Legislature(2023 - 2024)SENATE FINANCE 532
04/12/2023 01:00 PM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| SB87 | |
| SB67 | |
| SB104 | |
| SB114 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 67 | TELECONFERENCED | |
| + | SB 87 | TELECONFERENCED | |
| + | SB 104 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 114 | TELECONFERENCED | |
SENATE BILL NO. 114
"An Act establishing an income tax on certain entities
producing or transporting oil or gas in the state;
relating to the oil and gas production tax; and
providing for an effective date."
2:50:22 PM
Co-Chair Stedman MOVED to ADOPT proposed committee
substitute for SB 114, Work Draft 33-LS0641\U (Nauman,
4/3/23).
Co-Chair Olson OBJECTED for discussion.
2:51:04 PM
KEN ALPER, STAFF, SENATOR DONNY OLSON, addressed a summary
of changes documents (copy on file):
CS for Senate Bill 114: Oil and Gas Production Tax,
Income Tax
Changes from initial version ("S" to "U")
Original bill was 42 pages long and had 47 sections.
Current CS is five pages long and has nine sections.
Four main changes:
1) Remove the addition of a "ringfence" on the North
Slope, which would have required separate calculation
of company spending on each field with a separate
profit and thus tax calculation for each field.
2) Remove substantial conforming language throughout
the bill that referred to the ringfence and the
various separate calculations required for it.
3) Corrects an error in the "per barrel credit"
change, so that the credit goes all the way to zero at
high prices.
4) Removed the repeal of AS 43.55.024(a) and (b). This
is an obsolete, sunsetted credit having to do with new
field development outside both Cook Inlet and the
North Slope.
This was removed because it is unnecessary and enabled
the elimination of about another 10 pages of
conforming text.
What the bill still does:
1) Expands the current petroleum corporate income tax
to all oil and gas producers and transporters,
regardless of business form. The tax is 9.4% of
taxable income greater than
$4 million / year. (Section 1)
2) Reduces the "per taxable barrel credit" by $3, from
$8 to $5 at the highest point (wellhead value below
$80), declining to zero at wellhead value of $120.
(Section 2-3)
3) Limits use of the per-barrel credits earned in a
year for production from a particular field to no more
than the producer's qualified capital spending on that
field. (Section 4)
4) Changes are retroactive to January 1, 2023
2:54:36 PM
Co-Chair Olson WITHDREW his objection. There being NO
OBJECTION, it was so ordered. The CS for SB 114 was
ADOPTED.
2:55:02 PM
SENATOR BILL WIELECHOWSKI, SPONSOR, thought ring fencing
was a concern that was compounded by the complex tax
structure of the state. He supported the new bill version
and thanked the committee for their work.
2:55:37 PM
Co-Chair Stedman asked for help understanding the
retroactive date.
2:55:59 PM
Senator Wielechowski said that corporate income tax
structure operated on a calendar year rather than a fiscal
year. He added that there was precedent for retroactivity
in oil tax structures. He said that the committee should
decide what was in the best interest of the state.
2:57:07 PM
Co-Chair Olson set the bill aside.
SB 114 was HEARD and HELD in committee for further
consideration.
Co-Chair Olson discussed housekeeping.