared that the House was taking a
multi-faceted approach to a fiscal plan. She thought there
were others that thought changes to the oil tax system must
come first. She stated that the House was trying to address
the situation and make some modest changes, which might
make people more comfortable about other proposals in the
fiscal plan.
Co-Chair MacKinnon asked about the cuts that were part of
the House's plan, and asked if there had been a reduction
in payment of the tax credits.
Representative Tarr answered in the affirmative, and
qualified that the cut was to reduce the tax credit
payments to the statutory minimum.
Co-Chair MacKinnon asked about the amount of the cut.
Representative Tarr recalled that the amount was $37
million. She wanted to double check the figures.
9:24:35 AM
Senator von Imhof referred to Representative Tarr's comment
about a precarious economy and business environment for
producers. She noted that Representative Tarr had
acknowledged that paying some of the tax credits was
important, and referenced her complete fiscal plan that
included an income tax. She asked if Representative Tarr
felt that taking money from a precarious economy was in the
best interest of paying for tax credits. She wondered how
an income tax, in the context of the House's treatment of
tax credits, would not put the state's economy into a
tailspin.
Representative Tarr stated that the House had tried to work
closely with the Legislative Finance Division (LFD) and the
Department of Revenue (DOR) to consider different
proposals. She stated that relative to the bill proposal,
nothing would change the obligations that would be due
because of the taxes being on a calendar year. The
effective date of the bill was January 1, 2018; and
everything that continued through the 2017 would be under
the current tax credit system. She thought if some of the
tax credits were not paid, it might be more challenging for
smaller companies.
Representative Tarr continued discussing a potential income
tax; and stated that she had been told that for every $100
million in budget cuts that were made, there would be about
$1000 to $1,200 jobs lost from the public sector.
Additionally, there would thousands more lost in the
private sector. She discussed the numbers of residents
leaving the state, and recalled that 9,000 people had left
Alaska the previous year. She pondered that an income tax
would be the least impactful to the public, whereas deeper
cuts could drive the state into a deeper recession.
Representative Tarr observed that many people's retirement
accounts were still recovering from the recession in the
Lower 48, while home values had not dropped significantly.
She thought there was real concern that if people left the
state in large numbers, it would cause house prices to
drop. She argued that a 30 percent to 40 percent drop in
real estate value would far exceed the $1,500 to $2,000
that might be paid in income tax. She noted that an income
tax would also get out-of-state workers to help contribute
to the state, so the burden would not be felt entirely by
Alaskans. She discussed the concept of a sales tax, which
she considered overly burdensome for small communities when
stacked upon other local sales taxes.
9:28:47 AM
Senator Micciche thought the conversation was moving off
topic. He asked if a reduction of the cashable credits was
one of the four pillars of the House fiscal plan. He asked
if the bill was related to one of the four pillars.
Representative Tarr answered in the affirmative.
Senator Micciche asked if one of the four pillars was a
change to the oil tax structure, or specifically reductions
in the exposure to cashable credits.
Representative Tarr thought the answer depended upon whom
one was speaking to. She stated that reduction to exposure
from cashable credits was a priority, and she hoped that
all parties were in agreement. She wanted to move forward
with changes to give companies time to make plans.
Co-Chair MacKinnon relayed that statute required the
legislature contribute $77 million towards paying down the
tax credits. The House version of the bill had reduced the
amount to $37 million, so there had been a $40 million cut
to the small explorers that received cashable credits.
Co-Chair MacKinnon asked if there were questions regarding
the structure of the bill. She knew that the interest had
changed, and mentioned ring-fencing and repeal of the per-
barrel credit.
9:31:30 AM
Senator Micciche thought the effective tax rate and state
take under the House Resources Committee version of the
bill was somewhat more balanced in relation to the
consultant's advice. He thought the House Finance Committee
version seemed as if there had not been a consultant
involved; and that instead of going with industry and
sovereign/global balance evaluation, the bill version went
for more money. He asked Representative Tarr to comment on
the changes that happened in the House Finance Committee.
Representative Tarr stated that working on the bill in the
House Resources Committee, she had felt like more progress
would be made by working within the infrastructure of SB
21. She relayed that Mr. Ruggiero had recommended using
brackets off the PTV, which the committee would have worked
on had time allowed. She thought that there was room to
raise the overall effective tax rate. She specified that at
at an oil price of $55/bbl, the tax rate was approximately
10 percent, while the bill would bump it up to the 13
percent range. When the House Finance Committee had
considered the bill, it had built on the original
conversation and put in a 15 percent tax bracket, which had
changed the overall proposal.
Representative Tarr continued, explaining that the
consultant had asserted there were ways to remove the per-
barrel credit and GVR provisions, in aid of simplifying the
system. She mentioned a provision for a dry-hole credit (as
an incentive for explorers), which was eliminated in the
House Finance Committee version of the bill after questions
as to how it would be implemented. She summarized that
there had been different approaches in what had been done
in the House Resources Committee versus the House Finance
Committee. She discussed the differences in revenue to the
state based on the two approaches of the oil tax system at
different oil price points.
Vice-Chair Bishop commented that Mr. Ruggiero had suggested
that the state should have a tax regime that did not chase
the price of oil.
Co-Chair MacKinnon asked if Representative Tarr had any
closing thoughts for consideration of the committee.
Representative Tarr appreciated Vice-Chair Bishop's
comments; and qualified that the version of the bill that
passed the House used the PTV and tax brackets for the same
reason. She considered that basing things off the PTV would
function more independent of the price of oil. She thought
the feature was worth considering. She acknowledged that
the Senate Finance Committee was knowledgeable in the area
of oil tax credits, and looked forward to collaborating
with the members to complete the work of the session.
Co-Chair MacKinnon clarified that PTV was in reference to
production tax value.
9:36:39 AM
AT EASE
9:39:04 AM
RECONVENED
SENATOR CATHY GIESSEL, addressed the Senate Committee
Substitute (SCS) for HB 111(RES). She stated that the bill
focused on the important issues around which the Senate had
consensus. She recalled that the Senate had started work on
the issue three years previously when it had observed that
cash credits were a significant risk to the state. She
detailed that in January of 2015, the legislature's
consultant enalytica had put out a white paper entitled,
"The Impact of Alaska's Oil and Gas Production Tax Credits
at Low Oil Prices" (copy on file under committee meeting on
January 27, 2015). She stated that at the time, the Senate
had recognized the risk. In the conclusion of the report
the Cook Inlet capital well lease expenditure and carry-
forward annual loss credits were distinguished as "the most
significant" of the tax credit issue, and were worth
examining in further detail.
Senator Giessel recounted that the Senate had convened the
Senate Oil and Gas Tax Credit Working Group, on which four
members of the committee had served. The group had also
included industry, labor unions, and Native corporations.
The group had addressed the significant liability faced by
the state, focusing primarily on the Cook Inlet. The group
had made six recommendations.
Senator Giessel relayed that the previous session, in HB
247 [oil and gas tax legislation passed in 2016], the
Senate had accomplished several of the working group's
recommendations to reform the state's cash tax credits. She
believed that HB 111 completed the list of recommendations.
9:41:19 AM
Senator Giessel asserted that there was a continuing
countdown on tax credits in Cook Inlet. She spoke to an
overview of SCS CSHB 111(RES) (copy on file):
Summary of Senate CS for CS for HB 111 \C
Eliminates the state's cash exposure by ending the
program of refundable oil and gas tax credits to small
or new companies. Transitions to a system of carrying
forward operating losses for use against future tax
liability, while protecting the basic tax components
in statute today.
Eliminating refundable tax credits
• Ends refundable credits statewide and repeals
the tax credit fund; credits issued for work done
through 2017 are refundable by appropriation
instead. (Sec. 15-17, 25, 32)
• Concludes the multi-year effort to eliminate
tax credits used against liability, except for
the local energy source work developing in Middle
Earth. (Sec. 25)
• Preserves Middle Earth credits as non-
refundable, and allows the company earning the
credits to apply them against the corporate
income tax as well as against production tax;
also, applies timelines to encourage prompt
issuance of Middle Earth credits. (Sec. 2, 11,
12, 14, 26, 27)
• Ensures the expiring in-state refinery and LNG
storage facility credits remain refundable
through appropriation. (Sec. 3-6)
• Expands opportunities for companies holding
credits to realize value of those credits by
enabling credits - a company's own or purchased
from another - to be used against prior
liabilities once those liabilities come due.
(Sec. 7, 9, 13, 28)
Senator Giessel detailed that the SCS hardened the tax
floor at 4 percent against net operating losses (NOLs).
Additionally, the sliding scale credit was retained,
because it helped to offset the high royalty. She
emphasized the importance of local energy production in
areas such as the Interior. She emphasized that expanding
the opportunity for credits to be used against prior
liabilities would help to reduce the state's liability.
9:45:58 AM
Senator Giessel addressed the topic of transparency. She
thought that transparency was created when making the
credits refundable only by appropriation. She discussed an
example of tax credit for seismic work, and noted that the
bill placed a time limit of 120 days for the Tax Division
to respond and issue a certificate for the company.
Senator Giessel continued discussing the bill summary:
Transition to carry-forward loss system while
protecting SB 21 tax
• Repeals the net operating loss credit
statewide. On the North Slope, shifts to a system
of carrying forward lease expenditures unable to
be deducted in the current year as a mechanism to
recover costs, and provides non-cash support for
new developments through an uplift. (Sections 10,
21, 23, 25, 29)
• Protects the tax structure in place, including
a flexible floor for new oil and small producers,
and affirming a hard floor against losses.
(Sections 10, 23)
Miscellaneous
• Reduces the interest rate on delinquent taxes
and extends the time during which interest
accrues. (Section 1)
Senator Giessel relayed that consultants had been emphatic
about the loss carry-forward. She emphasized that all other
jurisdictions around the world allowed companies to get
back their losses. She discussed uplift, which supported
new developments. She detailed that DOR had communicated
that it was difficult to have a separate oil and gas tax
interest rate on delinquent taxes. The bill would set the
interest rate for delinquent taxes at 3 percent
(compounding quarterly), with no time limit for accruing
interest. The language was put into the area of tax law
that was for all other delinquent taxes. She thought the
key elements of the bill addressed the three issues that
the Senate had focused on.
9:49:38 AM
Senator Giessel reiterated that the bill opened the door
for various uses of the tax credits in order to reduce the
backlog, which occurred at no cost to the GF. She thought
the biggest piece of the work protected the state from
future cash calls by repealing the cash credit fund
entirely. The NOLs moved from a credit to a deduction,
which put an expiration date on the state's cash exposure.
She emphasized that both consultants utilized by the Senate
had recommended the change; and had suggested that to do
otherwise would put Alaska at the bottom of the
competitiveness ladder.
Senator Giessel continued, stating that the bill
incorporated a non-cash uplift for operating losses that
were carried forward. She thought the provision gave
respect to the time-value of money, and pointed out that it
was only for new companies. The bill allowed for natural
expiration in 5 years for the refinery and gas storage
credits, which would be made only by appropriation. She
emphasized that the changes in the SCS were profound, and
that industry would be impacted. She believed that the
legislature had heard from the industry, and it had
recognized the cash risk that the state was in.
Senator Giessel addressed the third issue of concern to the
Senate, and thought that a complete re-write of the state's
tax policy would require significantly more time than what
was available in the current legislative session. She
recalled that in the past, when the legislature had written
tax policy, the administration had come forward with its
own consultant; and the legislature had robust, experienced
consultants rather than just the two that were presently
retained. She stated that policies in SB 21 were retained
in the SCS with minor changes; such as hardening the floor.
Senator Giessel stated that the consensus in the Senate
stood on four pillars of tax policy: the tax must be fair
to Alaskans and to business, the tax must encourage new
production, the tax must be balanced, and the tax must be
durable for the long-term. She thought the bill was
balanced in protecting the state while allowing companies
to carry forward their losses.
9:53:15 AM
Senator Giessel asserted that the bill was neutral, in that
it levelled the playing ground for all the companies. She
thought the bill was a way to end cashable credits, with a
clear policy rather than vetoes. She relayed that the
Senate had been very concerned that the policies were in
the best interested of Alaska's families, businesses, and
jobs.
Senator Giessel relayed an anecdotal story about an elderly
woman concerned about a proposed income tax. She thought
rewriting tax policy in the last days of an extended
session was not appropriate, and informed that the Senate
had focused only on the cashable credits. She asserted that
if the administration had moved the goalpost, and was now
asking for a complete tax policy rewrite and an increase in
taxes, she thought it would require significantly more
discussion.
Co-Chair MacKinnon referred to her earlier question to
Representative Tarr relating to paying of cashable tax
credit liability. She thought the Senate Resources
Committee version of the bill proposed to start paying down
the liability.
Senator Giessel answered in the affirmative. She explained
that the bill began the process of reducing the outstanding
cashable credit liability by allowing companies to either
use the credits on assessed tax liability or (in the case
Middle Earth) to allow for deduction of outstanding cash
credits from corporate income tax.
Co-Chair MacKinnon discussed NOLs and shared that the
consultant hired by the Legislative Budget and Audit
committee had suggested that around the world, 100 percent
of loss carry-forwards were allowable in keeping the state
competitive in the global market. She thought the bill
coming from the other body had a condition of seven years,
and a ten percent reduction; she believed it was in aid of
encouraging earlier production. She asked Senator Giessel
to address carry-forward losses.
Senator Giessel recalled slides shown by Mr. Ruggiero,
which had addressed lost NOLs, and had emphasized that it
was critical that 100 percent of the loss carry-forwards
should be recoverable by companies. He had demonstrated
multiple ways that the value was lost, and the Senate had
taken the advice and incorporated it into the bill. She
stated that 100 percent of the losses would be recoverable
in the bill version she was presenting.
9:58:01 AM
Senator Micciche did not know that all Alaskans understood
how federal tax code worked. He discussed a hypothetical
situation under which he started a business (with expenses)
and federal tax code allowed for carrying the losses
forward. He emphasized that loss carry-forwards were not
unusual.
Senator Giessel concurred, and thought that the practice
merely sounded unusual because it had not been done in SB
21, and the state had been offering cash for the NOLs. She
stated that the consultant had been clear in that he did
not know of any other jurisdiction in the world that gave
cash for the credits.
Senator Micciche clarified that the NOLs being discussed
were for the smaller producers, but were also part of the
large taxpayers. Mr. Ruggiero had discussed the importance
of the losses being 100 percent used and useful. He
emphasized that carry-forward losses were commonly used in
a net tax system.
Co-Chair MacKinnon asked if SB 21 had created cashable
credits.
Senator Giessel believed that cashable credits were first
established in Alaska's Clear and Equitable Share Act
(ACES). She recounted that SB 21 had begun to reduce the
credits, but left some in place; while HB 247 had removed
the majority of the credits for Cook Inlet. The removal had
not been fully implemented, and the proposed bill would
complete the process.
10:01:17 AM
AT EASE
10:05:56 AM
RECONVENED
Senator von Imhof thanked Senator Giessel for her work on
the bill. She thought the bill accomplished a balance. She
appreciated a summary of the work done by the task force.
She agreed that it was important to find a way to pay down
the tax credit liability over time, and she thought the
bill would accomplish the goal in a thoughtful and
systematic manner. She thought the bill protected and
promoted oil production on the North Slope. She agreed with
the Senator's comment that addressed changing the overall
tax structure.
Senator von Imhof referred to Mr. Ruggiero's comment about
the complexity of the oil and gas tax system, and that it
was worth examining. She thought the topic was worth a
discussion in a larger context. She was happy to be part of
the legislation, and thought it addressed the issue of tax
credits.
Senator Giessel pointed out that the Legislative Budget and
Audit Committee was in the process of offering a request
for proposal for legislative consultants on the topic of
oil and gas taxes. She clarified that the legislature was
preparing to address the entire oil and gas tax system, but
was not prepared at present.
Senator Giessel pointed out that the previous year the
legislature had requested a report from DOR on which
credits were being paid off under HB 247 (copy on file).
She informed that the report had been delivered the
previous day. She drew members attention to the report, and
noted that it would specify which payments had been made
under the AS 463.55.028 Tax Credit Fund the previous year.
Co-Chair MacKinnon asked if Senator Giessel could provide a
copy of the report.
Co-Chair MacKinnon thanked Senator Giessel for introducing
the SCS.
Co-Chair MacKinnon thanked the House and Senate Resources
Committees for their perspective on addressing challenges
and looking at cashable credits. She asked Senator Micciche
to speak to a timeline of different taxes.
10:09:56 AM
Senator Micciche spoke to the frequency of change in tax
policy as the legislature and the administration tried to
pursue various goals. He recalled that in 2006, the
Petroleum Production Tax (PPT) had a $25 million per-
company cap. In 2007, ACES created the Tax Credit Fund,
which had the same goal as the Cook Inlet Recovery Act
passed in 2010; and was to entice smaller companies into
the marketplace. He was not sure of the degree of success
of the act. He stated that all the credits were heavily
supported by both sides of the aisle. He recalled that the
previous year HB 247 had limited credits to $70 million per
company, and there was a discount for early payment that
dropped the liability somewhat.
Senator Micciche thought that as the legislature moved
forward in tax policy, it was important to consider that
some efforts had unintended consequences. He thought the
state had learned a lesson and was trying to correct the
situation.
ADJOURNMENT
10:12:09 AM
The meeting was adjourned at 10:12 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 111 DOR Annual Report Requirement for Tax Credit Certificates.pdf |
SFIN 4/26/2017 9:00:00 AM |
HB 111 |