Legislature(2005 - 2006)CAPITOL 124

04/05/2006 01:00 PM RESOURCES

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Meeting Postponed to 1:15 PM--
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
Heard & Held
<Bill Hearing Rescheduled from 04/03/06>
Moved CSHB 386(O&G) Out of Committee
HB 386-EXTEND NORTH SLOPE SEVERANCE TAX CREDIT                                                                                
CO-CHAIR  SAMUELS  announced  that  the first  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                                                              
REPRESENTATIVE  VIC KOHRING, Alaska  State Legislature,  presented                                                              
HB 386 as  Sponsor and said the  bill provides tax credits  to the                                                              
oil and  gas industry for drilling  work and abandonment  of work.                                                              
The credit will  "apply toward a variety of payments  to the State                                                              
of Alaska.   Such payments are  production taxes, what  are called                                                              
bonus  bids,  lease rental  payments,  property  taxes,  corporate                                                              
income  taxes."    He  said  he hopes  it  will  provide  a  major                                                              
incentive to invest  in Alaska.  The bill adjusts  the law that is                                                              
going to  expire in  2007 and  extends it  to 2010.   He said  the                                                              
legislature  should  pass  it  now   so  the  companies  can  plan                                                              
accordingly.    He  said  HB 386  is  strongly  supported  by  the                                                              
industry,  particularly  Anadarko  Petroleum  Corporation  and  BG                                                              
North, who said it is in Alaska because of the credits.                                                                         
1:26:37 PM                                                                                                                    
REPRESENTATIVE KOHRING  said these  credits were addressed  in the                                                              
committee substitute  to HB  488, which might  not be  included in                                                              
the final  bill.   It is  important that  the industry  have these                                                              
[credits] to offset the taxes of HB 488, he stated.                                                                             
1:27:31 PM                                                                                                                    
CO-CHAIR SAMUELS  said these were referred  to as "the  SB 185 tax                                                              
credits" in the CS, which came from Representative Kohring.                                                                     
REPRESENTATIVE  KOHRING  said his  staff  worked  on creating  the                                                              
CO-CHAIR SAMUELS said  he is not going to offer an  amendment.  If                                                              
HB 488  doesn't pass, "then  I don't have  a problem as  much with                                                              
being able  to take these tax  credits off of the  income property                                                              
taxes,  because,  quite  frankly,  they're  not  used  that  much.                                                              
These  are for true  explorers."   He  said he will  be sending  a                                                              
letter from  the House Resources  Standing Committee to  the House                                                              
Finance  Committee  to  say  his committee  has  not  changed  its                                                              
position  on HB  488  "on not  being able  to  take these  credits                                                              
against income  and property  taxes in the  big scheme  of things.                                                              
If you're  going a  big tax reform  bill, but  we still  thing the                                                              
income tax and the  property tax should not have  this as a credit                                                              
against that,  but if  it is a  stand-alone piece of  legislation,                                                              
the implications are far less severe."                                                                                          
1:29:30 PM                                                                                                                    
REPRESENTATIVE SEATON  said these credits under this  bill are not                                                              
tradable,  but  they  would be  under  HB  488.    If it  is  only                                                              
allowable against  production tax, "you're  going to have  to wait                                                              
until  you go  into production,  so  I think  it's reasonable  for                                                              
this tax but not the other."                                                                                                    
1:30:02 PM                                                                                                                    
CO-CHAIR SAMUELS  said it is  a different  scenario if HB  488 and                                                              
SB 305 fail.                                                                                                                    
REPRESENTATIVE  SEATON  moved to  report  CSHB  386 (O&G)  out  of                                                              
committee  with individual  recommendations  and the  accompanying                                                              
fiscal   notes  and   the  accompanying   letter.     Hearing   no                                                              
objections, it was so ordered.                                                                                                  
The committee took an at-ease from 1:31:28 PM to 1:32:49 PM.                                                                

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