2010-02-10                     House Journal                      Page 1454
qualified capital expenditure or successfully bid on a lease on State                                                           
land. If the applicant is unable to meet either requirement, the                                                                
applicant cannot receive payment for the qualified capital expenditures                                                         
the applicant invested in the state. To solve this problem, the bill will                                                       
eliminate the requirement that the applicant make additional capital                                                            
expenditures or be the successful bidder for a lease on State land.                                                             
                                                                                                                                
Third, the bill will allow producers and explorers who qualify for the                                                          
20 percent tax credit under AS 43.55.023 for capital expenditures to                                                            
use the credit in the year that the credit is earned. Currently, producers                                                      
and explorers are required to spread the benefit over two years.                                                                
Allowing producers and explorers the full value of their credits in one                                                         
year would increase the amount available for further exploration                                                                
activities and for work on currently producing wells.                                                                           
                                                                                                                                
Finally, the bill will allow the Department of Revenue to waive                                                                 
interest for certain underpayments of taxes due before the effective                                                            
date of certain regulations implementing the production tax. This                                                               
provision will apply only if regulations to implement the production                                                            
tax are not yet in effect at the time the annual tax payments are due,                                                          
and only if the underpayment results from the producer's good faith                                                             
estimation of the tax due. Should it be determined that the taxpayer                                                            
overpaid the amount of tax due under the regulations in effect at the                                                           
time of payment and that a refund is due, no interest will be due on a                                                          
refund made within the time period specified in the bill.                                                                       
                                                                                                                                
With these changes, we will continue to responsibly maximize and                                                                
invest in Alaska's oil and gas resources. I urge your prompt and                                                                
favorable action on this measure.                                                                                               
                                                                                                                                
Sincerely,                                                                                                                      
/s/                                                                                                                             
Sean Parnell                                                                                                                    
Governor"                                                                                                                       
                                                                                                                                
                                                                                                                                
HB 338                                                                                                                        
HOUSE BILL NO. 338 by the House Rules Committee by request of                                                                   
the Governor, entitled: