Legislature(2005 - 2006)
2006-07-12 Senate Journal
Full Journal pdf2006-07-12 Senate Journal Page 3628 SB 3001 SENATE BILL NO. 3001 BY THE SENATE RULES COMMITTEE BY REQUEST OF THE GOVERNOR, entitled: "An Act relating to the production tax on oil and gas and to conservation surcharges on oil; relating to criminal penalties for violating conditions governing access to and use of confidential information relating to the production tax; amending the definition of 'gas' as that definition applies in the Alaska Stranded Gas Development Act; making conforming amendments; and providing for an effective date." was read the first time and referred to the Special Committee on Natural Gas Development. The following fiscal information was published today: Fiscal Note No. 1, zero, Department of Natural Resources Fiscal Note No. 2, Department of Revenue Governor's transmittal letter dated July 12: Dear President Stevens: Under the authority of article III, section 18, of the Alaska Constitution, I am transmitting a bill relating to the oil and gas production tax. This bill is similar to previous versions of oil and gas production tax legislation that the Legislature has considered during both the regular and special sessions this year. I appreciate that legislators have devoted sustained and serious attention and concern to this subject, and there is therefore no need for me to repeat in detail here the reasons why this legislation is urgently needed or how the new tax system set out in this legislation would work. Legislators well understand that the existing production tax law is not adequately serving the interests of Alaskans and that the approach taken by this bill would provide the state with a fairer share of the value of oil and gas production while encouraging vital investment in future production. 2006-07-12 Senate Journal Page 3629 I also appreciate that the legislative process this year has led to numerous improvements in the bills that were originally submitted, resulting in increased clarity, predictability, and ease of administration. The bill I am transmitting takes advantage of these improvements by using as its model the most recent versions that were passed by the House and Senate, HCS CSSB 2001(FIN) am H and CCS SB 2001. The following two changes from those versions are reflected in the bill: 1. Because I still believe that a 20 percent tax rate on net value represents a more appropriate balance than either of the higher rates contained in HCS CSSB 2001(FIN) am H or CCS SB 2001, my bill returns to a 20 percent rate. 2. For the same reason, my bill eliminates the additional "progressivity" tax provisions that were in the other versions. 3. Similarly, because I believe that the four percent of gross value tax floor on North Slope production that was added by HCS CSSB 2001(FIN) am H and the similar three percent floor that was contained in CCS SB 2001 are inconsistent with the concept of a progressive net value tax system, my bill eliminates that tax floor provision. As explained more fully in my transmittal letter accompanying the original administration bills, this bill will greatly improve Alaska's oil and gas tax system, encouraging investment in the state, making tax administration more predictable, and better reflecting the variable economics of oil and gas development. This bill will provide Alaskans with a fairer share of the value of the oil and gas taken out of the ground in our state and provide fiscal certainty for future generations of Alaskans. I urge your prompt and favorable action on the bill. Sincerely yours, /s/ Frank H. Murkowski Governor