Legislature(2013 - 2014)HOUSE FINANCE 519
04/09/2013 05:00 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB21 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 21 | TELECONFERENCED | |
| += | SB 18 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
April 9, 2013
5:08 p.m.
5:08:12 PM
CALL TO ORDER
Co-Chair Austerman called the House Finance Committee
meeting to order at 5:08 p.m.
MEMBERS PRESENT
Representative Alan Austerman, Co-Chair
Representative Bill Stoltze, Co-Chair
Representative Mark Neuman, Vice-Chair
Representative Mia Costello
Representative Bryce Edgmon
Representative Les Gara
Representative Lindsey Holmes
Representative Scott Kawasaki, Alternate
Representative Cathy Munoz
Representative Steve Thompson
Representative Tammie Wilson
MEMBERS ABSENT
Representative David Guttenberg
ALSO PRESENT
Joe Hegna, Juneau; Dixie Hood, Juneau; Bill Corbus, Juneau;
Gary Miller, Juneau; Aves Thompson, Executive Director,
Alaska Trucking Association; Blyth Campbell, Nana
Development; Patrick Race, Juneau; Kim Metcalf, Juneau;
Lance Stevens, Juneau Chamber of Commerce, Juneau; Barbara
Huff Tuckness, Teamsters Local, Juneau; Senator Peter
Micciche; Deacon Charles Rohrbacher, Juneau; Jackie
Stewart, Juneau; Phoebe Rohrbacher; Andy Rogers, Alaska
State Chamber of Commerce, Juneau.
PRESENT VIA TELECONFERENCE
Jake Jacobson, Kodiak; Karl Gohlke Frontier Plumbing Supply
Co., Fairbanks; Jim Plaquet, Alaska Supports Industry
Alliance, Fairbanks; Tim Tilsworth, Fairbanks; Roger
Burggraff, Fairbanks; Richard Fineberg, Fairbanks; PJ
O'Riley, Fairbanks; David Delong, Fairbanks; Ken Hall,
Fairbanks; Randy Griffin, Fairbanks; Dave Cruz, Cruz
Companies, Dead Horse; Jim Sykes, Mat-Su; Tim Smith, Nome;
Kate Veh, Kenai; Maynard Tapp, Anchorage; Tom Lakosh,
Anchorage; Jerry Ahwinona, Anchorage; Scott Thorson,
Anchorage; Kelly Walters, Sand Lake; Jeffrey Todd Brown,
Anchorage; Tom Maloney, Anchorage; Lynn Johnson, make
Alaska Competitive Coalition, Anchorage; Ben Mohr, Eagle
River; Rick Rogers, Resource Development Council,
Anchorage; John Dickens, Self, Bethel; Shay Foster,
Anchorage; Paula Hite, Kenai; Carl Portman, Anchorage; Pete
Stokes, Anchorage; Beau Obrigewitch, Eagle River; Gail
Boerwinkle, Anchorage; Michael Jesperson, Anchorage;
Richard Evans, Anchorage; John Maltas, Anchorage; John
Shively, Anchorage; Deantha Crockett, Anchorage; John
Sturgeon, Anchorage; Marleanna Hall, Anchorage; Daniel
Donkel, Donkel Oil and Gas, Florida; Merrick Pierce,
Ninilichik; Kathleen M. Kennedy, Ninilichik; Alan Parks,
Homer; Larry Smith, Homer; Pamela Brodie, Homer; Roberta
Highland, Homer; Ken Landfield, Homer; Bjorn Olson, Homer;
Valerie Brooks, Ketchikan; Libby Stortz, Sitka; William
Stortz, Sitka; Ward Eldridge, Sitka; Ray Friedlander,
Sitka; Joan Franz, Fairbanks; Lisa Herbert, Greater
Fairbanks Chamber of Commerce, Fairbanks; Elizabeth Siegel,
Fairbanks; Reed Christensen, Anchorage; Ray Metcalfe,
Anchorage; Keith Silver, Anchorage; Rick Button, Anchorage;
Michael Dzurisin, Anchorage; Brian Hove, Anchorage; Rachel
Petro, President, Alaska State Chamber of Commerce,
Anchorage; Lillian Koneig, Anchorage; Jessica Ullrich,
Anchorage; Caroline Bolar, Anchorage; Dirk Nelson, Rosie
Creek; Jerry Ahwinona, Anchorage.
SUMMARY
CSSB 21 (FIN) am(efd fld)
OIL AND GAS PRODUCTION TAX
CSSB 21 (FIN) am(efd fld) was HEARD and HELD in
committee for further consideration.
CS FOR SENATE BILL NO. 21(FIN) am(efd fld)
"An Act relating to the interest rate applicable to
certain amounts due for fees, taxes, and payments made
and property delivered to the Department of Revenue;
providing a tax credit against the corporation income
tax for qualified oil and gas service industry
expenditures; relating to the oil and gas production
tax rate; relating to gas used in the state; relating
to monthly installment payments of the oil and gas
production tax; relating to oil and gas production tax
credits for certain losses and expenditures; relating
to oil and gas production tax credit certificates;
relating to nontransferable tax credits based on
production; relating to the oil and gas tax credit
fund; relating to annual statements by producers and
explorers; establishing the Oil and Gas
Competitiveness Review Board; and making conforming
amendments."
5:08:17 PM
Co-Chair Austerman OPENED public testimony.
JUNEAU
JOE HEGNA, JUNEAU, testified on behalf of his eight
grandchildren. He hoped that the legislature would take
action to preserve the future of his grandchildren. He
stated that ACES was detrimental to the future of Alaska,
but felt that the proposed legislation was optimal. He
worked with consultants and understood the value of proper
information. He voiced that taking action was imperative.
Delays would result in loss of oil and revenue.
5:11:23 PM
DIXIE HOOD, JUNEAU, stated that she was disturbed by the
lack of funding for education and health and social
services coinciding with tax reductions for large oil
companies. She would like to see the oil companies commit
to a timeline for development. She stated that the internal
rate of return in North Dakota was equal to that of Alaska.
She added that the net present value was higher in Alaska
than in North Dakota, Texas or Louisiana. She noted that an
international oil consultant reported that Alaska had a
higher government take than the other states.
5:12:47 PM
BILL CORBUS, JUNEAU, stated that he served as Commissioner
of the Department of Revenue (DOR) and participated in the
formulation of Petroleum Production Tax (PPT) and he
watched with dismay when the legislature passed the Alaska
Clear and Equitable Share (ACES). He opined that the
extreme tax increase in ACES was disruptive. He supported
HCS CSSB 21(RES) and the progressive feature for credit-
per-barrel. He urged the committee to pass the bill in a
version that would be accepted by the Senate. He believed
that the regime change would increase investment by the
petroleum industry and stem the declining oil production.
Representative Gara replied that he had to pass out a bill
that he believed in rather than one the Senate would like.
Representative Costello asked Mr. Corbus to project the oil
decline rate under ACES.
Mr. Corbus responded that production was projected to
decrease at an average of 5.5 percent per barrel through
2022. Unrestricted revenues were predicted to decrease from
$7.5 billion to $6 billion by 2022. He stated that the
decrease would impact Alaskans by lowering the standard of
living.
5:17:19 PM
GARY MILLER, JUNEAU, opposed the proposed legislation. He
stated that British Petroleum (BP) made poor decisions in
April 2010 while cementing the oil well involved in the
abnormally large oil spill. He noted that BP violated
federal regulations and ignored crucial warnings. He stated
that he did not trust the oil companies. He mentioned the
Exxon Valdez oil spill. He understood that the industry
profited by $35 billion under ACES. He stated that the oil
industry spent approximately $730 thousand annually on
lobbyists.
5:19:42 PM
AVES THOMPSON, EXECUTIVE DIRECTOR, ALASKA TRUCKING
ASSOCIATION, testified in support of SB 21. He noted that
the difficult decisions required action. He stated that the
legislature received plenty of information to help make
their decision. The greatest risk would be lack of action.
The legislature must take bold steps and make Alaska more
competitive.
5:21:08 PM
BLYTH CAMPBELL, NANA DEVELOPMENT, testified in support of
oil tax reform. She and her daughter had both worked for
the oil industry. She noted that many people realized that
the importance of the oil industry in Alaska. She urged a
vote for HCS CSSB 21(RES).
5:22:26 PM
PATRICK RACE, JUNEAU, testified in opposition to HCS CSSB
21(RES). He advocated for changing the current system
(ACES) in a different manner. He felt that the oil industry
provided employment and other advantages, but were not
operating in Alaska with altruistic intentions. He demanded
that Alaska receive the most revenue for their resources.
He mentioned a proposed amendment allowing the oil
companies to determine their own deductions, which would be
retroactive to 2007.
5:24:17 PM
KIM METCALF, JUNEAU, testified in opposition to SB 21. She
opined that the legislation would result in funding cuts to
education. She believed that the bill would lead to the
loss of jobs and minimize infrastructure improvements. She
did not understand why Alaska legislators would give money
back to the oil companies. She requested a guarantee that
the state would benefit from the legislation. She mentioned
the governor's hopes for the legislation. She noted that
the bill should allow the state to be more competitive. She
wished for a guarantee that the oil companies intended to
invest.
5:26:50 PM
LANCE STEVENS, JUNEAU CHAMBER OF COMMERCE, JUNEAU,
testified in support of the legislation. He noted that a
strong and healthy oil industry was important for the
state.
5:27:32 PM
BARBARA HUFF TUCKNESS, TEAMSTERS LOCAL, JUNEAU, represented
union members in the private and the public sector. She
supported the proposed legislation. She opined that the
changes provided the opportunity for new production. She
believed that the private sector deserved the increase in
production. She understood that the changes and the
fairness in the system would allow for consideration given
as the issue moved forward. She encouraged action. The
current tax system was faulty and she appreciated the ideas
presented in HCS CSSB 21(RES).
KODIAK
5:31:07 PM
JAKE JACOBSON, KODIAK (via teleconference), testified in
opposition to the legislation. He stated that Alaska was
behind with accounting for the current tax system, and he
wondered how a new system might catch up and adapt. He
recalled many millions of dollars spent on studies for the
Susitna hydro project. He recalled other projects with
similar outcomes. He suggested that the oil in the ground
would eventually be extracted and he advocated for a
judicious process that would benefit the future. He noted
that 90 percent of the state's revenue resulted from oil
taxes, yet the legislature considered cutting the revenue
drastically.
FAIRBANKS
5:35:26 PM
KARL GOHLKE FRONTIER PLUMBING SUPPLY CO., FAIRBANKS (via
teleconference), stated that Alaska was no longer
attracting investment in Alaska. He noted that Alaska was
at risk of falling behind other states in the Lower 48. He
testified in support of HCS CSSB 21(RES) and policy reforms
for Alaska. He believed that the maximization of the
resources was crucial presently. He stated that the private
sector investment was important and tax reform was
essential.
5:37:31 PM
JIM PLAQUET, ALASKA SUPPORTS INDUSTRY ALLIANCE, FAIRBANKS
(via teleconference), testified in support of HCS CSSB
21(RES). He noted that an increase in investment was
essential to changing the tax structure. He stated that the
tax change would allow for further investment.
5:39:34 PM
TIM TILSWORTH, FAIRBANKS (via teleconference), testified in
opposition to HCS CSSB 21(RES), but agreed that a tax
change was necessary. He stated that the oil companies
neglected to provide insurance that they would invest. He
stated that the three large oil companies were earning the
greatest amounts of money.
5:41:51 PM
ROGER BURGGRAFF, FAIRBANKS (via teleconference), testified
in support of HCS CSSB 21(RES). He believed that the oil
companies would invest in Alaska and keep the pipeline
full. He noted that tax reform was necessary if the
investment was to be attractive to the oil companies.
5:43:41 PM
RICHARD FINEBERG, FAIRBANKS (via teleconference), testified
in opposition to the legislation. He opined that the slides
provided by the large oil companies in committee were
misleading and inaccurate. He advocated for using calendar-
year data versus fiscal-year data for increased accuracy.
He opined that the audits were also inaccurate. He stressed
that the legacy fields were located far from the areas
requiring oil. He stressed that the charts created by the
industry were oversimplified and poorly sourced. He
provided a documented report to the committee. He asserted
that good policy could not be created from bad numbers.
5:47:19 PM
PJ O'RILEY, FAIRBANKS (via teleconference), stated that she
saw nothing in the bill that required oil through-put or
Alaska hire. She added that the bill contained no
requirement that dollars be spent in Alaska. She understood
the need for changes to the tax system. She did not see the
benefit of the tax break, which would eliminate 10 percent
of the state revenue. She asked how the budgetary shortfall
would be addressed. She recommended holding HCS CSSB
21(RES) until an industry guarantee was received via
provision.
5:49:53 PM
DAVID DELONG, FAIRBANKS (via teleconference), testified in
opposition to HCS CSSB 21(RES). He stated that the money
saved by the oil companies would not be spent in Alaska.
The state's savings account would be drained. He spoke
about Prudhoe Bay and added that the oil in the ground
would only become more valuable. He noted that employees of
ConocoPhillips were legislators voting on the bill.
5:52:25 PM
KEN HALL, FAIRBANKS (via teleconference), testified in
support of HCS CSSB 21(RES). He opined that ACES was a poor
idea as it provided a punitive tax against the industry. He
mentioned the comments made by industry and he appreciated
the benefits offered by a change in policy. He understood
that the improvements were necessary.
5:54:34 PM
RANDY GRIFFIN, FAIRBANKS (via teleconference), testified in
support of HCS CSSB 21(RES). He advocated for the long-term
future of Alaskans. He stated that the Alaska constitution
encouraged development of resources to the maximum benefit
of the people. He stated that taxes were raised by the
Murkowski administration and PPT. He mentioned Sarah Palin
and her proposal of ACES. He noted that the issue of the
royalties was a large issue. He commented on the high cost
of living in Alaska.
5:57:05 PM
OFFNET
DAVE CRUZ, CRUZ COMPANIES, DEAD HORSE (via teleconference),
testified in support of HCS CSSB 21(RES). He discussed
competition with states in the Lower 48. He noted that
wells in North Dakota were drilled at much lower expense.
He stated that a change in the oil tax would allow the
state to attract multiple companies. He advocated for the
encouragement of development.
Vice-Chair Neuman asked how many men in his company moved
to North Dakota.
Mr. Cruz replied that his company had 150 employees working
in North Dakota. He added that 21 different oil companies
were competing for development in North Dakota.
5:59:27 PM
JIM SYKES, MAT-SU (via teleconference), testified in
opposition to HCS CSSB 21(RES). He stated that the bill
lacked mandate for oil companies to explore and produce in
Alaska. He added that the current administration neglected
to audit ACES. He pointed out that the return on investment
seen by the industry for the fees spent on lobbyists was
quite positive. He noted that the imminent shortages in the
state budget would lead to state income taxes or depletion
of the permanent fund. A change in tax structure would not
modify another jurisdiction's oil boon.
6:02:16 PM
TIM SMITH, NOME (via teleconference), spoke in opposition
to the legislation. He did not believe oil was taxed at an
unreasonably high rate in comparison to other global
locations. He stated that the oil would be needed at some
point, so he encouraged waiting for further development. He
suggested a sunset provision if the tax reform was
implemented; a way to get back to the current point if the
change was unsuccessful.
6:04:06 PM
KATE VEH, KENAI (via teleconference), vocalized opposition
to the bill. She spoke on behalf of her father in Ketchikan
as well. She stated that she was part of an organized
opposition event in Soldotna with 60 other Alaskans. She
read from the Alaska Constitution an excerpt related to
making resources available for the maximum benefit of the
state's residents. She wondered if the bill's passage
required a constitutional amendment with a vote from the
people of Alaska. She stated that if the legislature did
not require the companies to provide proof that they would
increase production or hire Alaskans. She spoke to the
benefit of economic diversification for Alaska.
ANCHORAGE
6:06:11 PM
MAYNARD TAPP, ANCHORAGE (via teleconference), testified in
favor of the legislation. He opined that the bill adjusted
the overzealous government taxing of investment capability.
He advocated for an investment environment that focused on
long-term revenue for the state.
6:08:12 PM
TOM LAKOSH, ANCHORAGE (via teleconference), opposed the
legislation. He stated that the bill was unconstitutional.
He stressed that the bill could cost the state $6 billion
without any increase in production. He stated that there
was no evidence that the bill would result in increased
production. He stressed that there was clearly no need to
produce any more oil, as the legislature was willing to
approve a loss of $6 billion in revenue. He advocated for
pacing the production of oil to obtain a ratio to the
consumption of oil products in Alaska. He suggested that
those opposing the bill should organize a suit against SB
21 as unconstitutional.
6:12:56 PM
JERRY AHWINONA, ANCHORAGE (via teleconference), voiced
opposition to the legislation. He stated that state tax
returns showed massive revenue increases since the
inception of ACES. He stated that the profits earned
belonged to the state and its citizens and not the oil
companies.
SCOTT THORSON, ANCHORAGE (via teleconference), spoke in
support of the bill. He was concerned about the state's
economic structure if nothing was done to change Alaska's
economic future. He believed that Alaska must be
competitive with Canada and other locations. He opined that
the state's only lever to make a change was in relation to
its tax rates. He believed the important question was what
would happen if nothing was done. He believed it would not
take long to deplete the state's revenue if nothing was
done. He opined that the bill may not go far enough to
increase Alaska's competitiveness.
6:17:06 PM
KELLY WALTERS, SAND LAKE (via teleconference), testified in
opposition to the bill. He understood that Alaskans wanted
more oil in the pipeline. He pointed out the last time
taxes were raised and the indictment of former legislators.
He stated that throughout decades of oil taxation, Alaska
allowed 15 -19 fields to pay zero taxes, yet production
continued to decline. The organization for economic
cooperation forecasted crude oil at $270 per barrel within
the next seven years. At that forecasted price, the state
would lose $23.5 billion in a single year. He advocated for
a sunset clause on the bill to determine whether an
increase in production was proven.
6:20:30 PM
JEFFREY TODD BROWN, ANCHORAGE (via teleconference)
testified against the legislation. He agreed that the
progressivity aspect of ACES required change. He stated
that SB 21 represented a "whole-sale giveaway" of Alaska
resource wealth to oil company shareholders. He wondered
how many restricted shares legislators and employees held.
He was suspicious of the market hegemony. He opined that
Alaska must begin thinking and acting like an oil company
and major owner of their resources.
6:23:41 PM
TOM MALONEY, ANCHORAGE (via teleconference), spoke in favor
of the legislation. He spoke about the decrease in oil
production. He pointed out that the highest producing month
in 2012 was lower than the lowest producing month in 2007.
He stated that increased production would generate higher
royalties, which increased the permanent fund for Alaskan
residents. He urged the passage of the bill.
Representative Gara noted that everyone in the legislature
agreed that production decline was not acceptable.
6:26:45 PM
LYNN JOHNSON, MAKE ALASKA COMPETITIVE COALITION, ANCHORAGE
(via teleconference), spoke in favor of the bill. He spoke
to the formation of the coalition as a result of concern
over production decline. He pointed out the coalition's
website. He thanked the legislature for recognizing the
declining production problem, recognizing that no action
was a significant risk to the state. He furthered that the
decline curve had been presented from various sources. He
pointed to business opportunities occurring out-of-state
while Alaska's industry declined. He spoke to the
importance of implementing a change in the current year. He
stated that SB 21 was the right answer.
6:29:56 PM
BEN MOHR, EAGLE RIVER (via teleconference), voiced support
for the bill. He opined that the penalizing structure of
progressivity in ACES could "sink" the oil industry. He
stated that the slowdown in oil production was not healthy
for the state's economy. He relayed that the bill may not
be perfect, but it was a step in the right direction.
6:31:07 PM
RICK ROGERS, RESOURCE DEVELOPMENT COUNCIL, ANCHORAGE (via
teleconference) urged support for the bill. He pointed to
concern about balancing the short-term impact to the
treasury and the long-term benefits to the economy. The
short-term focus could distract from the ultimate goal of
stemming the Trans-Alaska Pipeline System (TAPS) throughput
decline. He highlighted a lack in infrastructure needed. He
stated that the discussion was not about helping industry
but about providing the state with a more profitable
future. He furthered that the real giveaway was the oil
left in the ground with no benefit to Alaskans. He spoke to
conversations about a potential need for amendments. He
thanked the committee for its work.
6:34:02 PM
JOHN DICKENS, SELF, BETHEL (via teleconference) testified
in favor of the bill. He stated that ACES was a threat to
the state. He stated that the country had given money away
to other countries because capital invested to receive a
return. He stated that there were better investment
opportunities in other countries. He urged the importance
of increasing the states revenue to support the outrageous
budgets.
6:36:30 PM
SHAY FOSTER, ANCHORAGE (via teleconference), spoke in
support of the legislation. He spoke about the industry and
its value to future generations. He did not know what
Alaska held for his daughter's future, but he did know she
would move to a location where work was available. He
furthered that the oil industry was not growing. He noted
that his company's competitiveness did not matter if
customers left the state.
6:38:35 PM
PAULA HITE, KENAI (via teleconference), voiced support for
the legislation. She spoke to family members' work in the
area for the oil and gas industry. She spoke to the
importance of a healthy economy and the need for jobs in
the state. She understood that the legislature had a chance
to fix the "awful wrong" that was ACES.
6:40:32 PM
CARL PORTMAN, ANCHORAGE (via teleconference), spoke in
favor of the bill. He pointed to the importance of
positioning the state for increased investment that would
lead to additional state revenue. He furthered that the
state was guaranteed a weaker economy from decreased
production under the ACES regime. He believed it was time
to make a change to the current system. He encouraged the
committee to pass the legislation.
6:42:40 PM
PETE STOKES, ANCHORAGE (via teleconference), vocalized
support for the legislation that he opined would attract
increased investment and North Slope production. He urged
the committee to pass legislation in the current year. The
current tax system created throughput decline. The current
bill would adequately address the decrease in production.
He applauded the committee on its efforts to change the tax
system. He stated that efforts to lower the decline would
not occur without the bill.
6:45:22 PM
BEAU OBRIGEWITCH, EAGLE RIVER (via teleconference),
testified in support of the bill. He believed that ACES was
intended to punish the oil companies. He stressed that
action needed to be taken to address the decline in
production. He discussed operational changes that occurred
on the North Slope, which increased employment for
Alaskans. He wondered where new exploration was, since
operational rigs focused on recovering more of the existing
oil. He spoke to well-established infrastructure. He stated
that the bill may not be perfect, but it would encourage
increased production.
6:48:18 PM
GAIL BOERWINKLE, ANCHORAGE (via teleconference), spoke in
opposition to the bill. She pointed to testimony from the
industry in the prior year. She supported putting Alaskans
to work and to increasing development, but she would
appreciate insurance of exploration and production from the
industry. She supported a sunset clause on the legislation.
She noted that industry had relayed during the prior year's
testimony that they would "keep an eye on Alaska" if the
tax system was altered. She did not judge the comment as
assurance that new production or exploration would ensue.
6:49:56 PM
MICHAEL JESPERSON, ANCHORAGE (via teleconference),
testified in favor of the bill. He relayed that he had
urged the legislature to make a tax change for the past
three years. He had been told that he needed to leave the
state if he wanted to advance in his career. He stated that
the fastest way to improve the economy was to pass oil tax
reform; maximum benefit for the people did not mean maximum
taxation. He urged the committee to help his family remain
in the state.
6:52:11 PM
RICHARD EVANS, ANCHORAGE (via teleconference), testified in
opposition to the bill. He disputed the idea that oil
companies would depart the state if the investment climate
did not change. He pointed to various countries with
geopolitical issues as options for investment. He stated
that discontinuing ACES and reducing tax credits for
independent companies was also a bad idea. He believed the
state should be encouraging independent industries. He
opined that the bill was moving through the process too
quickly and he advocated for more time. He opined that
Governor Parnell was working for the oil companies as
opposed to the state's people. He suggested a sunset clause
for the bill.
6:56:31 PM
JOHN MALTAS, ANCHORAGE (via teleconference), testified in
support of oil tax reform, but opposed HCS CSSB 21(RES). He
reminded the legislature about Alaska history. He stated
that the federal decision to allow off-shore exploration
was positive. If fracking was seen as a valuable practice,
the state would benefit. He opined that the legislature
heard what the petroleum industry wanted it to hear. He
wished to hear a commensurate commitment by the petroleum
industry to merit the extent of the proposed changes to the
current tax structure. He supported a cautious incremental
adjustment to the tax rate. He suggested a sunset provision
for HCS CSSB 21(RES).
7:02:07 PM
JOHN SHIVELY, ANCHORAGE (via teleconference), testified in
support of HCS CSSB 21(RES) and understood the need to
increase oil production. He stated that the decline in oil
production required action by the legislature. He pointed
out that other jurisdictions faced similar issues and their
decisions to modify the situation were profitable.
7:03:39 PM
DEANTHA CROCKETT, EXECUTIVE DIRECTOR, ALASKA MINERS
ASSOCIATION, ANCHORAGE (via teleconference), testified in
support of HCS CSSB 21(RES). She stated that a healthy oil
and gas industry was good for the mining industry as well.
She noted that the costs of energy were important to all
industries and Alaska was an expensive state. She pointed
out that the infrastructure for rural areas was essential
and a change in tax regimes would promote growth in Alaska.
7:05:45 PM
JOHN STURGEON, ANCHORAGE (via teleconference), testified in
support of HCS CSSB 21(RES). He understood the value of
competition and its effect on investment. He stated that
there was no shortage of oil in Alaska, only a shortage of
incentive for extraction. He appreciated the committee's
work on the bill.
7:07:04 PM
MARLEANNA HALL, ANCHORAGE (via teleconference), testified
that HCS CSSB 21(RES) was a great beginning for Alaska oil
reform. She stated that she was a lifelong Alaskan. She
encouraged the passage of HCS CSSB 21(RES) and hoped that
the committee would consider the long-term impacts of the
bill.
7:08:08 PM
DANIEL DONKEL, DONKEL OIL AND GAS, FLORIDA (via
teleconference), testified in favor of the legislation. He
stated that he had 200 thousand acres in Alaska and planned
to utilize the area if the competition could be eliminated.
He noted that the three majors were the only ones making a
profit on the North Slope. He spoke fondly of the small
petroleum producers.
7:13:17 PM
MERRICK PIERCE, NINILICHIK (via teleconference), credited
Governor Sarah Palin for helping Alaska avoid the United
States recession. If passed, HCS CSSB 21(RES) would affect
capital outlay spending and damage the Alaskan economy and
cripple the economy of the Interior. He stressed that the
bill was unconstitutional. He commented on the lack of
affordable energy in Alaska. He testified in opposition to
the legislation. He noted that the state was linked to oil
revenue and he stated that a prudent investor would invest
correctly. He criticized the lack of comparative due
diligence of the value of the investment under
consideration.
7:16:23 PM
KATHLEEN M. KENNEDY, NINILICHIK (via teleconference),
testified in opposition to HCS CSSB 21(RES). She believed
that the bill was unconstitutional. She realized that the
oil industry contributed to the state's treasury. She
proposed the use of alternative energy.
7:18:53 PM
ALAN PARKS, HOMER (via teleconference), testified in
opposition to HCS CSSB 21(RES) because of the lack of
guarantee of increased oil production with the legislation.
He stated that Senator Micciche wished for the important
guarantee from the oil companies during his campaign. He
wondered how to pay for education and public safety with
the loss in revenue. He requested that the legislature
spend additional time on the bill.
7:21:10 PM
LARRY SMITH, HOMER (via teleconference) opposed the
legislation. He discussed the publication of Governor Jay
Hammond's last book about oil policy titled "Diapering the
Devil." He believed that Alaska managed to avoid multiple
short falls seen in other areas of the world.
7:23:22 PM
PAMELA BRODIE, HOMER (via teleconference), testified in
opposition to the legislation. She understood the
importance of declining oil production and the need to coax
oil companies into more drilling. She disliked the lack of
guarantee on behalf of the oil companies despite the $1
billion per year gift from the legislature.
7:25:12 PM
ROBERTA HIGHLAND, HOMER (via teleconference), spoke in
opposition to the legislation. She hoped that the
legislature had the backbone to stand up to the oil
companies. She expressed concern about the state's
connection to the oil companies.
7:27:30 PM
KEN LANDFIELD, HOMER (via teleconference), testified in
opposition to the legislation. He described SB 21 as
welfare for the oil conglomerates. He advocated for written
promises from the oil industry of investment upon tax
structure change. He noted that the existing reserves and
infrastructure should be backed by a guarantee by the oil
companies. He opined that ACES was functioning properly. He
begged for a sunset clause for the bill.
7:29:22 PM
BJORN OLSON, HOMER (via teleconference), testified in
opposition to the legislation. He noted that fossil fuels
worked to alter the earth's atmosphere and marine
chemistry. He advocated for a move away from fossil fuels
and toward more sustainable economies and energy
production. He stated that climate change was a fact and
that alternative legislation was essential. He stated the
revenue derived via ACES ought to help work toward Alaska's
long-term future.
KETCHIKAN
7:30:46 PM
VALERIE BROOKS, KETCHIKAN (via teleconference), testified
in opposition to HCS CSSB 21(RES). She stated that the lack
of focus on education funding was unfortunate. She noted
the lack of increase to the Base Student Allocation (BSA)
for the fourth year in a row. She opined that the state's
priority must be education funding. She noted that the
profits earned by the oil companies did not indicate that
they required additional money from Alaska.
SITKA
7:32:37 PM
LIBBY STORTZ, SITKA (via teleconference), testified in
opposition to the legislation. She believed that SB 21
provided an enormous give-away to the oil companies. She
stated that oil production was in decline due to peak oil
production and easy accessibility in the Lower 48. She
noted that the tax break provided no guarantees of gains
for Alaskans and would lead to major losses in needed
services throughout the state.
7:34:20 PM
WILLIAM STORTZ, SITKA (via teleconference), testified in
opposition to HCS CSSB 21(RES). He explained that he was a
lifelong Alaskan who made his money via production. He
argued that the state was willing to provide money to the
oil industry without guarantee of production, which he
found unconscionable. He stated that he was looking at a
photograph of Ben Grussendorf who always fought for the
state's resources.
7:35:21 PM
WARD ELDRIDGE, SITKA (via teleconference), testified in
opposition to the legislation. He believed that the oil in
the ground belonged to the people of Alaska. He interpreted
the tax as a method for the industry to pay the people of
Alaska for their oil. He saw the bill as robbing the common
Alaskan to give to the rich.
7:36:34 PM
RAY FRIEDLANDER, SITKA (via teleconference) testified in
opposition to the legislation. She stated that she was one
of 75 people who attended a rally in Sitka opposing SB 21.
She saw the legislation as a giveaway. She mentioned that a
petition with 64 signatures opposing the bill was sent to
the finance committee. She expressed discontent about the
lack of guarantee on behalf of the industry to act in the
public's best interest. She noted that funding for schools
and critical services would be diminished.
7:37:53 PM
JOAN FRANZ, FAIRBANKS (via teleconference), testified in
opposition to the legislation. She pointed out that the oil
industry paid the salaries of two legislators voting on the
bill, which she opined was a conflict of interest. She
noted that the analysis by Joe Paskvan was independent of
oil company influence. She noted that the oil industry
profits were soaring and she wished to see a commitment to
increase production.
7:40:17 PM
LISA HERBERT, GREATER FAIRBANKS CHAMBER OF COMMERCE,
FAIRBANKS (via teleconference), spoke in support of the
bill. She wondered how not making a change would improve
the state's financial situation. She stressed that the
state required increased oil production immediately. She
discussed the importance of increasing Alaska's
competitiveness. She encouraged the committee to pass the
bill.
7:42:38 PM
ELIZABETH SIEGEL, FAIRBANKS (via teleconference), testified
in opposition to the bill. She understood the importance of
the complex issue, however, she advocated for the inclusion
of requirements for increased oil production. She stressed
that the oil industry should be required to sign a written
agreement that production would increase under a stated
time limit. She opined that the oil companies should not
control any aspect of state auditing. She was outraged that
two senators had been able to vote on the bill as they
worked for oil companies benefitting from its passage. She
urged the committee to not pass the bill.
ANCHORAGE
7:44:32 PM
REED CHRISTENSEN, ANCHORAGE (via teleconference), testified
in support of the bill. He expressed that opinions seeking
guarantees for oil production were short-sighted. He listed
guarantees the state should provide the oil companies. He
equated the issue to investing in his children's college
education. He stressed that the reform was the necessary
investment in the state's future that could not be ignored.
He encouraged the committee to vote in favor of the bill.
RAY METCALFE, ANCHORAGE (via teleconference) referred to
testimony by Mr. Donkel who had testified against the
legislation. He stated that Mr. Donkel's greatest asset in
attracting business to Alaska was the ACES system. He spoke
to the common desire for increased production. He discussed
that oil companies had not provided a commitment under the
current legislation. He believed that the independent
companies were willing and able to provide commitments for
exploration with a properly structured tax system. He
stated that Mr. Donkel's recommendation was to set up a
fund with $1 billion for use outside of existing producing
areas.
7:50:54 PM
KEITH SILVER, ANCHORAGE (via teleconference), spoke in
favor of the bill. He stated that he and other former oil
industry employees were victims of ACES. He opined that
three years of vetting was sufficient for the new oil
taxation proposed in SB 21. He wondered what the
legislature and Governor Palin gave to the oil companies in
return for increased taxes. He stated that the state was
rapidly approaching the point of operational problems for
the pipeline. He urged the committee to pass the bill.
7:52:37 PM
RICK BUTTON, ANCHORAGE (via teleconference), testified in
support of the legislation. He stated that it was important
to take action to reduce or reverse oil production decline.
He advocated for the removal of the progressive portion of
the tax code. He did not believe that SB 21 went far enough
to reduce taxes. He would prefer a 30 percent base tax
rate. He furthered that capital budgets had grown
unsustainably and ACES rates were justified to compensate
for the unrealistic budgets. He added that the state
operated under a capitalist system unlike the socialist
system in Norway.
7:55:21 PM
MICHAEL DZURISIN, ANCHORAGE (via teleconference), spoke in
opposition to the bill. He opined that SB 21 was a tax
giveaway to the large oil producers. He cited Mr. Donkel as
an independent oil producer. He stated that Mr. Donkel's
selling point was the credit and profit guaranteed by ACES.
He pointed to excessive charges charged to independent
producers by the major producers for feeder lines,
conditioning facilities and other contracts. He believed
the bill was a deal killer. He discussed that Mr. Donkel
had been in the business for 30 years. He believed it was
important to take to heart the testimony of Mr. Donkel. He
reiterated his opposition to the bill.
7:58:05 PM
BRIAN HOVE, ANCHORAGE (via teleconference), vocalized
support for the bill. He was hopeful that the state could
move forward and pass the bill allowing the legislature to
focus on other important matters. He believed the framers
of the state constitution had future generations in mind.
He urged the passage of the bill.
7:59:51 PM
RACHEL PETRO, PRESIDENT, ALASKA STATE CHAMBER OF COMMERCE,
ANCHORAGE (via teleconference), testified in favor of the
legislation. She pointed to a diverse population of
businesses in the chamber. She supported the governor's
guiding principles of the bill. She pointed to various
scenarios that could take place related to the tax system.
She stated that tweaking taxes would put Alaska in the
middle of the pack. She asked the committee to consider
whether being in the middle of the pack would be enough.
She would like to see the bill's competitiveness increased.
8:03:25 PM
LILLIAN KONEIG, ANCHORAGE (via teleconference), spoke in
support of the legislation with constraints that would
allow for reinvestment in Alaska. She was sick of hearing
about oil. She stated that money should be invested in the
state and not in other areas. She furthered that money was
leaving the state. She wondered why people wanted to leave
when they retired. She believed Fairbanks was a dying city.
She stated that 35 years of drilling was a long time and
she encouraged a change in Alaska's vision.
8:06:18 PM
RECESSED
9:14:55 PM
RECONVENED
Vice-Chair Neuman noted that the public testimony.
DEACON CHARLES ROHRBACHER, JUNEAU, spoke about the value
and dignity of every human being. He noted that working for
the common good addressed both economic and social justice.
He added that the poor in Alaska were affected on many
different levels. The greatest problem that the state faced
was the crisis in rural Alaska. He noted that the damage of
development for native people of rapid and uncontrolled
social and economic change. He urged the legislators to
view the impact of the legislation on the poorest people in
the state. He added that there was not a guarantee that the
oil companies would invest in our state, but when the money
was transferred out of the state, it would no longer be
available for social necessities. He pointed out his
devastating experience supporting those affected by suicide
in rural areas.
9:19:42 PM
Vice-Chair Neuman struggled with the decline in the revenue
with throughput declining in Trans-Alaska Pipeline System
(TAPS) equated to approximately 40 thousand barrels per day
or $40 million per day. He noted that the revenue stream
was less than what the needs of the state were. He agreed
that he shared the same concerns regarding funding for
social necessities and education. He expressed the goal of
protecting Alaska's future.
9:20:45 PM
Representative Edgmon thanked the Deacon for coming forward
and he appreciated the struggle of the issue. He noted that
the primary source of revenue was declining. He also
struggled with short and long-term consequences of
declining revenue on rural Alaska. He hoped to find a
solution for the rural areas.
9:22:31 PM
JACKIE STEWART, JUNEAU, stated that she lived in Alaska
since 1975. She reported that she worked many different
jobs in Alaska. She retired from state appointment. She
also helped people with mental illnesses start businesses.
She noted that the Alaska Mental Health Trust Authority
(AMHTA) was a collaborating entity for her. She stated that
before ACES was passed, the oil companies sought tax
breaks. She advocated for focus on renewable resources. She
testified in opposition to HCS CSSB 21(RES). She hoped for
a focus on renewable resources.
9:26:50 PM
PHOEBE ROHRBACHER, testified in opposition to HCS CSSB
21(RES). She testified on behalf of her brother who
believed that SB 21 was immoral and did not support the
poor and vulnerable people in Alaska.
9:27:57 PM
ANDY ROGERS, ALASKA STATE CHAMBER OF COMMERCE, JUNEAU,
testified as an Alaskan. He testified in support of HCS
CSSB 21(RES) and hoped that the legislature would pass it
out of committee. He stated that ACES might undo all of his
hard work. He worried that his family might lose more if
the price of oil falls. He believed that ACES made Alaska
an unattractive partner.
9:30:54 PM
JESSICA ULLRICH, ANCHORAGE (via teleconference), testified
in opposition to HCS CSSB 21(RES) as a social worker who
witnessed the effect of funding cuts on children and
families. She noted that the changes would negatively
impact social services in Alaska. She urged the legislature
to vote no on SB 21.
9:33:19 PM
CAROLINE BOLAR, ANCHORAGE (via teleconference), testified
in opposition to the legislation. She read a letter from
the Anchorage Daily News. She discussed the ten year
dispute settled for ten cents on the dollar and the Exxon
Valdez oil spill. She suggested hiring the Norwegian
government to help Alaska control and profit from our
resources.
9:36:22 PM
DIRK NELSON, ROSIE CREEK (via teleconference), testified in
opposition to the legislation. He opined that SB 21 was an
irresponsible scandal that lacked a guarantee of increased
production or revenue. He stated that the United States
Department of Interior stated that Alaska's oil revenues
were low on the international market. He noted that the oil
facilities were limited by the larger producers. He stated
that Alaska was an excellent place for excess cash flow,
but the profits would not be reinvested in state. He
claimed that ConocoPhillips had a net profit of $28 per
barrel. Under ACES, if the oil companies did not earn
money, they did not pay taxes. He challenged the idea of
tying oil decline to tax rates. He suggested tackling the
issue of undeveloped leases as a solution to declining
production. He saw the bill as highly irresponsible.
9:40:42 PM
JERRY AHWINONA, ANCHORAGE (via teleconference), suggested
structuring the tax credits differently. He praised the
efforts of the committee. He testified in opposition to the
legislation.
9:42:35 PM
Vice-Chair Neuman CLOSED public testimony.
Co-Chair Stoltze announced the schedule.
CSSB 21 (FIN) am(efd fld) was HEARD and HELD in committee
for further consideration.
9:44:03 PM
ADJOURNMENT
The meeting was adjourned at 9:44 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 21 Support Letters.pdf |
HFIN 4/9/2013 5:00:00 PM |
SB 21 |
| SB 21 Opposition Letters.pdf |
HFIN 4/9/2013 5:00:00 PM |
SB 21 |