02/03/2006 09:02 AM House W&M

HB 63-OIL SEVERANCE TAX                                                                                                       
                                                                                                                                
9:02:41 AM                                                                                                                    
                                                                                                                                
CHAIR WEYHRAUCH announced that the  first order of business would                                                               
be  HOUSE BILL  NO.  63, "An  Act  relating to  the  oil and  gas                                                               
properties  production  (severance) tax  as  it  applies to  oil;                                                               
establishing a  minimum rate  of tax for  certain fields  of five                                                               
percent;  providing  for  an  adjustment   to  increase  the  tax                                                               
collected when  oil prices  exceed $20 per  barrel and  to reduce                                                               
the tax collected when oil prices  fall below $16 per barrel; and                                                               
providing for  relief from the tax  when the price per  barrel is                                                               
low or  when the  taxpayer demonstrates that  a reduction  in the                                                               
tax is necessary  to establish or reestablish  production from an                                                               
oil  field  or pool  that  would  not otherwise  be  economically                                                               
feasible."                                                                                                                      
                                                                                                                                
CHAIR WEYHRAUCH,  having determined there  was no one  wishing to                                                               
testify, closed  public testimony  on HB  63, and  announced that                                                               
the committee would discuss it at the end of the meeting.                                                                       
                                                                                                                                
HB 63-OIL SEVERANCE TAX                                                                                                       
                                                                                                                                
9:36:52 AM                                                                                                                    
                                                                                                                                
CHAIR  WEYHRAUCH announced  that the  committee would  return its                                                               
attention to HOUSE  BILL NO. 63, "An Act relating  to the oil and                                                               
gas properties production  (severance) tax as it  applies to oil;                                                               
establishing a  minimum rate  of tax for  certain fields  of five                                                               
percent;  providing  for  an  adjustment   to  increase  the  tax                                                               
collected when  oil prices  exceed $20 per  barrel and  to reduce                                                               
the tax collected when oil prices  fall below $16 per barrel; and                                                               
providing for  relief from the tax  when the price per  barrel is                                                               
low or  when the  taxpayer demonstrates that  a reduction  in the                                                               
tax is necessary  to establish or reestablish  production from an                                                               
oil  field  or pool  that  would  not otherwise  be  economically                                                               
feasible."                                                                                                                      
                                                                                                                                
9:37:15 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GRUENBERG moved  to report HB 63  out of committee                                                               
with  individual  recommendations  and  the  accompanying  fiscal                                                               
note.                                                                                                                           
                                                                                                                                
REPRESENTATIVE  SAMUELS objected.    He expressed  his thanks  to                                                               
Representative  Gara, his  staff,  Deborah Vogt,  and others  for                                                               
their work on the bill, and  opined that the subject of oil taxes                                                               
does  need to  be discussed  in the  legislature.   He explained,                                                               
however,  that  the  only  reason  he  objected  is  due  to  the                                                               
insufficient  amount of  world-class analysis  available to  help                                                               
him form  a decision.  He  noted that "85 percent  of the state's                                                               
revenue is at  stake here," therefore "you need to  know what the                                                               
competition  around the  world is  doing  [on this  topic]."   He                                                               
informed  the  committee  that  he  does  "hope  the  bill  moves                                                               
forward," but  wanted to have his  objections on the record.   He                                                               
concluded by expressing his view as  to how important the oil and                                                               
gas are to the future of this state.                                                                                            
                                                                                                                                
REPRESENTATIVE  GRUENBERG  expressed   his  appreciation  of  the                                                               
Representative Samuel's  comments and  indicated that  this could                                                               
be seen as a first step.                                                                                                        
                                                                                                                                
REPRESENTATIVE WILSON remarked on  how significant this source of                                                               
income is to  the State of Alaska.  However,  she questioned what                                                               
the ramifications would  be [should this legislation  pass].  She                                                               
concluded   that   although   she  does   not   have   sufficient                                                               
information, she does  have confidence in her  colleagues to work                                                               
further  on  this  legislation  as it  moves  through  the  other                                                               
committees.                                                                                                                     
                                                                                                                                
REPRESENTATIVE SEATON expressed  that he, too, does  not feel the                                                               
committee has  enough analysis before  it to determine  the right                                                               
solution.   However,  he  opined that  the  legislation would  be                                                               
heard  by  the  House  Resources Standing  Committee  where  "the                                                               
expertise has  been generated."   He specified that his  "vote to                                                               
move this on  is saying that we know something  is wrong with the                                                               
[oil] tax structure,  that we need to change it,  and I'm willing                                                               
to let the other committees work on the exact amount ...."                                                                      
                                                                                                                                
9:41:29 AM                                                                                                                    
                                                                                                                                
A roll call  vote was taken.   Representatives Gruenberg, Seaton,                                                               
Weyhrauch, and  Wilson voted in favor  of reporting HB 63  out of                                                               
committee.  Representative Samuels  voted against it.  Therefore,                                                               
HB 63  was reported out  of the  House Special Committee  on Ways                                                               
and Means by a vote of 4-1.