03/31/2006 01:00 PM House RESOURCES

HB 386-EXTEND NORTH SLOPE SEVERANCE TAX CREDIT                                                                                
                                                                                                                                
1:45:12 PM                                                                                                                    
                                                                                                                                
CO-CHAIR RAMRAS announced that the  final order of business would                                                               
be  HOUSE BILL  NO. 386,  "An Act  making uniform  throughout the                                                               
state the  deadline for certain exploration  expenditures used as                                                               
credits against the  production tax on oil and  gas produced from                                                               
a lease  or property in the  state by extending to  July 1, 2010,                                                               
the  deadline  for those  expenditures  on  leases or  properties                                                               
located north of 68 degrees, 15 minutes, North latitude."                                                                       
                                                                                                                                
The committee took an at-ease from 1:45 p.m. to 2:02:23 PM.                                                                   
                                                                                                                                
REPRESENTATIVE VIC  KOHRING said HB 386  is the same as  what the                                                               
House  Resources   Standing  Committee   put  in   the  committee                                                               
substitute (CS) [for HB 488].  He  said it is not the same in its                                                               
entirety, but  it is the same  with regard to the  incentives for                                                               
the industry.  "We tried to  make that bill better by rolling in,                                                               
in the form  of the CS, some things that  essentially sweeten the                                                               
pot and made it better for  the industry in terms of incentives."                                                               
He  said the  incentives included  providing tax  credits against                                                               
not  just  the production  tax,  but  against bonus  bids,  lease                                                               
rental payments,  property taxes,  corporate tax  liability, "and                                                               
so  forth."   He said  that was  all part  of the  CS, and  he is                                                               
bringing  this   bill  before  the  committee   "because  of  the                                                               
volatility  of  the  whole  situation."   He  said  there  is  no                                                               
guarantee that the provisions in the  CS will pass, and, thus, HB
 can pass on its own.                                                                                                        
                                                                                                                                
2:04:19 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KOHRING  said HB 386  will provide tax  credits to                                                               
offset taxes  on oil  and gas  produced in  the state,  and those                                                               
credits  can be  sold to  other companies.   He  stated that  the                                                               
amount of  expenses that could be  claimed are up to  40 percent,                                                               
"not that  the full 40  percent would be  granted; it will  be at                                                               
the  discretion  of the  department  to  provide once  they  have                                                               
looked at  the application  and examined  what credits  are being                                                               
applied for."   He said it  has been a fairly  successful program                                                               
in  encouraging more  development in  marginal fields.   He  said                                                               
there are five applications pending  for a total of $15.1 million                                                               
in credits.   There are seven that have already  been granted, he                                                               
stated.  "It's not  like it's a statute that we  put on the books                                                               
that's  just been  sitting there  unused,  as some  bills end  up                                                               
being.    This  is  one  that  has  actually  been  used  by  the                                                               
industry."   He  said small  companies feel  that this  bill will                                                               
make a  difference in terms of  development in the state,  and he                                                               
noted  there  are ten  letters  in  support, including  one  from                                                               
Anadarko Petroleum Corporation.   The bill "enjoys strong support                                                               
from those companies,"  and he asked who would not  support a tax                                                               
credit to their industry.                                                                                                       
                                                                                                                                
2:06:28 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KOHRING spoke  of support from the  Alaska Oil and                                                               
Gas Conservation Commission and other oil companies.                                                                            
                                                                                                                                
2:06:50 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE CRAWFORD  said he has  a concern of  expanding the                                                               
credits  to  property  taxes  because   there  are  boroughs  and                                                               
municipalities that really depend on those taxes.                                                                               
                                                                                                                                
REPRESENTATIVE KOHRING deferred to Ms. Millett.                                                                                 
                                                                                                                                
CHARISSE MILLETT, Staff to Representative  Kohring, said the bill                                                               
only applies to  state property taxes, not municipal  taxes.  She                                                               
drew attention to page 2, line 17.                                                                                              
                                                                                                                                
2:08:14 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE OLSON  said with  all the  work the  committee has                                                               
done on this issue, he would  prefer that the full committee look                                                               
at it.  He  said he would probably support it, but  it would be a                                                               
disservice to the other members [to vote on it now].                                                                            
                                                                                                                                
2:09:26 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ELKINS said he agrees with Representative Olson.                                                                 
He will support it, but it is a good idea to wait.                                                                              
                                                                                                                                
CO-CHAIR RAMRAS said he shares that opinion.                                                                                    
                                                                                                                                
REPRESENTATIVE KOHRING said he will be happy to come back.                                                                      
                                                                                                                                
REPRESENTATIVE OLSON said the committee might lose some friends                                                                 
if it cut some members out of the process.                                                                                      
                                                                                                                                
[HB 386 was held over]