Legislature(2025 - 2026)BUTROVICH 205
03/14/2025 03:30 PM Senate RESOURCES
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| Audio | Topic |
|---|---|
| Start | |
| SB97 | |
| SB92 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 97 | TELECONFERENCED | |
| += | SB 105 | TELECONFERENCED | |
| += | SB 92 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
SENATE RESOURCES STANDING COMMITTEE
March 14, 2025
3:30 p.m.
DRAFT
MEMBERS PRESENT
Senator Cathy Giessel, Chair
Senator Bill Wielechowski, Vice Chair
Senator Matt Claman
Senator Forrest Dunbar
Senator Scott Kawasaki
Senator Shelley Hughes
Senator Robert Myers
MEMBERS ABSENT
All members present
OTHER LEGISLATORS PRESENT
Representative Ky Holland
COMMITTEE CALENDAR
SENATE BILL NO. 97
"An Act establishing a big game guide concession area permit
program on land in the state; relating to the duties of the Big
Game Commercial Services Board, the Board of Game, the
Department of Fish and Game, and the Department of Natural
Resources; requiring the Board of Game to establish an initial
big game guide concession area; and providing for an effective
date."
- MOVED SB 97 OUT OF COMMITTEE
SENATE BILL NO. 92
"An Act establishing an income tax on certain entities producing
or transporting oil or gas in the state; and providing for an
effective date."
- HEARD & HELD
SENATE BILL NO. 105
"An Act relating to the lease and sale of state land for
recreational cabin sites; and providing for an effective date."
- BILL HEARING CANCELED
PREVIOUS COMMITTEE ACTION
BILL: SB 97
SHORT TITLE: BIG GAME PERMIT PROGRAM
SPONSOR(s): RESOURCES
02/12/25 (S) READ THE FIRST TIME - REFERRALS
02/12/25 (S) RES, FIN
02/28/25 (S) RES AT 3:30 PM BUTROVICH 205
02/28/25 (S) -- MEETING CANCELED --
03/05/25 (S) PRIME SPONSOR CHANGED - SENATE
RESOURCES COMMITTEE
03/05/25 (S) REPLACED SENATE RULES COMMITTEE
03/10/25 (S) RES AT 3:30 PM BUTROVICH 205
03/10/25 (S) Heard & Held
03/10/25 (S) MINUTE(RES)
03/14/25 (S) RES AT 3:30 PM BUTROVICH 205
BILL: SB 92
SHORT TITLE: CORP. INCOME TAX; OIL & GAS ENTITIES
SPONSOR(s): RESOURCES
02/10/25 (S) READ THE FIRST TIME - REFERRALS
02/10/25 (S) RES, FIN
02/19/25 (S) RES AT 3:30 PM BUTROVICH 205
02/19/25 (S) Heard & Held
02/19/25 (S) MINUTE(RES)
03/03/25 (S) RES AT 3:30 PM BUTROVICH 205
03/03/25 (S) Heard & Held
03/03/25 (S) MINUTE(RES)
03/14/25 (S) RES AT 3:30 PM BUTROVICH 205
WITNESS REGISTER
INTIMAYO HARBISON, Staff
Senator Cathy Giessel
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented SB 97 on behalf of the Senate
Resources Committee, Chair Giessel.
Sonja Kawasaki, Legal Council
Senate Majority Caucus
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Answered questions on SB 97
INTIMAYO HARBISON, Staff
Senator Cathy Giessel
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented SB 92 on behalf of the Senate
Resources Committee, Chair Giessel.
MICHAEL WILLIAMS, Corporate Tax Manager
Tax Division
Department of Revenue (DOR)
Anchorage, Alaska
POSITION STATEMENT: Answered questions on SB 92.
JOHN LETOURNEAU, Certified Public Accountant (CPA)
Thomas, Head, and Greisen
Anchorage, Alaska
POSITION STATEMENT: Testified by invitation in support of SB 92.
JERRY WEBRE, President
Little Red Services
Anchorage, Alaska
POSITION STATEMENT: Testified in opposition to SB 92.
HOLLIS FRENCH, representing self
Anchorage, Alaska
POSITION STATEMENT: Testified in support of SB 92.
BOB SHAVELSON, representing self
Homer, Alaska
POSITION STATEMENT: Testified in support of SB 92.
MADDIE HALLORAN, representing self
Anchorage, Alaska
POSITION STATEMENT: Testified in support of SB 92.
BEN BOETTGER, Energy Specialist
Cook InletKeeper
Soldotna, Alaska
POSITION STATEMENT: Testified in support of SB 92 on behalf of
the Cook Inletkeeper organization.
SARAH FURMAN, representing self
Fairbanks, Alaska
POSITION STATEMENT: Testified in support of SB 92.
NATALIE KILEY-BERGEN, Energy Lead
Alaska Public Interest Research Group
Anchorage, Alaska
POSITION STATEMENT: Testified in support of SB 92.
GEORGIA HOUDE, representing self
Fairbanks, Alaska
POSITION STATEMENT: Testified in support of SB 92.
ACTION NARRATIVE
3:30:31 PM
CHAIR GIESSEL called the Senate Resources Standing Committee
meeting to order at 3:30 p.m. Present at the call to order were
Senators Myers, Claman, Dunbar, Hughes and Chair Giessel.
Senators Wielechowski and Senator Kawasaki arrived shortly
thereafter.
SB 97-BIG GAME PERMIT PROGRAM
3:31:15 PM
CHAIR GIESSEL announced the consideration of SENATE BILL NO. 97
"An Act establishing a big game guide concession area permit
program on land in the state; relating to the duties of the Big
Game Commercial Services Board, the Board of Game, the
Department of Fish and Game, and the Department of Natural
Resources; requiring the Board of Game to establish an initial
big game guide concession area; and providing for an effective
date."
3:31:30 PM
INTIMAYO HARBISON, Staff, Senator Cathy Giessel, Alaska State
Legislature, Juneau, Alaska, called attention to written public
testimony on SB 97 received by the committee since the last
hearing.
3:31:57 PM
CHAIR GIESSEL solicited a motion.
3:32:02 PM
SENATOR MYERS moved to adopt Amendment 1, work order 34-
LS0445\A.1, to SB 97:
34-LS0445\A.1
Nauman
3/11/25
AMENDMENT 1
OFFERED IN THE SENATE BY SENATOR MYERS
Page 4, line 28, through page 5, line 2:
Delete all material and insert:
"(e) A concession permit may not be
transferred. A big game guide who holds a
concession permit under this section may, during
the term of the permit, relinquish the permit to
the commissioner. If the Big Game Commercial
Services Board established under AS 08.54.591 is
aware that a big game guide is no longer able to
guide in the concession area, the board shall
notify the commissioner. The commissioner may
revoke the permit under (f) of this section
after providing the permittee with written
notice and an opportunity to be heard. The
department shall immediately reissue a permit
revoked under this section."
3:32:12 PM
CHAIR GIESSEL objected for purposes of discussion.
3:32:15 PM
SENATOR MYERS explained that the intention with Amendment 1 was
to remove the permit-transfer provision from SB 97. Professional
hunting guides noted that some form of transfer was usually
needed because permits were issued for 10 years, and guides may
retire, stop operating, or pass away mid-term. Instead of
allowing transfers, Amendment 1 would give the Big Game
Commercial Services Board authority to recommend that the
Commissioner of DNR revoke a permit, with public notice, and
immediately reopen the area for a new permit application
process. He said the intent is to keep the permit system open
and prevent a small group from informally controlling permits,
an issue in other limited-entry systems, while still ensuring
that vacancies can be filled when guides leave before their
permit term ends.
3:34:16 PM
SENATOR DUNBAR noted that Senate Bill 189, the predecessor to SB
97, became tied up with other bills at the end of the 2024
legislative session, became law and was now being challenged in
court. He noted that legislators expressed a desire to re-
establish the programs [established by the contended
legislation] through standalone bills to ensure they remain
valid regardless of the court outcome. He asked whether passing
new, independent bills might render the court case moot, and
whether the likelihood of mooting the case was greater if the
bills were passed in the same form as last year, "clean", rather
than with amendments.
3:36:09 PM
SONJA KAWASAKI, Legal Counsel, Senate Majority Caucus, Alaska
State Legislature, Juneau, Alaska, recommended that substantive
provisions in SB 97 should stay very close to those originally
enacted in Senate Bill 189. While amendments would not
automatically prevent the case from becoming moot, passing an
identical or nearly identical version avoids requiring the court
and litigants to argue over whether the new provisions match the
challenged ones, thereby increasing clarity and the likelihood
of mooting the case.
3:37:15 PM
CHAIR GIESSEL sought to clarify that Senate Bill 189 had already
passed and was in effect as law. She said SB 97 was affirming
the passage of Senate Bill 189. She argued that the policy
proposed in Amendment 1 might be a very good idea but was best
done as an independent bill of its own.
3:37:49 PM
SENATOR DUNBAR agreed with Ms. Kawasaki's legal analysis and
advocated for the intent to clarify matters before the court as
they consider mootness. He said amending SB 97 would probably
complicate matters. He affirmed the content of Amendment 1 but
said he would not support it to avoid compromising the passage
of SB 97.
3:38:53 PM
SENATOR HUGHES concurred with the concerns expressed about
Amendment 1.
3:39:11 PM
SENATOR MYERS asked Ms. Kawasaki what the consequence would be
if the lawsuit [challenging Senate Bill 189] was not mooted.
3:39:28 PM
MS. KAWASAKI answered that if the state could not successfully
argue that the case was moot, the lawsuit would proceed. She
explained that if some of the related bills currently before the
Senate were not passed into law, the court case would continue
with respect to those unresolved bills.
3:39:29 PM
SENATOR KAWASAKI and SENATOR WIELECHOWSKI arrived.
3:40:26 PM
CHAIR GIESSEL maintained her objection and asked for a roll call
vote.
A roll call vote was taken. Senator Myers voted in favor of
Amendment 1, work order 34-LS0445\A.1 and Senators Claman,
Hughes, Dunbar, Wielechowski, Kawasaki, and Giessel voted
against it. The vote was 1:6.
3:41:50 PM
CHAIR GIESSEL announced that Amendment 1 failed on a vote of 1
yea and 6 nays.
3:42:14 PM
SENATOR MYERS moved to adopt Amendment 2, work order 34-
LS0445\A.2, to SB 97:
34-LS0445\A.2
Nauman
3/11/25
AMENDMENT 2
OFFERED IN THE SENATE BY SENATOR MYERS
Page 4, lines 9 - 10:
Delete "without the same open and competitive
process provided by the department for the issuance of
a concession permit under this subsection"
Insert ". The department shall use the same open
and competitive process provided under this subsection
for the issuance of a new concession permit after the
previous concession permit has expired"
3:42:17 PM
CHAIR GIESSEL objected for purposes of discussion.
3:42:21 PM
SENATOR MYERS explained that Amendment 2 would remove automatic
permit renewal after 10 years and instead require permit holders
to reapply. He said this was meant to prevent routine renewals
that could effectively create lifetime permits in the guide
community.
3:43:15 PM
CHAIR GIESSEL maintained her objection.
3:43:20 PM
SENATOR MYERS withdrew Amendment 2.
3:43:26 PM
CHAIR GIESSEL solicited a motion.
3:43:29 PM
SENATOR MYERS moved to adopt Amendment 3, work order 34-
LS0445\A.3, to SB 97:
34-LS0445\A.3
Nauman
3/11/25
AMENDMENT 3
OFFERED IN THE SENATE BY SENATOR MYERS
Page 5, line 15, following "appropriate":
Insert ", except that the commissioner may not
delegate authority under this section to the Board of
Game or the Big Game Commercial Services Board"
3:43:32 PM
CHAIR GIESSEL objected for purposes of discussion.
3:43:34 PM
SENATOR MYERS said under SB 97 the commissioner of DNR could
choose to delegate the guide concession program, but Amendment 3
would prohibit delegating it to the Board of Game or the Big
Game Commercial Services Board. The concern is that those boards
include many licensed guides, and delegating authority back to
them could recreate pre-1988 conditions from before the Owsichek
decision, effectively allowing guides to control their own
permitting system again. The intent of Amendment 3 is to avoid
that conflict of interest.
3:44:47 PM
SENATOR DUNBAR supported the intent of Amendment 5. He agreed
that the DNR commissioner should not delegate authority back to
the Board of Game for the reasons stated. He emphasized this
point for the legal record and to clarify that any withdrawal of
the amendment was due to concerns about preserving mootness in
the related lawsuit, not because of disagreement with its
substance.
3:45:26 PM
CHAIR GIESSEL maintained her objection.
3:45:29 PM
SENATOR MYERS withdrew Amendment 3.
3:45:35 PM
CHAIR GIESSEL solicited a motion.
3:45:37 PM
SENATOR MYERS moved to adopt Amendment 4, work order 34-
LS0445\A.5, to SB 97:
34-LS0445\A.5
Bullard/Nauman
3/12/25
AMENDMENT 4
OFFERED IN THE SENATE BY SENATOR MYERS
Page 1, line 3, following "Resources;":
Insert "relating to regulations adopted by the
Board of Game;"
Page 1, following line 10:
Insert a new bill section to read:
"* Sec. 2. AS 16.05.255(j) is amended to read:
(j) This section authorizes the board to
regulate regarding the conservation, development, or
utilization of game in a manner that addresses
whether, how, when, and where the public asset of game
is allocated or appropriated. However, the board may
not adopt a regulation that adds additional species to
those listed under AS 16.05.407(a) for which a
nonresident may not hunt, pursue, or take unless the
nonresident is personally accompanied as required by
AS 16.05.407(a)."
Renumber the following bill sections accordingly.
Page 6, line 13:
Delete "sec. 2"
Insert "sec. 3"
Page 6, line 20:
Delete "sec. 3"
Insert "sec. 4"
Page 6, line 21:
Delete "sec. 3"
Insert "sec. 4"
Page 6, line 26:
Delete "sec. 2"
Insert "sec. 3"
Page 6, line 27:
Delete "sec. 3"
Insert "sec. 4"
Page 6, line 29:
Delete "sec. 2"
Insert "sec. 3"
Page 6, line 31:
Delete "sec. 3"
Insert "sec. 4"
Page 7, line 13:
Delete "sec. 2"
Insert "sec. 3"
Page 7, line 15:
Delete "sec. 2"
Insert "sec. 3"
Page 7, lines 16 - 17:
Delete "sec. 2"
Insert "sec. 3"
Page 7, lines 19 - 20:
Delete "sec. 2"
Insert "sec. 3"
Page 7, line 21:
Delete "sec. 3"
Insert "sec. 4"
Page 7, line 22:
Delete "sec. 2"
Insert "sec. 3"
3:45:42 PM
CHAIR GIESSEL objected for purposes of discussion.
3:45:48 PM
SENATOR MYERS explained that Amendment 4 clarified that the
Board of Game cannot add new must-be-guided species beyond those
already defined in statute, currently four species, including
sheep and grizzly bear. He noted ambiguity about whether the
Board could expand this list using its authority over hunting
methods and means. He said there was concern that the board
might designate new must-be-guided species in a specific area,
and then recommend a guide-concession program to the Department
of Natural Resources, potentially creating an unfair advantage
or giveaway to certain guides. Amendment 5 would ensure that
adding must-be-guided species can only be done by the
legislature, not by the Board of Game.
3:47:11 PM
SENATOR MYERS withdrew Amendment 4.
3:47:29 PM
CHAIR GIESSEL solicited the will of the committee.
3:47:37 PM
SENATOR WIELECHOWSKI moved to report SB 97, work order 34-
LS0445\A, from committee with individual recommendations and
attached fiscal note(s).
3:47:54 PM
SENATOR MYERS objected.
3:47:56 PM
A roll call vote was taken. Senators Dunbar, Hughes,
Wielechowski, Claman, and Giessel voted in favor of SB 97 and
Senators Kawasaki and Myers voted against it. Therefore, SB 97
was reported from the Senate Resources Standing Committee by a
vote of 5:2.
SB 92-CORP. INCOME TAX; OIL & GAS ENTITIES
3:48:38 PM
CHAIR GIESSEL announced the consideration of SENATE BILL NO. 92
"An Act establishing an income tax on certain entities producing
or transporting oil or gas in the state; and providing for an
effective date."
CHAIR GIESSEL noted that this was the fourth hearing of SB 92 by
the Senate Resources Committee, and that the committee was now
the sponsor of SB 92.
3:49:17 PM
INTIMAYO HARBISON, Staff, Senator Cathy Giessel, Alaska State
Legislature, Juneau, Alaska, moved to slide 1 and explained that
the purpose of the presentation was to address concerns that SB
92 could be applied to S corporations (S-Corps) unrelated to oil
and gas production.
3:50:08 PM
MR. HARBISON moved to and narrated slide 2:
[Original punctuation provided.]
C Corporations are taxed separately from their owners,
meaning they pay taxes on their profits and then the
shareholders pay taxes again on any dividends they
receive.
S Corporations pass their profits and losses directly
to their shareholders' personal tax returns, avoiding
the perceived "double taxation" seen with C
Corporations. S Corporations were created in the tax
code on January 1, 1958.
There are specific requirements and restrictions for
an entity to qualify as an S Corporation:
? Does not have more than 100 shareholders
? Does not have a shareholder who is not an
individual (with the exception for various tax-
exempt organizations, estates and trusts)
? Does not have a nonresident alien as a
shareholder
? Does not have more than one class of stock
(DCCED, Div of Corp, business & prof licensing)
There are ~11,700 S Corporations registered in the
Alaska. (Alaska Department of Revenue Indirect
Expenditure Report 2024)
3:51:45 PM
MR. HARBISON moved to and narrated slide 3:
[Original punctuation provided.]
Limited Liability Companies
Limited Liability Company (LLC) were first introduced
in Wyoming in 1977, but did not catch on until the
1990s. A limited liability company is a legal business
entity, considered its own "person" by law, which
exists separate from its members. An LLC shares the
limited liability features of a corporation but has
the management and tax efficiencies of a partnership.
Members' liabilities are limited to their financial
contributions meaning an individual members' liability
is only extends to what they contribute to the LLC.
Limited liability does not shield owners of the LLC
from negligence liability.
LLCs have an array of tax options. For example,
members may file taxes as one of the following, but
not limited to:
? Single member LLC taxed as Sole Proprietorships
(Sole Prop)
? Partners in an LLC taxed as a Traditional
Partnership (LLP)
? LLC taxed as a Corporation, including S
Corporations or C Corporations (S-Corp, C-Corp)
3:53:16 PM
MR. HARBISON continued to narrate slide 3:
LLCs can elect to be taxed as S Corporations if they
meet the requirements, but they have more flexibility
in structure and management compared to traditional S
Corporations. So, if an LLC opts for S Corporation
status, it's taxed similarly to other S Corporations,
but with the added flexibility of the LLC framework.
According to the Department of Commerce, Community and
Economic Development, as of 2024, there are 67,133
active LLCs registered in Alaska. This number can
fluctuate with new formations and dissolutions.
3:54:03 PM
SENATOR MYERS asked to be provided with the number of S-Corps
and LLCs based in Alaska versus based outside the state.
3:54:20 PM
MR. HARBISON affirmed that he could obtain those numbers from
the Department of Commerce, Community and Economic Development
(DCCED).
3:54:31 PM
SENATOR CLAMAN asked to be provided with the number of C
corporations (C-Corps) in Alaska.
3:54:46 PM
MR. HARBISON said he would pass the number of C-Corps in Alaska
to the committee when it was received from the DCCED.
3:55:02 PM
MR. HARBISON moved to and narrated slide 4:
[Original punctuation provided.]
Alaska Linkage to Federal Code
Federal Code Linkage: Alaska generally follows federal
tax rules for federal tax purposes but does not have
its own state income tax code. Instead, Alaska uses
federal tax rules as a basis for compliance and
reporting for businesses operating within the state.
This means that while there's no separate state income
tax code, businesses and individuals must adhere to
federal tax regulations for their federal tax filings.
Both S Corporations and LLCs enjoy similar tax
treatments in Alaska due to the state's lack of a
state income tax.
Individual Income Tax Repeal: Alaska originally
implemented an individual income tax in 1949. However,
this income tax was repealed in 1979. The repeal came
as a result of the state's new revenue source, the
Alaska Permanent Fund, which was established to manage
oil revenues and provide annual dividends to Alaskans.
The creation of the Permanent Fund reduced the need
for individual income taxes.
3:56:18 PM
MR. HARBISON moved to and narrated slide 5:
[Original punctuation provided.]
AS 43.20.021
Current Statutes for
companies filing as S Corporations
? "Under Alaska's adoption of the Internal Revenue
Code [AS 43.20.021], corporations that have
elected S Corporation status are generally not
subject to tax.
? Prior to 1980, the stakeholders' share of income
was subject to Alaska's personal income tax.
? Since the 1980 repeal of the state's personal
income tax, the income is taxed neither at the
corporate level nor at the shareholder level"
-Legislative Finance Division Indirect Expenditure
Report January 2021
3:57:04 PM
MR. HARBISON moved to and narrated slide 6:
[Original punctuation provided.]
AS 43.20.011 (e)
Current Statute for
companies filing as
C Corporations
*Last amended 2013
If the taxable income is: Then the tax is:
Less than $25,000 0 percent of the
taxable income
$25,000 but less than $49,000 2 percent of the
taxable income over
$25,000
$49,000 but less than $74,000 $480 plus 3 percent
of the taxable
income over $49,000
$74,000 but less than $99,000 $1,230 plus 4
percent of the
taxable income over
$74,000
$99,000 but less than $124,000 $2,230 plus 5
percent of the
taxable income over
$99,000
$124,000 but less than $148,000 $3,480 plus 6
percent of the
taxable income over
$124,000
$148,000 but less than $173,000 $4,920 plus 7
percent of the
taxable income over
$148,000
$173,000 but less than $198,000 $6,670 plus 8
percent of the
taxable income over
$173,000
$198,000 but less than $222,000 $8,670 plus 9
percent of the
taxable income over
$198,000
$222,000 or more $10,830 plus 9.4
percent of the
taxable income over
$222,000
3:57:45 PM
MR. HARBISON moved to and narrated slide 7. He noted that the
tax structure for C-Corps would not change under SB 92 and
reiterated that SB 92 only applies to oil and gas companies:
[Original punctuation provided.]
SB 92 Changes
Proposed changes
for companies filing
as S Corporations
*No change to C
Corporation tax
If the taxable income is: Then the tax is:
Less than $25,000 0 percent of the
taxable income
$25,000 but less than $49,000 0 percent of the
taxable income over
$25,000
$49,000 but less than $74,000 $0 plus 0 percent
of the taxable
income over $49,000
$74,000 but less than $99,000 $0 plus 0 percent
of the taxable
income over $74,000
$99,000 but less than $124,000 $0 plus 0 percent
of the taxable
income over $99,000
$124,000 but less than $148,000 $0 plus 0 percent
of the taxable
income over
$124,000
$148,000 but less than $173,000 $0 plus 0 percent
of the taxable
income over
$148,000
$173,000 but less than $198,000 $0 plus 0 percent
of the taxable
income over
$173,000
$198,000 but less than $5,000,000 $0 plus 0 percent
of the taxable
income over
$198,000
$5,000,000 or more $0 plus 9.4 percent
of the taxable
income over
$5,000,000
3:58:47 PM
SENATOR DUNBAR asked whether taxable income, in the context of
SB 92, was the gross revenue or if it was the net revenue after
deducting some or all costs.
3:59:35 PM
MR. HARBISON said the tax would apply to income after companies
had taken their deductions for costs.
3:59:55 PM
CHAIR GIESSEL asked for confirmation from the Department of
Revenue (DOR).
4:00:08 PM
MICHAEL WILLIAMS, Corporate Tax Manager, Tax Division,
Department of Revenue (DOR), Anchorage, Alaska, affirmed that
the tax proposed by SB 92 would apply to the net income, or the
income less expenses.
4:00:34 PM
SENATOR MYERS referred to slides 6 and 7 and noted there did not
seem to be parity between C-Corps and S-Corps. He asked why SB
92 did not cause the two different tax brackets to match.
4:01:34 PM
SENATOR WIELECHOWSKI concurred and suggested amending SB 92, so
the two brackets match.
4:01:59 PM
CHAIR GIESSEL announced invited testimony on SB 92.
4:02:36 PM
JOHN LETOURNEAU, Certified Public Accountant (CPA), Thomas,
Head, and Greisen, Anchorage, Alaska, testified by invitation in
support of SB 92.
4:02:57 PM
MR. LETOURNEAU moved to slide 1, describing the hypothetical
parameters of his presentation:
[Original punctuation provided.]
SB 92: Tax analysis
By John Letourneau, CPA, Thomas, Head and Greisen
Assume the following for an entity with operations
entirely sourced to Alaska
? $50 million gross income
? $40 million qualified expenses and deductions
Resulting in $10 million pre tax taxable income
4:03:43 PM
MR. LETOURNEAU moved to and narrated slide 2.
[Original punctuation provided.]
Current tax structure: Alaska
State Corporate Income Tax
C-Corps S-Corps & LLCs
Taxable Income $10,000,000 $10,000,000
Alaska Corporate $930,150 $0
Tax owed*
*tax is $10,830 on the first $220,000 and 9.4% on
everything above $220,000
MR. LEOURNEAU explained that:
? A C-Corp with $10 million in taxable income owes roughly
$930,000 in Alaska corporate income tax (at about 9.4 percent,
with slight reductions due to bracket "stair steps").
? An S-Corp or LLC owes no Alaska tax at the entity level
because these are pass-through entities, their income flows to
the owners.
? Since Alaska has no individual income tax, S-corp owners pay
no tax on that income in Alaska.
? An LLC owned by a taxable C-Corp would become part of that
corporation's overall taxable income, and tax would then be
collected from the C-Corp rather than the LLC itself.
4:05:45 PM
MR. LETOURNEAU moved to slide 3:
[Original punctuation provided.]
Current tax structure: Federal taxes 2025
Current Federal Law
Federal corporate income tax
C-Corps
Pre AK tax Federal $10 million
taxable income
Gross Alaska $930,150
Federal taxable income $9,069,850
after Alaska Corporate
tax, expenses and
deductions
Gross Federal $1,904,669
Corporate income tax*
Federal individual income tax
S-Corps & LLCs
Federal taxable $8,000,000
income**
Tax on first $751,600 $202,155
Tax on income above $2,681,908
$751,600***
Total federal individual $2,884,063
income tax
* Federal corporate tax rate is 21%
** Includes a 199A deduction of 20%
*** Highest marginal tax rate is 37%
MR. LETOURNEAU pointed out that under current federal law, this
example showed higher federal tax when the business is an S-Corp
owned by an individual than when it is a C-Corp. However, he
said federal rules may change soon because several provisions of
the 2017 Tax Cuts and Jobs Act expired at the end of 2025.
4:08:01 PM
SENATOR MYERS asked for clarification on how the Section 199A 20
percent deduction worked for S-Corps as pass-through entities.
He noted that his own personal deduction, the standard deduction
of about $24,000, was capped, so a 20 percent deduction of
business income seemed very different.
4:08:29 PM
MR. LETOURNEAU explained that Congress created Section 199A in
the Tax Cuts and Jobs Act to reduce the effective marginal tax
rate for certain taxpayers engaged in operating businesses. He
said oil and gas extraction companies qualified as operating
businesses. He said 199A provided a non-cash deduction equal to
20 percent of net business profits, meaning that portion of the
income was simply not taxed. He explained that if an S-
corporation shareholder received $10 million in profits, 20
percent of that, $2 million was excluded from taxation to
encourage business activity and risk-taking. He said the
deduction was limited in scope and would not apply to interest,
dividends, or other passive income, but only to specific types
of active business income Congress wanted to encourage.
4:10:07 PM
SENATOR HUGHES referred to the figures for C-Corps on slide 3.
She noted that deductions for intangible drilling costs and for
reserve depletion were not included and asked whether Mr.
Letourneau was aware of them.
4:10:33 PM
MR. LETOURNEAU explained that the assumed $40 million deduction
in the hypothetical included those deductions.
4:10:55 PM
SENATOR HUGHES noted that the hypothetical included the same
deductions for the S-Corps, but it was her understanding that S-
Corps did not receive them at the federal level.
4:11:08 PM
MR. LETOURNEAU noted that S-Corp owners likely received many of
the same deductions, such as intangible drilling cost
deductions, but that he did not analyze the specific components
of the applicable deductions. He explained that the presentation
was intended as a high-level overview of C-Corp vs. S-Corp tax
structure, not a detailed walkthrough of the tax rules. He
offered to follow up.
4:11:50 PM
SENATOR HUGHES said she did not think an S-Corp would receive
the full $40 million expense deduction proposed by the
hypothetical. She argued that the S-Corps starting amount would
be higher because they could not take the intangible drilling
cost deduction or the reserve depletion deduction.
4:12:25 PM
SENATOR HUGHES asked that Mr. LeTourneau research [the qualified
deductions for S-Corps] and correct the hypothetical. She urged
that it would illustrate the lack of parity.
4:12:54 PM
MR. LETOURNEAU moved to slide 4 and pointed out that the C-Corp
and S-Corp end up with similar total tax burdens:
[Original punctuation provided.]
Current structure: Total Gross Income Tax liability
C-Corps S-Corps & LLCs
Alaska corporate $930,150 -
income tax
Federal corporate $1,904,669 -
income tax (2026
Current IRC)
Federal individual - $2,884,063
income tax (2026
Current IRC)
Total $2,834,819 $2,884,063
MR. LETOURNEAU noted the earlier discussion about double
taxation and explained that the C-Corp number shown only
reflects the first level of tax, the corporate-level tax. He
said the second layer would occur if the C-Corp distributed
profits as dividends to shareholders, creating a double-taxation
effect.
4:14:31 PM
MR. LETOURNEAU moved to and narrated slide 5, a summary of the
impact of SB 92.
[Original punctuation provided.]
SB 92 tax structure: Alaska Income Tax
C-Corps S-Corps & LLCs
Alaska taxable income $10,000,000 $5,000,000*
Tax owed $930,150 $470,000**
*SB 92 exempts the first $5,000,000 from taxation
** Tax rate is 9.4% on all taxable income over
$5,000,000
4:15:23 PM
MR. LETOURNEAU moved to and narrated slide 6. He highlighted
that under SB 92, a C-Corp would pay about $1.9 million in
federal tax on $10M income after Alaska deductions, while an S
Corporation's individual shareholder would pay $2.7 million in
federal tax, assuming Alaska state taxes were federally
deductible:
[Original punctuation provided.]
SB 92 tax structure: Federal taxes 2025 Current IRC
Federal corporate income tax
C-Corps
Pre AK tax Federal $10 million
taxable income
Gross Alaska $930,150
Federal taxable income $9,069,850
after Alaska Corporate
tax, expenses and
deductions
Gross Federal $1,904,669
Corporate income tax*
Federal individual income tax
S-Corps
Federal taxable income $10,000,000
before Alaska tax &
199A deduction
Alaska Qualified Entity $470,000
income tax
Federal taxable income** $7,624,000
Tax on first $751,600 $202,155
Tax on income above $2,681,908
$751,600***
Total federal individual $2,884,063
income tax
* Federal corporate tax rate is 21 percent
** Includes a 199A deduction of 20 percent
*** Highest marginal tax rate is 37 percent
4:17:47 PM
MR. LETOURNEAU moved to slide 7, summarizing the tax patterns
for C-Corps and S-Corps under SB 92. He emphasized that the
federal income tax would be paid by the individual, not by the
entity:
[Original punctuation provided.]
Under SB 92: Total gross income tax liability
C-Corps S-Corps & LLCs
State Corporate $930,150 -
Income tax
State Qualified Entity $470,000
Income Tax
Federal corporate $1,904,669 -
income tax
Federal individual - $2,744,943
income tax
Total $2,834,819 $3,214,943
4:18:50 PM
SENATOR HUGHES commented that if S-Corps were unable to claim
the same deductions as C-Corps then the total tax paid by S-
Corps would be higher. She requested that the hypothetical and
calculations be re-done to demonstrate this.
4:19:21 PM
CHAIR GIESSEL noted that supporting documents submitted by Mr.
Letourneau included detailed calculations beyond what was on the
slides, showing tax deductions applied to the $470,000 state tax
on $50 million income, which could further reduce state taxes.
She said the documents were available to committee members and
to the public online.
4:20:41 PM
SENATOR DUNBAR sought clarification on the impact of the 9.4
percent corporate tax proposed by SB 92. He expressed concern
that the tax might appear to increase the total tax burden by
9.4 percent. He asked for confirmation that the actual increase
is less due to the interaction between state and federal taxes.
4:21:40 PM
MR. LETOURNEAU concurred and explained that because the new tax
was imposed at the entity level, individual owners can deduct
that state tax on their federal tax returns. This deduction
would reduce their individual federal taxable income and provide
a federal tax benefit, roughly lowering the after-tax cost of
the state tax from about $470,000 to around $330,000 in the
example.
4:22:51 PM
SENATOR DUNBAR asked for confirmation that the ratio isn't one-
to-one, i.e. the individual could not deduct the entire state
tax increase from its federal taxes. However, they would still
receive a partial federal deduction, which means the actual
overall increase in their total tax burden would be smaller than
the full state-level tax increase. He asked if this
understanding was correct.
4:23:25 PM
MR. LETOURNEAU concurred and clarified that the federal benefit
was a deduction, not a dollar-for-dollar credit. The state tax
can be deducted like any other qualified expense on the
individual's return, but it does not reduce federal taxes by the
full amount, only by the value of the deduction.
4:24:11 PM
SENATOR CLAMAN referred to slide 7 and asked whether the
difference in tax liability for S-Corps vs. C-Corps might
incentivize companies to switch from being an S-Corp to C-Corp.
4:24:48 PM
MR. LETOURNEAU said he did not expect many S-Corps or LLCs to
convert to C-Corps. He explained that converting to a C-Corp was
easy, but converting back to an S-Corp was difficult under
federal law. He also noted that C-Corps faced double taxation
and lost certain tax advantages available when selling or
liquidating a flow-through business. Because of these
disadvantages, he said he would be surprised if many businesses
chose to switch.
4:26:18 PM
SENATOR CLAMAN suggested that although Senator Hughes' questions
about specific deductions were interesting, they weren't the
focus of Mr. LeTourneau's hypothetical. The purpose of his
example was simply to compare tax liability at the entity level,
not to analyze every deduction. He suggested it wouldn't be
necessary to ask for more detailed work on deductions.
4:27:02 PM
CHAIR GIESSEL concurred and pointed out that slide 7 showed C-
Corps would pay about $930,000 in state corporate tax, while
comparable S-Corps would pay roughly half that under SB 92. She
noted the hypothetical assumed $50 million in income and $40
million in deductions. She referred to the fiscal note for SB
92, by Department of Revenue, OMB Component Number 2476, dated
February 14, 2025, which estimated about $126.5 million in
revenue in FY27. She observed that if each example S-Corp paid
about $470,000, it would take many such entities to reach the
projected statewide revenue.
4:28:48 PM
SENATOR CLAMAN restated his position that the hypothetical
wasn't meant to reflect actual earnings or expenses from oil
production. Its purpose was to illustrate what the tax situation
would look like at the entity level under SB 92. He acknowledged
the numbers were illustrative and higher values could have been
used. He noted that while more detail could be obtained if
entities shared their tax returns with the committee that was
unlikely to happen.
4:29:28 PM
CHAIR GIESSEL asserted that the hypothetical for the
presentation satisfied the committees' question from the
previous hearing on SB 92. It compared the current tax situation
for both C-Corps and S-Corps under current law with the tax
situation under SB 92 and demonstrated that the tax consequence
for S-Corps would remain about half.
4:30:07 PM
CHAIR GIESSEL solicited questions on the presentation and
thanked Mt. LeTourneau.
4:30:37 PM
CHAIR GIESSEL concluded invited testimony on SB 92.
4:30:42 PM
CHAIR GIESSEL opened public testimony on SB 92.
4:31:31 PM
JERRY WEBRE, President, Little Red Services, Anchorage, Alaska,
explained that he was not a tax expert, but that he drew on
decades of experience in Alaska's oil and gas industry. He said
Little Red Services provided hot oil pumping, well testing, and
coil tubing services exclusively on the North Slope, and he
expressed strong opposition to SB 92. He noted that Hilcorp's
North Slope fields were active and production at Milne Point had
increased significantly since Hilcorps gained ownership from BP.
He argued that SB 92 would sharply raise taxes on both large and
small oil and gas companies, increase energy costs, and harm
Alaska-based suppliers and jobs. He said SB 92 would potentially
worsen energy insecurity, particularly in Southcentral, where
utilities already struggle to secure sufficient natural gas. He
concluded by reiterating that their team firmly discourages
passage of the bill.
4:34:14 PM
HOLLIS FRENCH, representing self, Anchorage, Alaska, expressed
strong support for SB 92, arguing that Alaska was the only state
that did not tax S-Corps and that this longstanding omission
should be fixed. He emphasized the state's need for revenue,
citing visible decline in public institutions and local
conditions, including the university, the city, and rising
homelessness in neighborhoods. He pointed out the city's
[Anchorage] dependence on state assistance. He concluded by
urging the committee to pass SB 92 and said he would watch the
vote closely.
4:35:34 PM
BOB SHAVELSON, representing self, Homer, Alaska, concurred with
prior testimony in support of SB 92. He argued that taxing S-
Corps was common sense and would level the playing field,
particularly for companies like Hilcorp that profit in Alaska.
He cited polling from Data for Progress showing broad public
backing: 77 percent of Alaskans and 66 percent of Republicans
for such a change. He urged passage of SB 92, noting Alaska was
the only state that did not tax S-Corps and emphasized the
importance of fair contributions amid large budget deficits.
4:36:44 PM
MADDIE HALLORAN, representing self, Anchorage, Alaska, said she
had a lifelong connection to Anchorage and was concerned over
declining public services, especially education. She viewed SB
92 as a way to help fund schools and balance the state budget by
closing an unfair tax loophole. She noted estimates that SB 92
could generate about $100 million annually from companies
profiting off public resources. She referenced strong public
support in Data for Progress polling and urged the committee to
pass SB 92.
4:38:16 PM
BEN BOETTGER, Energy Specialist, Cook InletKeeper, Soldotna,
Alaska, testified in support of SB 92 on behalf of the nonprofit
advocating for water quality and strong communities in the Cook
Inlet watershed. He argued that closing the S-Corp tax loophole
was an important step toward stabilizing Alaska's fiscal
situation and that taxing S-Corp oil and gas producers was
unlikely to discourage investment, given the profitability of
similar C-Corp operations. He emphasized that SB 92 would both
reduce revenue losses contributing to budget deficits and
promote basic tax fairness. He urged passage of SB 92.
4:39:13 PM
SARAH FURMAN, representing self, Fairbanks, Alaska, said she
supported SB 92, and said she was deeply concerned over Alaska's
projected $500 million budget deficit. She noted impacts of the
ongoing budget challenges in Fairbanks leading to school
closures, insufficient bas student allocation, and unfunded
energy system upgrades. She argued that SB 92 would generate
much-needed revenue and correct an unfair loophole in which some
profitable corporations paid state income tax while S-Corps did
not. She emphasized that closing the loophole had been
recommended for years and failing to act already cost the state
hundreds of millions in revenue. She added that every other
state taxed S-Corps, so the proposal was neither unusual nor
extreme. She pointed out that public polling showed support for
taxing S-Corps and urged the legislature to listen to the will
of the people.
4:41:06 PM
NATALIE KILEY-BERGEN, Energy Lead, Alaska Public Interest
Research Group (AKPRG), Anchorage, Alaska, said AKPIRG supported
SB 92 because it would create parity in Alaska's corporate
income tax system and help address the state's severe revenue
shortfalls. She contended the legislature should fix tax
loopholes rather than cut services, raise taxes on Alaskans, or
reduce PFDs. She rejected the idea that exempting large S
corporations from income tax brings jobs or development, noting
Alaska's ongoing Cook Inlet gas shortfall despite an S-Corp
holding most leases. She argued that the legislature should
guarantee that corporations invest in Alaska by imposing
corporate taxes which support essential services that benefit
businesses and communities. She highlighted that S-Corps paid
income tax in every other state, and that polling showed strong
public support, about 77 percent statewide, for requiring
companies like Hilcorp to pay. She said AKPIRG urged passage of
SB 92.
4:43:24 PM
GEORGIA HOUDE, representing self, Fairbanks, Alaska, said she
supported SB 92. She said she was in her mid-twenties and
emphasized the need to fund the state in ways that help
communities grow and make Alaska a place where young people can
build stable futures. She argued that it was unfair that S
corporations used Alaska's natural resources without paying
state income tax, allowing profits to leave the state instead of
benefiting residents. She noted Alaska was the only state that
allowed S corporations to avoid corporate taxes, highlighting
the need for reform. With the state budget in deep need of
funds, she viewed SB 92 as a first step toward prioritizing and
funding public services that catalyze growth in communities.
4:44:50 PM
CHAIR GIESSEL closed in-person public testimony on SB 92.
4:45:18 PM
CHAIR GIESSEL referred to testimony claiming that no other
states tax S-Corps. She said there would be research to
determine how other states do or do not tax S-Corps.
4:45:40 PM
SENATOR DUNBAR sought to clarify that the testimony claimed that
every other state taxed S-Corps.
CHAIR GIESSEL concurred.
4:46:01 PM
SENATOR DUNBAR said Alaska may not be the only state that
doesn't tax S-Corps, but it was likely the only, or one of very
few states that had neither a personal income tax nor an S-Corp
tax. He mentioned New Hampshire's unusual property tax system as
a partial analogy to an income-tax structure. He said he would
appreciate further research on the issue.
4:46:37 PM
SENATOR CLAMAN noted that most states did not tax S-Corps
directly because they levy personal income taxes on the
shareholders instead. He referred to Texas as an example of a
state without a personal income tax that also does not tax S-
Corps at the entity level. However, he said Texas imposed a
broad franchise tax that applied to many types of business
entities, not just S-Corps. He said he did not know the detailed
mechanics of the Texas franchise tax but expected forthcoming
information to clarify how it functioned and how broadly it
applied.
4:47:33 PM
CHAIR GIESSEL said GaffneyCline would provide modeling for SB 92
in a future committee hearing.
4:48:03 PM
[CHAIR GIESSEL held SB 92 in committee.]
4:48:20 PM
There being no further business to come before the committee,
Chair Giessel adjourned the Senate Resources Standing Committee
meeting at 4:48 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 92 Comparison to C-Corp Tax Structure.pdf |
SRES 3/14/2025 3:30:00 PM |
SB 92 |
| SB 92 Supporting Document - Tax analysis slides.pdf |
SRES 3/14/2025 3:30:00 PM |
SB 92 |
| SB 92 Supporting Document - Tax analysis 3.13.2025.pdf |
SRES 3/14/2025 3:30:00 PM |
SB 92 |
| SB 92 Public Testimony.pdf |
SRES 3/14/2025 3:30:00 PM |
SB 92 |
| A.1.pdf |
SRES 3/14/2025 3:30:00 PM |
SB 97 |
| A.2.pdf |
SRES 3/14/2025 3:30:00 PM |
SB 97 |
| A.3.pdf |
SRES 3/14/2025 3:30:00 PM |
SB 97 |
| A.5.pdf |
SRES 3/14/2025 3:30:00 PM |
SB 97 |
| SB 97 Public Testimony.pdf |
SRES 3/14/2025 3:30:00 PM |
SB 97 |
| SB 92 Public Testimony AKPIRG.pdf |
SRES 3/14/2025 3:30:00 PM |
SB 92 |