Legislature(2023 - 2024)BARNES 124
03/06/2024 01:00 PM House RESOURCES
Note: the audio ![]()
and video ![]()
recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.
| Audio | Topic |
|---|---|
| Start | |
| HB387 | |
| HB223 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 387 | TELECONFERENCED | |
| *+ | HB 388 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 92 | TELECONFERENCED | |
| += | HB 223 | TELECONFERENCED | |
HB 223-TAX & ROYALTY FOR CERTAIN GAS
2:02:53 PM
CHAIR MCKAY announced that the final order of business would be
HOUSE BILL NO. 223, "An Act relating to the production tax and
royalty rates on certain gas; and providing for an effective
date." [Before the committee, adopted as the working document
on 2/23/24 was the proposed committee substitute (CS), Version
33-LS0886\S, Nauman, 2/10/24, ("Version S"), as amended by the
adoption of Amendment 1 on 3/1/24.]
2:03:35 PM
The committee took an at-ease from 2:03 to 2:04 p.m.
2:04:52 PM
REPRESENTATIVE MEARS moved to adopt Amendment 4 to HB 223,
Version S, labeled 33-LS0886\S.5, Nauman, 2/20/24, which read as
follows:
Page 1, line 1, following "gas;":
Insert "relating to oil and gas production tax
credits;"
Page 9, following line 24:
Insert new bill sections to read:
"* Sec. 5. AS 43.55.024 is amended by adding a new
subsection to read:
(k) In a calendar year, for each lease,
property, or unit, a producer may not apply against
the producer's tax liability under AS 43.55.011(e)
credits earned under (i) or (j) of this section in an
amount that exceeds the producer's qualified capital
expenditures for the lease, property, or unit. A
producer may not carry forward an unused credit under
this subsection. In this subsection, "qualified
capital expenditure" has the meaning given in
AS 43.55.023(o).
* Sec. 6. The uncodified law of the State of Alaska
is amended by adding a new section to read:
APPLICABILITY. AS 43.55.024(k), as amended by
sec. 5 of this Act, applies beginning the first
calendar year after the effective date of sec. 5 of
this Act."
Renumber the following bill sections accordingly.
REPRESENTATIVE MCCABE objected.
2:05:11 PM
REPRESENTATIVE MEARS spoke to Amendment 4. She said it was
clear that a multi-faceted plan is needed for Southcentral and
Railbelt energy as well as energy in general for Alaska. She
pointed out that the finances are out of balance in the state
and the amendments she was offering addressed issues that needed
to be under discussion in the state. Amendment 4 would provide
accountability for some long-term continued drilling of at least
ten wells a year. There would also be some accountability for
oil tax credits. She explained that she did not believe the
amendment would affect operations in the near term such as for
the 15 new wells being drilled by Hillcorp for the next several
years, but it would provide accountability that at least ten
wells would be drilled.
2:06:45 PM
CHAIR MCKAY opined that no one is going to drill ten
exploration wells although they might drill 10 development
wells. He asked whether there would be a penalty if a company
were to drill only nine wells.
REPRESENTATIVE MEARS answered in the affirmative.
2:07:24 PM
REPRESENTATIVE SADDLER foresaw that under this scenario, a
company that tried to drill 10 wells but only got nine drilled
would find its investment for the first nine would come at a
much higher cost. He said Amendment 4, overall, seems to
undermine the value of a tax credit, allowing no carry forward
and with a hard limit, which would tend not to incentivize
investment. He said this is counter to the intent of the bill;
therefore, he opposed Amendment 4, as it would run counter to
the intent of HB 223.
REPRESENTATIVE MEARS reiterated her belief that Amendment 4
represented an opportunity for accountability.
2:08:29 PM
A roll call vote was taken. Representative Mears voted in favor
of Amendment 4. Representatives Armstrong, Dibert, McCabe,
Baker, Saddler, Wright, and McKay voted against it. Therefore,
Amendment 4 failed to be adopted by a vote of 1-7.
REPRESENTATIVE MEARS said she would not be offering Amendment 5
at this time.
2:09:26 PM
REPRESENTATIVE MEARS moved to adopt Amendment 6 to HB 223,
Version S, labeled 33-LS0886\S.6, Nauman, 2/20/24, which read as
follows:
Page 1, line 1, following "gas;":
Insert "establishing an income tax on certain
entities producing or transporting oil or gas in the
state;"
Page 9, following line 24:
Insert new bill sections to read:
"* Sec. 5. AS 43.20 is amended by adding a new
section to read:
Sec. 43.20.019. Tax on income attributable to a
qualified entity. (a) If an entity has qualified
taxable income over $4,000,000 in a tax year, the
entity shall pay a tax of 9.4 percent on the qualified
taxable income over $4,000,000.
(b) The tax under this section does not apply to
a corporation paying tax under AS 43.20.011.
(c) The department may aggregate the qualified
taxable income of two or more entities for the purpose
of determining the tax due under this section if the
department determines that, without the provisions of
this section, the qualified taxable income would
reasonably be expected to be attributed to a single
entity.
(d) In this section,
(1) "entity" means a
(A) sole proprietorship;
(B) partnership; or
(C) entity that has elected to file federal
returns under 26 U.S.C. 1361 - 1379 (Internal Revenue
Code);
(2) "qualified taxable income" means income
from the production of oil or gas from a lease or
property in the state or from the transportation of
oil or gas by pipeline in the state before deductions
for
(A) dividends and gifts; and
(B) wages, salaries, bonuses, or other
similar payments to owners, partners, members, or
shareholders of the entity.
* Sec. 6. The uncodified law of the State of Alaska
is amended by adding a new section to read:
APPLICABILITY. AS 43.20.019, added by sec. 5 of
this Act, applies to the tax year of an entity
beginning on or after the effective date of sec. 5 of
this Act."
Renumber the following bill sections accordingly.
REPRESENTATIVE MCCABE objected.
REPRESENTATIVE MEARS explained the purpose of Amendment 6 was to
close a corporate loophole because of the change in the
corporate income tax rates and the subsequent loss of corporate
tax income.
2:11:02 PM
REPRESENTATIVE MCCABE maintained his objection.
A roll call vote was taken. Representatives Armstrong, Mears,
Dibert voted in favor of Amendment 6 to HB 223. Representatives
Wright, McCabe, Baker, Saddler, and McKay voted against it.
Therefore, Amendment 6 failed to be adopted by a vote of 3-5.
[Amendment 7 failed to be adopted on 3/1/24.]
2:12:07 PM
REPRESENTATIVE MEARS moved to adopt Amendment 8 to HB 223,
Version S, labeled 33-LS0886\S.2, Nauman, 2/19/24, which read as
follows:
Page 1, line 1, following "gas;":
Insert "relating to tax credits against the oil
and gas production tax;"
Page 9, following line 24:
Insert new bill sections to read:
"* Sec. 5. AS 43.55.024(j) is amended to read:
(j) A producer may apply against the producer's
tax liability for the calendar year under
AS 43.55.011(e) a tax credit in the amount specified
in this subsection for each barrel of oil taxable
under AS 43.55.011(e) that does not receive a
reduction in the gross value at the point of
production under AS 43.55.160(f) or (g) and that is
produced during a calendar year after December 31,
2013, from leases or properties north of 68 degrees
North latitude. A tax credit under this subsection may
not reduce a producer's tax liability for a calendar
year under AS 43.55.011(e) below the amount calculated
under AS 43.55.011(f). The amount of the tax credit
for a barrel of taxable oil subject to this subsection
produced during a month of the calendar year is
(1) $5 [$8] for each barrel of taxable oil
if the average gross value at the point of production
for the month is less than $80 a barrel;
(2) $4 [$7] for each barrel of taxable oil
if the average gross value at the point of production
for the month is greater than or equal to $80 a
barrel, but less than $90 a barrel;
(3) $3 [$6] for each barrel of taxable oil
if the average gross value at the point of production
for the month is greater than or equal to $90 a
barrel, but less than $100 a barrel;
(4) $2 [$5] for each barrel of taxable oil
if the average gross value at the point of production
for the month is greater than or equal to $100 a
barrel, but less than $110 a barrel;
(5) $1 [$4] for each barrel of taxable oil
if the average gross value at the point of production
for the month is greater than or equal to $110 a
barrel, but less than $120 a barrel;
(6) zero [$3] for each barrel of taxable
oil if the average gross value at the point of
production for the month is greater than or equal to
$120 a barrel [, BUT LESS THAN $130 A BARREL;
(7) $2 FOR EACH BARREL OF TAXABLE OIL IF
THE AVERAGE GROSS VALUE AT THE POINT OF PRODUCTION FOR
THE MONTH IS GREATER THAN OR EQUAL TO $130 A BARREL,
BUT LESS THAN $140 A BARREL;
(8) $1 FOR EACH BARREL OF TAXABLE OIL IF
THE AVERAGE GROSS VALUE AT THE POINT OF PRODUCTION FOR
THE MONTH IS GREATER THAN OR EQUAL TO $140 A BARREL,
BUT LESS THAN $150 A BARREL;
(9) ZERO IF THE AVERAGE GROSS VALUE AT THE
POINT OF PRODUCTION FOR THE MONTH IS GREATER THAN OR
EQUAL TO $150 A BARREL].
* Sec. 6. The uncodified law of the State of Alaska
is amended by adding a new section to read:
APPLICABILITY. AS 43.55.024(j), as amended by
sec. 5 of this Act, applies to oil produced on or
after the effective date of sec. 5 of this Act."
Renumber the following bill sections accordingly.
REPRESENTATIVE MCCABE objected.
REPRESENTATIVE MEARS explained that the intent of Amendment 8
was a step-down reduction of oil production tax credits. She
explained that it was important to look at the state's entire
energy portfolio. Research shows that since 2014, the state has
paid out $7.2 billion in energy credits and is expected to pay
out another $8.7 billion in credits over the next nine years.
That would be equivalent to 10 percent of the budget every year.
2:13:01 PM
CHAIR MCKAY observed that the underlying bill is addressed
toward incentivizing gas production and this amendment appears
to be focused almost exclusively on oil.
2:13:16 PM
REPRESENTATIVE SADDLER commented that the proposed amendment
represents a wholesale change in tax structure and is not really
appropriate for inclusion in HB 223, Version S.
REPRESENTATIVE MEARS said she looked forward to discussing this
further.
2:13:56 PM
REPRESENTATIVE MCCABE maintained his objection.
A roll call vote was taken. Representative Mears voted in favor
of Amendment 8. Representatives Saddler, Wright, Armstrong
Dibert, McCabe, Baker, and McKay voted against it. Therefore,
Amendment 8 failed to be adopted by a vote of 1-7.
2:15:10 PM
REPRESENTATIVE MCCABE moved to report CSHB 223, Version 33-
LS0886\S, Nauman, 2/10/24, [as amended], out of committee with
individual recommendations and the accompanying fiscal notes.
2:15:32 PM
REPRESENTATIVE MEARS objected.
2:15:39 PM
A roll call vote was taken. Representatives Saddler, Wright,
Armstrong, Dibert, McCabe, Baker, and McKay voted in favor of
reporting CSHB 223, Version 33-LS0886\S, Nauman, 2/10/24, [as
amended], out of committee. Representative Mears voted against
it. Therefore, CSHB 223(RES) was reported out of the House
Resources Standing Committee by a vote of 7-1.
2:16:33 PM
The committee took a brief at-ease at 2:16 p.m.
2:17:30 PM
CHAIR MCKAY authorized Legislative Legal Services to make any
necessary technical or conforming changes to CSHB 223 (RES). He
noted that HB 388 would be rescheduled.
2:18:25 PM
REPRESENTATIVE MEARS commented for the record that she is
supportive of Alaska's natural gas industry in Cook Inlet. It
is the foundation for electricity and heat in Southcentral
Alaska. The infrastructure is built around it, and the storage
of natural gas not expansion is going to be key to future energy
evolution in Southcentral. She expressed her belief that there
needed to be more accountability in the work moving forward.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB387 Sponsor Statement 3.06.24.pdf |
HRES 3/6/2024 1:00:00 PM |
HB 387 |
| HB387 ver B 3.06.24.pdf |
HRES 3/6/2024 1:00:00 PM |
HB 387 |
| HB387 Sectional Analysis ver B 3.06.24.pdf |
HRES 3/6/2024 1:00:00 PM |
HB 387 |
| HB387 Presentation 3.06.24.pdf |
HRES 3/6/2024 1:00:00 PM |
HB 387 |
| HB387 Fiscal Note DOR 3.06.24.pdf |
HRES 3/6/2024 1:00:00 PM |
HB 387 |