Legislature(2003 - 2004)
05/10/2004 12:55 PM Senate RES
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HCR 39 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
SENATE RESOURCES STANDING COMMITTEE
May 10, 2004
12:55 p.m.
TAPE(S) 04-52
MEMBERS PRESENT
Senator Scott Ogan, Chair
Senator Ralph Seekins
Senator Ben Stevens
MEMBERS ABSENT
Senator Thomas Wagoner, Vice Chair
Senator Fred Dyson
Senator Kim Elton
Senator Georgianna Lincoln
COMMITTEE CALENDAR
CS FOR HOUSE CONCURRENT RESOLUTION NO. 39(RLS) am
Establishing the Alaska Royalty and Revenue Committee.
MOVED SCS CSHCR 39(RES) OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: HCR 39
SHORT TITLE: ALASKA ROYALTY AND REVENUE TASK FORCE
SPONSOR(s): RULES BY REQUEST OF ECON DEV, INT TRADE & TOURISM
05/06/04 (H) READ THE FIRST TIME - REFERRALS
05/06/04 (H) RLS
05/06/04 (H) RULES TO CALENDAR PENDING REPORT
05/06/04 (H) MOVED TO BOTTOM OF CALENDAR
05/06/04 (H) IN RULES
05/06/04 (H) RLS AT 1:30 PM CAPITOL 124
05/06/04 (H) Moved CSHCR 39(RLS) Out of Committee
05/06/04 (H) MINUTE(RLS)
05/07/04 (H) RLS RPT CS(RLS) NT 4DP 3NR
05/07/04 (H) DP: COGHILL, KOTT, MCGUIRE, MORGAN;
05/07/04 (H) NR: BERKOWITZ, KERTTULA, ROKEBERG
05/07/04 (H) TRANSMITTED TO (S)
05/07/04 (H) VERSION: CSHCR 39(RLS) AM
05/08/04 (S) READ THE FIRST TIME - REFERRALS
05/08/04 (S) RES
05/10/04 (S) RES AT 0:00 AM BUTROVICH 205
WITNESS REGISTER
Representative Cheryll Heinze
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Sponsor of HCR 39.
Mr. Pat Owens, Executive Director
Resource Development Council (RDC)
No address provided
POSITION STATEMENT: Opposes HCR 39.
Ms. Judy Brady, Executive Director
Alaska Oil and Gas Association
No address provided
POSITION STATEMENT: Opposes HCR 39.
Mr. Larry Howell, General Manager
Alaska Support Industry Alliance
POSITION STATEMENT: Opposes HCR 39.
ACTION NARRATIVE
TAPE 04-52, SIDE A
HCR 39-ALASKA ROYALTY AND REVENUE TASK FORCE
CHAIR SCOTT OGAN called the Senate Resources Standing Committee
meeting to order at 12:55 p.m. Present were Senators Ben
Stevens, Dyson, Seekins and Chair Scott Ogan. The first order of
business to come before the committee was CSHCR 39(RLS).
SENATOR WAGONER moved to adopt SCS CSHCR 39(RES), version \W.
There were no objections and it was so ordered.
REPRESENTATIVE CHERYLL HEINZE explained that many of the royalty
taxes had not been looked at since the 1980's and the emphasis
should be on how competitive Alaska is globally. She said the
whole point to forming this committee is that it needs to send a
message to industry that two consultants are being hired to do
the work, the legislature isn't.
MR. PAT OWENS, Executive Director, Resources Development Council
(RDC), said RDC is a statewide non-profit organization that
represents companies from Alaska's oil and gas, mining, tourism
and fishing industries. He was concerned with the resolution for
a couple of reasons. It was not introduced until May 6, only
four days earlier, and it needs more time to be thoroughly
evaluated. He thought HCR 39 could send negative signals to
existing and perspective investors in Alaska's oil patch. He
urged members to focus on improving Alaska's competitiveness in
order to grow the state's oil and gas industry rather than
focusing on increasing taxes to the existing industry if the
resolution passes.
CHAIR OGAN agreed that the bill was rushed and that there are
significant changes from the original version. He asked if Mr.
Owens wanted to comment on the changes, particularly page 1,
line 13. The MacKenzie Report, commissioned by the Alaska Oil
and Gas Authority (AOGA) said basically that Alaska is not that
competitive, that it needs to do more to encourage the industry.
He said the legislature needs good information to make good
policy.
MR. OWENS said he appreciated the attention he is paying to the
issue.
MS. JUDY BRADY, Executive Director, Alaska Oil and Gas
Association, cautioned the committee against passing this
resolution. She relayed a question that her exploration and
production companies have heard from the headquarter offices: If
the legislature increases oil and gas taxes in Alaska, taxes on
their projects increase? At least two companies are making
decisions now about whether or not to invest in new projects
that will determine new production 5 to 10 years from now. She
said HCR 39 is sending a mixed message to the industry that
Alaska is considering raising their taxes. Her companies want
Alaska policies to be clear and stable.
CHAIR OGAN said he thought that could be an accurate perception
of the original resolution, but that is why it was changed.
Legislative Budget and Audit (LB&A) has the authority to do a
study if it wishes and it should already have accurate
information.
MS. BRADY suggested that legislation should not be introduced
because of the message it sends. Right now a lot of phone calls
are being made [about taxes going up] and that's not good. LB&A
could be simply directed to do a study.
CHAIR OGAN asked her to pass on the message that HCR 39 is
different and have them comment on what is before them now. He
has worked awfully hard to encourage development in the state
and is not trying to discourage it in any way.
MR. LARRY HOWELL, General Manager, Alaska Support Industry
Alliance, said his 25,000 to 30,000 contracting members are
concerned with HCR 39 because it creates the perception that oil
and gas taxes will be increased although the bill has obviously
been changed. This bill focuses on the oil and gas industry and
this is something that colleagues on both sides have told his
members they would not do.
In addition, the Alliance believes this is very poor timing as
gas line negotiations are going on right now that are important
to the industry. "Increased taxation and a change to the Alaskan
fiscal tax regime slows capital spending. I kid you not,
contractors are on the first lines when it comes to slowed
capital spending. We're the first to feel the pain when it comes
to layoffs and that decrease in capital spending."
He suggested that a good study could be done by four of five
firms worldwide, but it would be very expensive. It would most
likely demonstrate that Alaska is clearly a very expensive and
costly place for investment. It needs to be competitive around
the globe.
CHAIR OGAN said that 90 percent of the work he does in the
legislature is on resource issues. He probably doesn't need a
study to tell him that Alaska is challenged with the highest
operating expenses in the world. It takes years to attract new
money for a new project to the state, but it only takes 15
minutes at a board meeting to have that money go away. This
resolution has been changed to tell LB&A to give the legislature
good information to make good decisions. He has a constitutional
responsibility to make the best choices for Alaska.
MR. HOWELL said he appreciated his efforts.
CHAIR OGAN moved to amend the title on line 1 by adding
"competitiveness of the" in front of "state's oil and gas
"requesting a study and report on the competitiveness of the
state's oil and gas tax and royalty structures". He then put
forth Amendment 1, again. There were no objections and it was so
ordered.
CHAIR OGAN moved Amendment 2 to delete "although" on line 13.
After some discussion, he withdrew it.
CHAIR OGAN said he wanted to change "consultant" to
"consultants" on lines 2, 6, 9 and 18 and to change the grammar
accordingly.
SENATOR STEVENS moved that as conceptual Amendment 3. There were
no objections and it was so ordered.
CHAIR OGAN wanted to consider making the date September 15 on
line 20.
REPRESENTATIVE HEINZE pointed out that the House felt very
strongly about making the date later rather than too soon.
CHAIR OGAN dropped his suggestion. There was no further
discussion.
SENATOR WAGONER moved to pass SCS CSHCR 39(RES), version \W from
committee with individual recommendations and attached fiscal
note.
CHAIR OGAN said that LB&A has discretionary funds to spend on
this committee and suggested amending the fiscal note to zero.
There were no objections and the zero fiscal note was adopted
and SCS CSHCR 39(RES) moved from committee.
There being no further business to come before the committee,
Chair Ogan adjourned the meeting at 1:35 p.m.
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