Legislature(2011 - 2012)HOUSE FINANCE 519
03/24/2011 05:00 PM House FINANCE
| Audio | Topic |
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| Start | |
| HB110 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 110 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
March 24, 2011
5:09 p.m.
5:09:17 PM
CALL TO ORDER
Co-Chair Stoltze called the House Finance Committee meeting
to order at 5:09 p.m.
MEMBERS PRESENT
Representative Bill Stoltze, Co-Chair
Representative Bill Thomas Jr., Co-Chair
Representative Anna Fairclough, Vice-Chair
Representative Mia Costello
Representative Mike Doogan
Representative Bryce Edgmon
Representative Les Gara
Representative David Guttenberg
Representative Tammie Wilson
MEMBERS ABSENT
Representative Reggie Joule
Representative Mark Neuman
ALSO PRESENT
Representative Mike Chenault; Representative Mike Hawker;
Senator Cathy Giessel; Mary Graham, Self, Juneau; Barbara
Huff Tuckness, Director, Teamsters Local 959, Juneau.
PRESENT VIA TELECONFERENCE
Jerry McCutcheon, Anchorage; Michael Jesperson, Anchorage;
Matthew Fagnani, Anchorage; David Gottstein, Anchorage;
Jeanine St. John, Anchorage; Paul Kendall, Anchorage;
Barbara Winkley, Anchorage; Robert Buch, Anchorage; Ben
Mohr, Eagle River; Bob Bulmer, Anchorage; David DeLong,
Fairbanks; Mark Sharp, Fairbanks; Lisa Herbert, Executive
Director, Fairbanks Chamber of Commerce; Paul Metz,
Fairbanks; Patrice Case, Fairbanks; Geoffrey Bacon, Alaska
Public Employees Association, Fairbanks; Jean Trainor,
Fairbanks; Buzz Otis, Fairbanks; Richard Fineberg,
Fairbanks; Gerald Rafson, Fairbanks; Richard Heieron,
Chair, Fairbanks Chamber of Commerce, Fairbanks; Lorna
Shaw, Fairbanks; Lorali Carter, Board of Directors, Palmer
Chamber of Commerce; James Crowell, Matsu; Donna Rae
Faulkner, Self, Homer; Don McNamara, Self, Homer; Bryan
Clement, Self, Anchorage; Mike McGinnis, Weona Corp,
Anchorage; David Baggert, Self, Anchorage; Kevin Durling,
Self, Anchorage; Deantha Crockett, Self, Anchorage; Kati
Capozzi, Self, Anchorage; Carl Portman, Self, Anchorage;
Jed Whittaker, Self, Anchorage; Scott Thorson, Self,
Anchorage; Pete Stokes, Self, Anchorage; Jason Brune,
Executive Director, Resource Development Council,
Anchorage; Cary Taylor, Self, Anchorage; Mike Milligan,
Kodiak; David Otness, Cordova; Skip Reierson, Seward; Mark
McArthur, Eagle River; Ron Johnson; Tom Lakosh; Merrick
Pierce; Tim Tilsworth, Fairbanks; Cynthia Cevasco,
Fairbanks; Butch Stein, Fairbanks; Randy Griffin,
Fairbanks; Ken Hall, Self, Fairbanks; Don Grey, Self
Fairbanks; Stu Graham, Self, Mat-Su; Geoffrey Humphrey,
Self, Anchorage; Roger Jenkins, Self, Anchorage; Allan
Dolynny, Self, Anchorage; Deborah Brollini, Self,
Anchorage; Chuck Becker, Self, Anchorage; Lynette Moreno-
Hinz, Self, Anchorage; Yolanda de la Cruz, Self, Anchorage.
SUMMARY
HB 110 PRODUCTION TAX ON OIL AND GAS
HB 110 was HEARD and HELD in committee for
further consideration.
HOUSE BILL NO. 110
"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;
relating to the oil and gas production tax rate;
relating to monthly installment payments of estimated
oil and gas production tax; relating to oil and gas
production tax credits for certain expenditures,
including qualified capital credits for exploration,
development, and production; relating to the
limitation on assessment of oil and gas production
taxes; relating to the determination of oil and gas
production tax values; making conforming amendments;
and providing for an effective date."
5:09:24 PM
PUBLIC TESTIMONY FOR HB 110
JERRY MCCUTCHEON, ANCHORAGE (via teleconference), spoke in
opposition to HB 110. He spoke to the duty to produce,
which was not addressed in the bill. He claimed that the
bill would not pass the "Harvard Test." He recalled serious
questions raised in Senator Jackson's committee and
predictions by the Alaska Oil and Gas Conservation
Commission (AOGCC).
5:15:37 PM
MICHAEL JESPERSON, ANCHORAGE (via teleconference),
testified in support of the bill.
MATTHEW FAGNANI, ANCHORAGE (via teleconference), spoke in
support of the bill. He opined that there needed to be new
oil in TAPS. He was a supporter of oil and gas. The
industry would find a better place to do business.
5:18:56 PM
DAVID GOTTSTEIN, ANCHORAGE (via teleconference), spoke in
opposition to HB 110. He wanted the oil companies to make
competitive returns. He advised against selling the
resource too cheaply, but wanted both the state and
companies to share the profits. He thought the mechanisms
of ACES worked except for progressivity, which limited
upside potential. He believed the answer was to change the
rate of progressivity so that it went down as prices rose.
5:24:20 PM
JEANINE ST. JOHN, ANCHORAGE (via teleconference), spoke in
support of HB 110.
PAUL KENDALL, ANCHORAGE (via teleconference), testified
against HB 110. He recommended putting the funding in an
account and wanted full disclosure in hearings.
5:29:12 PM
BARBARA WINKLEY, ANCHORAGE (via teleconference), spoke in
opposition to HB 110. She suggested setting aside funds for
infrastructure. She questioned whether the legislature was
acting in the state's best interests.
ROBERT BUCH, ANCHORAGE (via teleconference), voiced
opposition to HB 110. He believed investment and
exploration would be status quo and that more money would
not be put into the North Slope. He listed the profits of
ConocoPhillips.
5:34:38 PM
Mr. Buch referred to the state constitution's stipulation
that the people benefit from the state's resources.
BEN MOHR, EAGLE RIVER (via teleconference), spoke in
support of HB 110.
5:37:29 PM
BOB BULMER, ANCHORAGE (via teleconference), testified in
support of HB 110.
DAVID DELONG, FAIRBANKS (via teleconference), voiced
opposition to HB 110. He thought the legislation would
represent an unnecessary give-away to the oil companies. He
opined that tariff reform was needed rather than tax
reform. He referred to a former employee of ConocoPhillips.
5:41:05 PM
MARK SHARP, FAIRBANKS (via teleconference), testified
against HB 110. He felt that the bill was a give-away and
wanted to negotiate. He noted that the industry had given
significant money to Governor Parnell, according to APOC.
He urged action instead of speculation and study.
5:45:00 PM
LISA HERBERT, EXECUTIVE DIRECTOR, FAIRBANKS CHAMBER OF
COMMERCE (via teleconference), spoke in support of HB 110.
She felt that businesses and the entire economy of
Fairbanks were affected by a decline in oil production. She
felt the legislation would save the state.
5:47:09 PM
PAUL METZ, FAIRBANKS (via teleconference), voiced support
of HB 110. He supported the comments of Ms. Herbert.
PATRICE CASE, FAIRBANKS (via teleconference), spoke in
support of HB 110 as a business owner.
5:48:51 PM
GEOFFREY BACON, ALASKA PUBLIC EMPLOYEES ASSOCIATION,
FAIRBANKS (via teleconference), testified in opposition to
HB 110. He felt money would be taken from Alaska's
communities and put it in the hands of oil company
shareholders. He stated that APEA was not in favor of the
bill.
JEAN TRAINOR, FAIRBANKS (via teleconference), testified in
opposition to HB 110. She felt the bill was a give-away of
savings to oil companies.
5:53:13 PM
BUZZ OTIS, FAIRBANKS (via teleconference), spoke in support
of HB 110.
RICHARD FINEBERG, FAIRBANKS (via teleconference), voiced
strong opposition to HB 110. He felt the significance of
the decline had been exaggerated. He thought it was
reasonable to expect that the tangible qualities of
reserves and resources would be produced for an extended
period. He thought the current ACES tax regime was not a
problem. He had not heard substantive evidence that the
structure should change.
5:58:48 PM
GERALD RAFSON, FAIRBANKS (via teleconference), spoke in
opposition to HB 110. He supported tariff reform rather
than tax reform. He thought the major oil companies were
the greatest impediment to development, as they controlled
the infrastructure.
6:01:20 PM
RICHARD HEIERON, CHAIR, FAIRBANKS CHAMBER OF COMMERCE,
FAIRBANKS (via teleconference), testified in strong support
of HB 110. He voiced concerns as a businessman that
something needed to change. He did not like frequent tax
changes.
LORNA SHAW, FAIRBANKS (via teleconference), spoke in
support of HB 110.
6:05:33 PM
MARY GRAHAM, SELF, JUNEAU, spoke in opposition to HB 110.
She stated that the bill equated to the oil companies
coming to the state for their allowance and doing their
chores at a later time. She believed the state needed to
diversify the economy away from oil and that it was
important to think about the bigger picture.
6:09:20 PM
BARBARA HUFF TUCKNESS, DIRECTOR, TEAMSTERS LOCAL 959,
JUNEAU, was in favor of the oil and gas legislation that
would come out of the committee. She thought it was
important to secure the revenue flow and supported the gas
project. She noted that there were approximately a couple
of hundred teamsters working on the North Slope. The
Teamsters believed that it was important to look at the
governor's proposed legislation as development in the state
was down and jobs were important to the Teamsters.
6:13:25 PM
LORALI CARTER, BOARD OF DIRECTORS, PALMER CHAMBER OF
COMMERCE (via teleconference), supported HB 110. He
believed the bill was important for employment and that tax
revenue was a major source of revenue for the state.
6:14:49 PM
JAMES CROWELL, MATSU (via teleconference), supported HB
110. He believed that it was important to bracket Alaska's
taxes and to lower the tax rate. He wanted Alaska to become
a state that was once again open for business.
6:18:08 PM
DONNA RAE FAULKNER, SELF, HOMER (via teleconference), spoke
strongly against HB 110. She understood that the oil
companies wanted to increase their profits for their
shareholders. She did not understand why the governor was
in favor of rolling back ACES and taking money away from
Alaskans. She felt Alaska deserved its fair share of oil
and gas profits. The legislature should defeat HB 110.
6:18:57 PM
DON MCNAMARA, SELF, HOMER (via teleconference), was opposed
to HB 110. He believed that the state should look at
Venezuela's model. The oil companies were already making
record profits and Exxon Mobil had not finished paying for
the 1989 oil spill. The tax rate was 60 percent and in
Norway the taxes were at 78 percent. He thought Alaska was
doing well.
6:21:39 PM
BRYAN CLEMENT, SELF, ANCHORAGE (via teleconference), was in
support of HB 110. He urged that the legislature pass the
bill.
6:21:55 PM
MIKE MCGINNIS, WEONA CORP, ANCHORAGE (via teleconference),
was strongly in support of HB 110. He believed that one of
the underlying issues was about the 100,000 jobs that were
at risk if the oil companies were chased out of Alaska.
6:23:19 PM
DAVID BAGGERT, SELF, ANCHORAGE (via teleconference),
supported HB 110 as a person who had worked in the oil
fields for many years.
6:24:09 PM
KEVIN DURLING, SELF, ANCHORAGE (via teleconference), was
strongly in support of HB 110. He worked in a number of
industries, including oil and gas. He had released
employees the day before and it was one of the hardest days
he had experienced. He believed that it was impossible to
ask a business to guarantee a return.
6:25:39 PM
DEANTHA CROCKETT, SELF, ANCHORAGE (via teleconference),
testified in support of HB 110. She knew people who had
worked for Alyeska pipeline and she hoped that they would
continue to work there in the future. She wanted to stay in
Alaska and urged support of the bill.
6:26:51 PM
KATI CAPOZZI, SELF, ANCHORAGE (via teleconference), spoke
in support of HB 110. She loved Alaska and wanted to stay.
She and her husband were looking to make Alaska their home
and were afraid that the state may not be the right place
because the current system was broken. She urged that
something be done to reverse the decline.
6:28:51 PM
CARL PORTMAN, SELF, ANCHORAGE (via teleconference),
testified in support of HB 110. He reported that had seen
his share of Alaska's booms and busts and was quite worried
about the future of his family in the state. He feared that
without oil, the state would not be able to meet its long-
term obligations to education and public pensions. He
believed HB 110 would help Alaska be competitive.
Representative Costello thanked Kati Capozzi for her
service in the military.
6:32:11 PM
JED WHITTAKER, SELF, ANCHORAGE (via teleconference),
testified against HB 110. He noted that in the year 2000
there had been 6 billion people on the planet; this year
there would be 7 billion people, with increased demand for
commodities. He believed it was foolish to provide a tax
break to oil companies that were already making huge
profits.
SCOTT THORSON, SELF, ANCHORAGE (via teleconference), was
strongly in support of HB 110. He believed that it was a
smart move to deal with the progressivity under ACES and
that Alaska needed to be competitive. He felt the cost of
doing business in Alaska was high and that Alaska had some
of the highest taxes, which made the state very
uncompetitive.
6:39:23 PM
PETE STOKES, SELF, ANCHORAGE (via teleconference), urged
the passage of HB 110 to enable the state to become more
competitive. He believed that oil had done wonders for the
state. He was a licensed petroleum engineer and had worked
in Alaska in the profession for the past eight years.
Dipping into the Permanent Fund and introducing state
income taxes would only last so long. He was worried about
future generations in Alaska.
6:43:19 PM
JASON BRUNE, EXECUTIVE DIRECTOR, RESOURCE DEVELOPMENT
COUNCIL, ANCHORAGE (via teleconference), testified in
strong support of HB 110. He reported that the council
supported a strong diversified sector in Alaska. He
believed that testimony that the committee had received
from Admiral Barrett the previous week had been very
accurate in encouraging new production. He believed that
the fair share that Alaska received in the state was the
royalty. He thought the state was very fortunate that the
oil companies found oil; the companies had taken all of the
risk to explore for the resource. He felt a pipeline
shutdown would impact all members of the council in each of
the different areas (such as mining).
Representative Doogan relayed that most of the credit for
the hearing in Anchorage went to Co-Chair Stoltze and his
staff.
6:49:20 PM
CARY TAYLOR, SELF, ANCHORAGE (via teleconference), spoke in
support of HB 110. He believed that without the investment
dollars to keep Prudhoe Bay viable the state would be in
trouble. He equated the situation to being on the Titanic
and that someone needed to turn the wheel to divert
disaster. He was concerned about the businesses of Alaska
and wanted to bring investment into the state.
6:54:47 PM
MIKE MILLIGAN, KODIAK (via teleconference), testified in
opposition to HB 110. He agreed with the governor that jobs
and filling the pipeline were important, but had concerns
about gasline development. He stated that over 65 percent
of production came from state-owned facilities. He relayed
history and advocated for state-owned fields.
6:57:18 PM
DAVID OTNESS, CORDOVA (via teleconference), voiced
opposition to HB 110. He stated concerns about the
largeness of the oil companies. He felt the companies had
been making and breaking governments all over the world,
including Alaska. He felt the companies held all the cards
and did not trust them.
7:01:42 PM
SKIP REIERSON, SEWARD (via teleconference), spoke in
support of HB 110. He opined that the progressivity element
of ACES needed improvement.
7:03:15 PM
MARK MCARTHUR, EAGLE RIVER (via teleconference), spoke in
opposition of HB 110. He spoke as a small business owner.
He did not want to give state money to oil companies, and
thought the bill would hurt the state.
7:06:20 PM
RON JOHNSON (via teleconference) spoke in opposition to HB
110. He suggested giving tax credits after production of
the oil. He wanted revenue to be used to provide long-term
support in the state.
7:08:56 PM
TOM LAKOSH (via teleconference) voiced opposition to HB
110. He thought the bill would be unconstitutional, as it
would not use resource to the maximum benefit of the
Alaskan people. He did not think production would be
increased by reducing taxes. He did not want Alaska to try
and compete with countries that were able to bribe oil
companies. He suggested investing the money in refineries
on the North Slope.
7:14:28 PM
MERRICK PIERCE (via teleconference), spoke in opposition to
HB 110. He suggested dividing up the money and giving each
Alaskan $3,000, or investing the money in a gasline,
resulting in new revenue and adding to the diversification
of the state.
7:19:29 PM
TIM TILSWORTH, FAIRBANKS (via teleconference), voiced
opposition to HB 110. He could support the bill but not
without facts. He supported the oil industry and knew the
state needed jobs. He questioned the number $2 billion. He
did not understand the urgency, as the state has known for
many years about the decline.
7:23:04 PM
CYNTHIA CEVASCO, FAIRBANKS (via teleconference), urged
support of HB 110. She had concerns about Alaska's economy.
She wanted her children to be able to live in the state.
BUTCH STEIN, FAIRBANKS (via teleconference), called in
support of HB 110.
RANDY GRIFFIN, FAIRBANKS (via teleconference), voiced
support of HB 110. He provided history of oil taxes. He had
been in favor of ELF and not in favor of ACES. He wanted
Alaskans to be smart pigs.
7:29:15 PM
KEN HALL, SELF, FAIRBANKS (via teleconference), spoke in
support of HB 110. He was committed to Fairbanks and to the
future of Alaska. He had always worked in private
enterprise in Alaska. He believed Alaska needed to be
competitive.
7:31:40 PM
DON GREY, SELF, FAIRBANKS (via teleconference), vocalized
his opposition to HB 110. He had worked as a financial
advisor. Governor Hammond had always emphasized that it was
important to remember who owned the oil originally. The oil
companies looked out for their shareholders. He did not
thing the amount of taxation under ACES was not
exceptionally heavy. He believed that making changes to
existing law under ACES would be possible.
7:36:29 PM
STU GRAHAM, SELF, MAT-SU (via teleconference), urged
support of HB 110. He thought the pipeline was capable of
carrying 2.5 times more than it was currently. He supported
a tax regimen that would provide oil companies the ability
to explore and develop. He did not believe that the state
would be giving anything away but that the state was
allowing the oil companies to keep money that they had
earned. He believed that the financial stability of the
state depended upon TAPS and the ability to produce on the
North Slope.
7:40:59 PM
GEOFFREY HUMPHREY, SELF, ANCHORAGE (via teleconference),
spoke against the passage of HB 110.
7:41:43 PM
ROGER JENKINS, SELF, ANCHORAGE (via teleconference), was
very supportive of HB 110. He was a constituent of
Representative Doogan and had been very impressed with his
article in the Petroleum News. He discussed Don Young's
pro-stance on the opening of ANWR.
Co-Chair Stoltze remarked that it had been very nice to
hear from Mr. Jenkins.
Representative Doogan relayed that it had been great to
hear Roger's voice.
7:45:49 PM
ALLAN DOLYNNY, SELF, ANCHORAGE (via teleconference), voiced
strong support for HB 110. He and his family loved Alaska
and he was afraid that they would not be able to remain in
the state if the oil companies decided to leave Alaska.
DEBORAH BROLLINI, SELF, ANCHORAGE (via teleconference),
testified in support of HB 110. She discussed the history
of Alaska and felt there was no longer the luxury of
substantial oil in the pipeline. She voiced concerns about
her children's future.
7:52:46 PM
CHUCK BECKER, SELF, ANCHORAGE (via teleconference), voiced
support of HB 110. He thanked the members of the committee
for hearing the public testimony. He was afraid that ACES
had exceeded its optimal therapeutic effect. He believed it
was important to bring industry back to the state.
7:55:05 PM
LYNETTE MORENO-HINZ, SELF, ANCHORAGE (via teleconference),
testified against HB 110. She felt as an Alaska Native that
former governor Palin had created hardships for Alaska. She
worked with homeless children and it was very disheartening
to have to drive the children back in forth to school and
to witness their hardships. She remarked that families and
friends were tired of paying the middleman that was the oil
industry.
8:01:54 PM
YOLANDA DE LA CRUZ, SELF, ANCHORAGE (via teleconference),
was opposed to HB 110. She believed that the state wanted
to give away $2 million to the oil companies. She remarked
that Sarah Palin and Sean Parnell had already given away
$500 million to the oil companies.
Vice-chair Fairclough appreciated all of the opinions that
were heard during the evening.
8:05:09 PM
ADJOURNMENT
The meeting was adjourned at 8:05 PM.
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