Legislature(2011 - 2012)HOUSE FINANCE 519
03/25/2011 03:00 PM House FINANCE
| Audio | Topic |
|---|---|
| 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 25, 2011
3:17 p.m.
3:17:08 PM
CALL TO ORDER
Co-Chair Stoltze called the House Finance Committee meeting
to order at 3:17 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 Reggie Joule
Representative Tammie Wilson
MEMBERS ABSENT
Representative Mark Neuman
ALSO PRESENT
John Sonin, Juneau; Don Smith, Juneau; Stuart Cohen,
Juneau.
PRESENT VIA TELECONFERENCE
Bob Harrison, Nikiski; William Warren, Kenai; Janice
Chumley, Nikiski; Crystal Nygard, MatSu Business Alliance;
Jean Woods, MatSu; Phillip Furbush, MatSu; Clarence
Furbush, MatSu; Ray Tinjum, MatSu; Jim Sykes, Palmer; Marty
Metiva, Self, MatSu; Peter Mooney, Port Alexander; David
Hopkinson, Anchorage; George Smallwood, Homer; Katie
Dawson, Homer; Dave Bachrach, Homer; LuAnne Nelson, Anchor
Point; Jim Nelson, Anchor Point; Mark Mcarter, Small
Business Owner, Anchorage; Ellston Laubson, Anchorage;
Malcom Roberts, Backbone III, Juneau; Lora Reinhold, Eagle
River; Christopher Stefanovich, Anchorage; Larry Houle,
Anchorage; Will Chinn, Anchorage; Eric Reinhold, Eagle
River; Edward King, Fairbanks; Aaron Lojewski, Fairbanks;
Brian Hove, Fairbanks; Ken Larson, North Pole; Linda
Setterberg, Fairbanks; Bob Hunter, Eagle River; Evan
Rowland, Anchorage; Lowell Humphrey, Anchorage; Mary
Pignalberi, Anchorage; Roger Burns, Fairbanks; Hannibal
Grubis, Fairbanks; Roger C. Burggraf, Fairbanks; Cynthia
Henry, Fairbanks; Cheryl Eluska, Anchorage; Karl James,
Anchorage; Kathy Gray, Anchorage; Mike Macy, Anchorage;
John Lawson, Anchorage; Andrea Veach, Anchorage; Thomas
Higgins, Anchorage; Michael O'Connor, Anchorage; Bruce
Harland, Anchorage; Kim Griffith, Anchorage; Joseph Scott
Sr., Talketna; Todd Brown, Anchorage; Jimmy Doyle,
Anchorage; Dr. Hugh Fate, Anchorage; Andy Bond, Anchorage;
Charlie Powers, Kodiak; Jodie Dominguez, Anchorage; Ken
Widmer, Matsu; Rhonda Boyles, Fairbanks; Mike Prax, North
Pole; Bart LeBon, Fairbanks; Adela Jackson, Fairbanks; Jack
Focose, Kenai; Steven McGroarty, Fairbanks; Bill Johnson,
Anchorage; Ray Metcalfe, Self; Steven Borelle, Executive
Director, Alaska Miners Association; Roy Earnest, Self;
Darlene Herbert, Self, Fairbanks; Blythe Campbell, Self;
Tom Maloney, Self; Kelly Walters, Self; Deidre Cronin,
Self; Janet Bounds, Self; John Shively, Self, Anchorage;
Hal Gazaway, Self, Anchorage; Barbara Gazaway, Self,
Anchorage; Paula Easley, Self, Anchorage; Ryan Knight,
Self, Anchorage; Mike Sirofchuck, Self, Kodiak; Shannon
Moore, Self, Anchorage; Neil Black, Self, Anchorage;
Shannon Moore, Self, Anchorage; Brian Newton, President,
Golden Valley Electric Association, Fairbanks; Alan Batten,
Fairbanks; Tim O'Donnell, Self, Juneau; Bertram Smith,
Self, Big Lake; Patricia Anderson, Self, Anchorage; Tom
Hendrix, Self, Palmer; Kathleen Harms, Self, Mat-Su; Cheri
Gillian, Self, Anchorage; Jack Crockett, 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."
3:17:51 PM
PUBLIC TESTIMONY
BOB HARRISON, NIKISKI (via teleconference), spoke in
support in HB 110.
WILLIAM WARREN, KENAI (via teleconference), voiced
opposition to HB 110. He called it a give-away. He thought
the oil companies could tell the state was worried. He had
concerns about the Trans Alaska Pipeline System (TAPS) and
wanted an all-Alaska line built. He wanted the state to do
business with companies interested in Alaska. He
recommended considering SB 85.
3:23:30 PM
JANICE CHUMLEY, NIKISKI (via teleconference), spoke in
opposition to HB 110. She believed the oil companies had
enough breaks, and that there was no guarantee of
additional jobs. She suggested giving the extra money to
Alaskans or investing in sustained energy programs.
CRYSTAL NYGARD, MATSU BUSINESS ALLIANCE (via
teleconference), testified in support of HB 110. She spoke
for a group of businesses in support of the governor's
proposal. She noted the decline of exploration on the North
Slope. She did not think lawmakers were listening to
industry.
3:27:56 PM
JEAN WOODS, MATSU (via teleconference), voiced support for
HB 110. She wanted Alaska to be "open for business."
PHILLIP FURBUSH, MATSU (via teleconference), testified in
opposition to HB 110. He did not think there was a
correlation between state support and investment made by
oil companies. He was concerned the income of companies was
used for other purposes such as oil-spill clean-up. He
recommended diversifying energy sources and economic
development in the state.
3:32:08 PM
CLARENCE FURBUSH, MATSU (via teleconference), voiced
opposition to HB 110. He did not want to give money to oil
companies, but wanted to invest in the development of
alternative energy.
RAY TINJUM, MATSU (via teleconference), spoke against HB
110. He thought oil companies should drill and the
legislature should fill the pipeline. He recommended giving
financial support when the oil got to the pipe. He
recommended developing alternative energy.
3:35:11 PM
JIM SYKES, PALMER (via teleconference), spoke in opposition
to HB 110. He recalled the Economic Limit Factor (ELF) tax,
which was opposed by the oil companies at the time, but
when it passed, they went on with business. He did not
think the problem was taxes, but price. He suggested
splitting the profit 50/50 between the state and the oil
companies, after paying the federal government.
3:39:15 PM
MARTY METIVA, SELF, MATSU (via teleconference), voiced
support for HB 110. He was concerned that diminished supply
of oil would diminish the quality of life in Alaska.
PETER MOONEY, PORT ALEXANDER (via teleconference),
testified in opposition to HB 110. He thought it would
represent a give-away of state money. He wanted more
refineries in the state.
DAVID HOPKINSON, ANCHORAGE (via teleconference), spoke in
support of HB 110. He thought the measure would be good for
business.
3:44:11 PM
GEORGE SMALLWOOD, HOMER (via teleconference), spoke in
opposition to HB 110. He asked for consideration of SB 85
as a substitute.
KATIE DAWSON, HOMER (via teleconference), stated opposition
to HB 110. She felt the oil companies were making enough
money. She felt that citizens were paying for the clean-up
and effects of oil. She believed that giving roll-backs was
unconstitutional. She was concerned about having to give up
the permanent fund dividend and the loss of federal
funding. She noted that oil would run out some day and felt
oil companies should be part of the solution and support
green jobs.
3:48:39 PM
DAVE BACHRACH, HOMER (via teleconference), testified in
opposition to HB 110. He quoted an article in a petroleum
journal. He thought Alaska Clear and Equitable Share (ACES)
was working, and that Alaska could not afford to give
additional money. He recommending taking the money and
investing in Alaska and in Alaskans jobs. He did not think
oil companies would abandon Alaska with the oil at the
current high price. He referred to testimony by the Office
of Management and Budget (OMB) about an increase in oil
exploration.
3:52:09 PM
LUANNE NELSON, ANCHOR POINT (via teleconference), voiced
opposition to HB 110. She did not think ACES was a problem,
and believed there were provisions for exploration.
Representative Gara provided his phone number to get the
information referred to by Mr. Bachrach.
Co-Chair Thomas asked that the information be given to the
whole committee.
JIM NELSON, ANCHOR POINT (via teleconference), spoke
against HB 110. He noted the difficulties and expense of
building a gasline. He thought the money that would be
given away to oil companies could be used to build a
gasline and support infrastructure. He referred to those
who were doing well because of ACES.
3:56:30 PM
MARK MCARTER, SMALL BUSINESS OWNER, ANCHORAGE (via
teleconference), testified against HB 110. He did not want
to give public money to the oil companies. He did not think
the state budget could handle the expense without hurting
the citizens. He challenged the legislature to start a new
oil company owned by the state, since the state was already
involved in the oil business.
4:01:26 PM
ELLSTON LAUBSON, ANCHORAGE (via teleconference), testified
against HB 110. He felt that reducing taxes would make the
Alaskan asset more attractive for leveraging.
4:05:37 PM
JOHN SONIN, JUNEAU, spoke against HB 110. He felt that
maximizing profit would not support human welfare.
4:07:02 PM
MALCOM ROBERTS, BACKBONE III, JUNEAU (via teleconference),
testified against HB 110. He stated concerns about
situations around the globe. He thought it was too soon to
make the decision. Backbone III was started by Governor
Hickel when BP merged with Atlantic Richfield and wanted to
include ARCO, which would have resulted in a company
controlling 70 percent of Prudhoe Bay and TAPS. He referred
to history; Backbone III did not support HB 110, and wanted
to wait until there was more information.
4:10:11 PM
LORA REINHOLD, EAGLE RIVER (via teleconference), testified
in support of HB 110. She highly recommended a Commonwealth
North report, "Alaska's Oil Investment Tax Structure:
Establishing a Competitive Alaska." She felt that ACES was
a mistake, and needed to be corrected. She wanted her
children to be able to be employed in Alaska.
4:12:23 PM
CHRISTOPHER STEFANOVICH, ANCHORAGE (via teleconference),
spoke against HB 110. He provided information about the
situation in North Africa; the reason authoritarian regimes
have lasted because of the economic model used. He felt
control of natural resources should be commonly held by
citizens.
4:14:27 PM
LARRY HOULE, ANCHORAGE (via teleconference), spoke in
support of HB 110. He believed the architectural business
he worked for was successful because of the oil industry in
the state and was concerned about the decline in
throughput. He reported employment history, including in
the oil industry. He wanted to incentivize oil company
investment in the state.
4:17:30 PM
WILL CHINN, ANCHORAGE (via teleconference), spoke in
support of HB 110. He felt the lack of North Slope
exploration and development was a clear result of producers
pushing back against current high taxes on oil and gas
production, which was already the most expensive in the
world. He was concerned about development outside of Alaska
and blamed the high taxes. He urged quick action.
4:19:51 PM
ERIC REINHOLD, EAGLE RIVER (via teleconference), spoke in
support of HB 110. He reviewed experience in the oil
industry. He felt that ACES was inefficient in terms of
promoting oil development and uncompetitive. He stressed
that oil prices were high, but oil production was down. He
believed there was still a great deal of development
potential.
4:23:43 PM
EDWARD KING, FAIRBANKS (via teleconference), spoke in
support of HB 110. He supported oil companies developing
the resource and believed the effort was cooperative.
4:24:37 PM
AARON LOJEWSKI, FAIRBANKS (via teleconference), testified
in support of HB 110. He believed TAPS was Alaska's
economic lifeline and thought incentivizing throughput was
essential.
4:25:12 PM
BRIAN HOVE, FAIRBANKS (via teleconference), testified in
support of HB 110. He referred to a graph showing declining
oil production. He believed the legislation would encourage
more exploration.
4:26:35 PM
KEN LARSON, NORTH POLE (via teleconference), spoke against
HB 110. He stressed that oil taxes should remain as they
were. He felt big oil companies were pushing their case and
not providing any assurance to the state. He stated
concerns about the high costs of fuel.
4:30:23 PM
LINDA SETTERBERG, FAIRBANKS (via teleconference), spoke in
support of HB 110. She was concerned about the future of
Alaska and the prospects of her family in the state.
4:32:09 PM
BOB HUNTER, EAGLE RIVER (via teleconference), testified in
support of HB 110. He was involved in the state's oil and
gas industry as a geologist. In 1989, TAPS production was
strong, but has declined significantly. He wanted new
exploration and development, which could take many years to
throughput.
4:33:51 PM
EVAN ROWLAND, ANCHORAGE (via teleconference), spoke in
support of HB 110. He felt the problem had to be addressed
as soon as possible to get business moving again.
4:34:27 PM
LOWELL HUMPHREY, ANCHORAGE (via teleconference), testified
in support of HB 110. He felt ACES had put his family's
future at risk. He pointed to other tax incentives that had
worked in the state.
4:35:47 PM
MARY PIGNALBERI, ANCHORAGE (via teleconference), spoke in
support of HB 110.
4:36:46 PM
ROGER BURNS, FAIRBANKS (via teleconference), testified
against HB 110. He reported experience working for Shell
Oil, which had to shut down production. He stressed that a
corporation's mission was to maximize profits and was
concerns about giving them more money.
4:38:55 PM
HANNIBAL GRUBIS, FAIRBANKS (via teleconference), spoke
against HB 110. He did not think the numbers added up. He
believed the decision was premature. He felt HB 110 was
based on politics and not economics.
4:41:07 PM
ROGER C. BURGGRAF, FAIRBANKS (via teleconference),
testified in support of HB 110. He thought ACES needed to
be reformed. He was concerned that Alaska be competitive in
the world market, and thought incentives were needed
because of the expense of operating in the state.
4:43:38 PM
CYNTHIA HENRY, FAIRBANKS (via teleconference), spoke in
favor of HB 110. She spoke as a business owner and was
concerned about economic instability in the state.
4:46:55 PM
CHERYL ELUSKA, ANCHORAGE (via teleconference), spoke in
support of HB 110. She wanted a future for her family and
friends.
4:48:03 PM
KARL JAMES, ANCHORAGE (via teleconference), testified in
support of HB 110. He believed all businesses wanted to
make a profit. He thought lower progressivity would
stimulate economic activity.
4:51:21 PM
KATHY GRAY, ANCHORAGE (via teleconference), spoke in
support of HB 110. She did not feel progressivity was
working and wanted ACES to be revamped as soon as possible.
4:53:03 PM
MIKE MACY, ANCHORAGE (via teleconference), testified
against HB 110. He felt the underlying assumption that the
give-away would encourage exploration was wishful thinking.
He felt big oil companies preferred to look for big oil
deposits ("elephants") and felt that the companies would
spend the $2 billion per year outside the state. He urged
the legislature to ask the Regulatory Commission of Alaska
to investigate whether any of the significant decline was
politically motivated and therefore artificial. He listed
reasons why he did not believe that gas was not being
developed in the state.
4:57:29 PM
JOHN LAWSON, ANCHORAGE (via teleconference), testified in
support of HB 110. He stated concerns about the economic
future of his children without enough throughput.
4:58:53 PM
ANDREA VEACH, ANCHORAGE (via teleconference), testified in
opposition to HB 110. She read from an article by Citizens
for Tax Justice, "What Oil and Gas Companies Extract from
the American Public." The article states that:
The evidence indicates that the public receives very
little benefit in return for subsidizing oil and gas
through the tax code. People associated with the oil
and gas industry often argue that the tax breaks they
enjoy encourage them to locate and extract more oil
and gas, which allows them to increase supply and thus
keep energy prices down below the level they would
otherwise reach. But among the largest five oil
companies, less than 10 percent of profit goes to
exploration for new oil fields. High profits do not
encourage exploration. In fact, in the top five oil
companies, managers direct most of their excess cash
to dividends and stock repurchases, both of which
drive up the companies' share prices and the
executives' stock option values. The percentage of net
profits directed towards dividends and stock
repurchases for the top five oil companies was 58
percent in 2005, 73 percent in 2006, and 72 percent in
2007, 71 percent in 2008, and 89 percent in 2009.
These figures are high in comparison to other
industries. To the extent that tax loopholes targeting
the oil and gas industry boost their profits, there is
no evidence that the additional profits lead the
companies to explore for more oil so that they can
increase the supply.
Ms. Veach believed the assumption that the oil companies
would so what was hoped for in return for the tax break
could be wrong.
5:02:11 PM
THOMAS HIGGINS, ANCHORAGE (via teleconference), testified
in opposition to HB 110. He did not think the bill should
be compared to other incentives offered to other
industries. He believed the film and tourist industries did
not take Alaska away for profit, but brought people to
Alaska. He thought the oil companies were making high
profits already and would stay. He encouraged gas
development.
5:06:16 PM
MICHAEL O'CONNOR, ANCHORAGE (via teleconference), testified
in support of HB 110. He disagreed with previous testimony
that money made from the oil industry left the state. He
commented on the changes resulting from the ACES
legislation. He did not think ACES was working. He listed
companies that had come to the state to explore and the
money they had spent to develop the resource. He pointed
out that the new companies had not spent money. He thought
the first priority was to keep oil flowing in the pipeline
and that incentives alone would keep big oil companies in
the state. He noted that 71 percent of oil revenue went to
the state or federal government.
5:10:26 PM
BRUCE HARLAND, ANCHORAGE (via teleconference), testified in
favor of HB 110. He described experience in the industry.
He stated that investment decisions that oil companies made
were long-lead items, and that companies were competing on
a world-wide market for infrastructure projects. He thought
the legislation would improve the investment climate in the
state.
5:13:01 PM
KIM GRIFFITH, ANCHORAGE (via teleconference), testified in
support of HB 110. She wanted her family to have
opportunity in the state and believed the legislation was
necessary as soon as possible.
5:14:39 PM
JOSEPH SCOTT SR., TALKETNA (via teleconference), testified
in opposition to HB 110. He saw the legislation as a
violation of ethics because of conflict of interest for the
governor. He also felt that money should not be given to
oil companies, as it would treat for-profit companies as
though they were nonprofit, charity organizations. He did
feel something needed to be done, but that HB 110 was not a
legitimate solution.
5:17:14 PM
TODD BROWN, ANCHORAGE (via teleconference), testified in
opposition to the legislation. He pointed to large profits
made by oil companies and questioned testimony that 70
percent of the profit stayed in the state. He spoke about
strategies in North Dakota to build an infrastructure to
make profit. He urged a larger perspective.
5:21:06 PM
JIMMY DOYLE, ANCHORAGE (via teleconference), testified in
support of HB 110. He discussed experience with business.
investment.
5:22:20 PM
HUGH FATE, ANCHORAGE (via teleconference), testified in
support of HB 110. He spoke about nations in the Middle
East that were suffering as a result of poor tax
structures. He described the business practices of oil
companies, and stated that those who have the lowest
expenses and the highest profit margins get the most money.
He reminded the committee that there was both fact and
fiction in testimony.
5:25:15 PM
ANDY BOND, ANCHORAGE (via teleconference), testified in
support of HB 110. He spoke as an engineer and compared
doing business in Texas with doing business in Alaska
related to investment. He believed progressivity was a
problem for companies. He spoke to declining throughput. He
wanted increased tax credits for new investment and reduced
progressivity at high oil prices.
5:27:29 PM
CHARLIE POWERS, KODIAK (via teleconference), testified in
support of HB 110. He described Alaskan lifestyle for
individuals and companies. He stated concerns about
declining throughput in TAPS. He believed that investment
dollars followed the highest return; since 90 percent of
the state's revenue was from oil, he felt it was essential
to make tough decisions and focus on becoming competitive.
5:30:38 PM
JODIE DOMINGUEZ, ANCHORAGE (via teleconference), testified
in opposition to HB 110. She thought it was good business
for oil and gas companies to pay less taxes; she wanted
legislators to treat Alaska like a company and protect the
state's assets.
5:31:52 PM
DON SMITH, JUNEAU, spoke in opposition to HB 110, unless it
was amended. He supported the oil industry. He supported an
incentive program rather than a straight reduction of
taxes. He did not want the profit to go outside the state.
He suggested amending the bill with incentives.
5:35:19 PM
STUART COHEN, JUNEAU, testified in opposition to HB 110. He
agreed oil was important in the state, but questioned the
bill's ability to accomplish what was needed. He pointed
out that the bill would give a blanket tax deduction for
all production, including areas that were already
developed. He felt the bill would reward companies for
sitting on developments already made and would not require
new exploration or the creation of new jobs. He did not
think it was good business to have vague promises. He
questioned a plan that would create a $2 billion budget
deficit.
5:39:42 PM
KEN WIDMER, MATSU (via teleconference), testified in
opposition to HB 110. He was not opposed to changes in the
tax system, but he thought the changes should be made by
non-partisan experts in the field. He suggested that the
legislation be completely rewritten. He wanted something
back from the oil companies in exchange for the funds.
5:41:30 PM
RHONDA BOYLES, FAIRBANKS (via teleconference), testified in
support of HB 110. She admitted that the bill needed
amending, but believed it was a step in the right
direction. She stated that ACES had to be corrected and
that the tax incentive was essential for the strength of
the economy of Alaska. She referred to someone from North
Dakota who had said that North Dakota "was taking Alaska's
oil industry and doing something with it." However, North
Dakota did not have the infrastructure. She stated
concerns.
5:46:29 PM
MIKE PRAX, NORTH POLE (via teleconference), testified in
support of HB 110. He believed the best strategy was
viewing the oil companies as partners and not competitors.
He thought oil prices were a bit high and needed to be
adjusted.
5:48:48 PM
BART LEBON, FAIRBANKS (via teleconference), spoke in
support of HB 110. He urged the immediate passage of the
legislation. He cited long experience as a banker in
Fairbanks. He believed that without action, the oil
companies would leave Alaska. He stated concerns about the
declining TAPS throughput.
5:51:26 PM
ADELA JACKSON, FAIRBANKS (via teleconference), spoke in
support of HB 110. She wanted to develop Alaska's resources
responsibly and to diversify the economy. She spoke in
favor of the mining industry. She believed the legislation
would bring investment back to Alaska and stimulate the
economy. "No oil, no jobs, no future, no way."
5:52:52 PM
JACK FOCOSE, KENAI (via teleconference), testified in
support of HB 110. He believed that incentives and tax
breaks worked and cited the experience of a company that
had moved to North Dakota. He spoke in support of past
decisions for Cook Inlet tax breaks.
5:54:22 PM
STEVEN MCGROARTY, FAIRBANKS (via teleconference), spoke in
opposition to HB 110. He listed expected exploration plans
by companies for the near future and stated that Alaska
would continue to provide good options for oil industry
investment. He suggested funding hydropower, wind,
geothermal, tidal power projects and roads-to-resources for
mineral development and ice-road access to villages, which
could create annual sustainable jobs in rural Alaska and
bring down the cost of fuel for the villages.
5:57:15 PM
BILL JOHNSON, ANCHORAGE (via teleconference), testified
against HB 110. He referred to industry testimony and did
not think there would be exploration by the big companies.
He stated concerns about TAPS infrastructure. He wanted the
state to look at developing other industries. He did not
believe that the state would see a gasline built.
6:00:49 PM
RAY METCALFE, SELF (via teleconference), voiced his
opposition to HB 110. He had been in the legislature when
ELF was passed. He had been skeptical of the bill
originally and regretted voting for it. He told a personal
story about his experience tracking down a memo put out by
Sohio (BP in Alaska) telling stockholders how much money
was being made from Alaskan investments, the opposite of
what their lobbyists had been telling legislators. He
believed that ELF had cost the state $100 billion over the
past 30 years. The people involved in the passage of the
bill went on to work for oil companies. He thought it was
important to look at why the newspapers in Anchorage and
Fairbanks had not published profits that were made by the
oil companies. He stated that Exxon, ConocoPhillips, and BP
(and others) had signed contracts in Iraq to produce their
oil for less than $2 per barrel, while they were getting
$20 in Alaska. He did not want tax breaks to be given to
the companies except on the increase.
6:07:05 PM
STEVEN BORELLE, EXECUTIVE DIRECTOR, ALASKA MINERS
ASSOCIATION (via teleconference), testified in support of
HB 110. He did not believe that anything except oil flowing
through the pipeline would ensure the security for Alaska's
future.
6:08:06 PM
ROY EARNEST, SELF, ESTER (via teleconference), was opposed
to HB 110. He agreed with Mr. Metcalfe. He pointed out that
the information referred to was open to the general public.
He understood the information and was not swayed by people
lobbying for the oil companies. He did not believe that the
oil would dry up or disappear. He felt that tax breaks to
the oil companies were ridiculous.
6:10:01 PM
DARLENE HERBERT, SELF, FAIRBANKS (via teleconference),
vocalized her opposition to HB 110. She did not believe
that oil companies cared about Alaskans or the legislators
and only cared about their stockholders. She told a
personal story about several visits to the North Slope. She
had recently been to the job fair in Fairbanks and she
emphasized that there were a significant amount of jobs
available in Fairbanks. She believed that Alaska was too
dependent on oil.
6:13:19 PM
BLYTHE CAMPBELL, SELF (via teleconference), supported HB
110. She did not agree that taking money away from private
industry would benefit Alaskans. She believed that the need
for legislators to be reelected every two or four years
made it difficult for them to take a long view of the
economy in Alaska. She wanted to make HB 110 retroactive to
January 2011 and start another oil boom.
6:15:20 PM
TOM MALONEY, SELF (via teleconference), stated his support
of HB 110. He referred to earlier testimony in Anchorage on
the legislation; he felt it was unanimous that people felt
changes were needed in ACES. He referred to a report by
Commonwealth North (pages 5 and 12):
If Alaskans are to maintain their present level of
economic well-being, the governor and legislature must
make increasing oil production the highest priority.
Nationally, there is a growing awareness of the
detrimental impact high taxes can have on the private
sector and thereby the general economy. Alaska has the
opportunity to heed this impact by making improvements
to the current oil tax structure. Now is the time to
act while there is still an opportunity to strengthen
Alaska's economy through increased oil production.
…100 percent of the time, the Department of Revenue's
forecasts have been too high in predicting oil
production.
Mr. Maloney questioned whether TAPS would still be
operating in five years without greatly needed changes.
6:17:27 PM
KELLY WALTERS, SELF (via teleconference), testified against
HB 110. He did not want the committee to pass the bill
before it had all of the data and facts. He referred to
testimony made by Commissioner Sullivan of the Department
of Natural Resources (DNR). He believed that it was
important to promote Alaska and that it was a great place
to do business. He referred to high rankings for the state.
He claimed that the development of wells and employment
under ACES was up. He noted that Repsol was investing
three-quarters of a billion dollars on exploratory wells in
new fields on the North Slope, and Great Bear Petroleum and
other companies had production plans as well.
6:21:56 PM
DEIDRE CRONIN, SELF (via teleconference), emphasized
support of HB 110. She reported that she worked in the non-
profit sector and wanted to raise their children in Alaska.
She was concerned that there had only been one well drilled
during the current year, while North Dakota was doing well.
She thought Alaskans should be proud to be an oil state.
6:23:18 PM
JANET BOUNDS, SELF (via teleconference), voiced support of
HB 110. She felt there was a lack of work in the
construction sector. She believed there needed to be
incentive for the oil industry to do business in Alaska.
6:24:48 PM
JOHN SHIVELY, SELF, ANCHORAGE (via teleconference), was in
favor of passage of HB 110. He discussed history of oil
taxes of as a former Commissioner of DNR. He had believed
there was a need to adjust the tax system when ACES was
being developed, but felt the focus went from trying to fix
the problem to trying to punish the oil industry. He
believed the punitive tax system had to be fixed and that
the evidence showed (in the Frasier Report) that oil
companies did not want to invest in Alaska on-shore.
6:26:36 PM
HAL GAZAWAY, SELF, ANCHORAGE (via teleconference),
testified that he was against HB 110. He felt that under
ELF, Alaska had some of the cheapest oil in the world and
that under ACES, the state was competitive. He did not see
that the bill was supported by commitment from any oil
company to drill more or bring more oil into the pipeline.
He pointed out that he would not mind paying more taxes.
6:28:14 PM
BARBARA GAZAWAY, SELF, ANCHORAGE (via teleconference), was
opposed to HB 110. She did not buy all of the "gloom and
doom" that was being put out by the oil corporations and
others in the state. She felt the corporations were making
a lot of money, including through tax subsidies, which were
distributed to shareholders instead of being used for
research and development of alternatives. She noted that
net profits had gone from 58 percent in 2005 to 89 percent
in 2009. She did not think the bill would require new
development in exchange for the $2 billion "gift." She
pointed out that the non-partisan Tax Foundation 2011
report had ranked Alaska as second in having the best
climate for business.
6:31:42 PM
PAULA EASLEY, SELF, ANCHORAGE (via teleconference), spoke
in support of HB 110. She referred to friends in business
who wanted to leave California because of so much
regulation, but the economy there was so diverse. She
pointed out that Alaska had only one major industry. She
wanted to eliminate ACES for a couple years and see whether
the oil companies increased exploration and development; if
they did not, ACES could be brought back.
6:33:36 PM
RYAN KNIGHT, SELF, ANCHORAGE (via teleconference), urged
against the passage of HB 110. She pointed out that the
country was in a recession and she did not want to put the
money into oil companies. She wanted the money to go
towards job development.
6:35:22 PM
MIKE SIROFCHUCK, SELF, KODIAK (via teleconference), voiced
opposition to HB 110. He wanted more information before
making the decision. He believed the oil companies were
making high profits and were interested in increasing those
profits, which would be at the expense of the citizens of
Alaska. He pointed out that residents of North Dakota paid
an income tax and he believed that Alaskans were fortunate
to not have to pay income tax, because of oil taxes. He
supported tax breaks for new exploration and developing
other sources of income, but did not support using the
proposed oil tax structure.
6:37:47 PM
SHANNON MOORE, SELF, ANCHORAGE (via teleconference), spoke
against the legislation. She pointed out that the
previously mentioned Frasier Institute Report had been
pulled and was not valid. (Reception interrupted; continued
testimony below.)
6:39:05 PM
NEIL BLACK, SELF, ANCHORAGE (via teleconference), urged a
no vote for HB 110. He communicated that oil companies were
making record profits and received billions of dollars in
tax subsidies; some did not pay any federal income tax. He
pointed out that oil companies were complaining about the
level of taxes in North Dakota. He recommended a website
called "fixthetax.org" and believed that oil companies were
complaining unnecessarily. He noted that Repsol and Great
Bear Petroleum were coming to the North Slope for
exploration and production, in spite of ACES, and that
there were more businesses opening in Anchorage. He agreed
that oil was needed in the pipeline, but did not want to
pay more money to the companies and increase their profits.
6:41:12 PM
SHANNON MOORE, SELF, ANCHORAGE (via teleconference), was
against HB 110. She discussed that the Fraser Institute
Report had originally been used by the administration, but
they stopped using it because it did not support HB 110.
She pointed out difference between Alaska and North Dakota.
She asserted that the legislature held the Alaskan people's
collective bargaining for collective mineral rights given
through the state constitution.
Ms. Moore relayed a story about people visiting from
outside Alaska who had the impression that Alaska was not a
good place to do business. She believed that the oil
companies were "crying poor" in spite of record profits,
and the administration had not ever pushed back. She argued
that Alaska was not in a recession and there were current
jobs that were helping our economy. She pointed to projects
in various districts that were supporting the private
sector.
Representative Gara thanked Ms. Moore and others for
remaining active in Alaska's politics.
6:45:48 PM
BRIAN NEWTON, PRESIDENT, GOLDEN VALLEY ELECTRIC
ASSOCIATION, FAIRBANKS (via teleconference), spoke in favor
of HB 110. He believed that lowering taxes on the oil
industry would increase production and help open Alaska for
business.
6:46:58 PM
ALAN BATTEN, FAIRBANKS (via teleconference), was opposed to
HB 110. He did not see anything wrong with the current tax
structure in Alaska. He reviewed profits by various
companies, which he thought were ample. He thought
investments had increased as well. He did not believe that
giving away $2 billion to the oil companies would improve
the situation.
6:48:25 PM
TIM O'DONNELL, SELF, JUNEAU (via teleconference), stated
opposition to HB 110. He reported that he had worked on the
TAPS pipeline and at Prudhoe Bay, and had helped with the
clean-up after the Exxon Valdez oil spill. He addressed the
subject of tax credits for giving jobs to Alaskans. He felt
that workers had been used pawns in the game of taxation.
He referred to amendments that had been introduced in the
past by Representative Guttenberg aimed at giving tax
credits for hiring Alaskan workers and consistently voted
down. He pointed to HB 82 and SB 71, which were aimed at
Alaska hire, which he did not think should be contingent on
passage of HB 110. He did not want the oil industry to be
able to apply for tax breaks by voluntarily hiring Alaska
workers, while there were thousands of non-resident jobs in
the oil industry and high rates of unemployment in the
state.
6:51:57 PM
BERTRAM SMITH, SELF, BIG LAKE (via teleconference), spoke
against HB 110. He believed there was a limited amount of
oil on the North Slope and that oil prices would continue
to rise as resources became more limited. He referred to
profits made in Libya from oil companies. He opined that
Alaska's oil should be kept in state; if not, it should be
paid well for.
6:54:36 PM
PATRICIA ANDERSON, SELF, ANCHORAGE (via teleconference),
was against HB 110. She read from the state constitution
about political power and government being inherent in the
people and instituted for the good of the people as a
whole. In addition, the constitution stipulates that
natural resources are for the good of the people, not the
good of a company. Therefore, the oil was owned by 700,000
Alaskans. She did not believe giving away $2 billion
without promise of oil production or Alaskan jobs was for
the good of the people.
6:55:34 PM
TOM HENDRIX, SELF, PALMER (via teleconference), testified
in support of HB 110. He believed that Alaskans should be
able to enjoy a profit, but also acknowledged that
corporations were in Alaska to make money. He felt that
Alaskan roads, schools, and libraries were funded by oil.
6:57:05 PM
KATHLEEN HARMS, SELF, MAT-SU (via teleconference), was
against HB 110. She believed that giving $2 billion to the
oil companies would not help the state. She thought the oil
would run out and the oil companies would be long gone.
6:58:27 PM
CHERI GILLIAN, SELF, ANCHORAGE (via teleconference), voiced
support of HB 110. She was concerned that without the oil
companies, investment in the state would decline, jobs
would disappear, and people would leave the state. She
believed that state policies were stifling exploration
development and development by the oil industry. She
believed the support of the oil and gas industry was very
important to businesses in the state. She urged immediate
action.
7:00:54 PM
JACK CROCKETT, SELF, ANCHORAGE (via teleconference),
vocalized support for HB 110.
Co-Chair Stoltze thanked the public for their testimony.
HB 110 was HEARD and HELD in committee for further
consideration.
7:02:15 PM
ADJOURNMENT
The meeting was adjourned at 7:02 PM.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 110 Guttenberg Handout 032511.pdf |
HFIN 3/25/2011 3:00:00 PM |
HB 110 |