SB 112-OIL & GAS PRODUCTION TAX  3:54:25 PM CHAIR GIESSEL announced the consideration of SENATE BILL NO. 112 "An Act relating to credits against the oil and gas production tax; and providing for an effective date." [On March 12, 2025 the committee adopted CSSB 112, workorder 34- LS0566\I as the working document.] 3:55:10 PM HUNTER LOTTSFELDT, Staff, Senator Bill Wielechowski, Alaska State Legislature, Juneau, Alaska, paraphrased the sectional analysis for SB 112, version I: Senate Bill 112  Oil & Gas Production Tax  Sectional Analysis for Version I    Section 1. Amends AS 43.55.024(i): Adds language to conform to the new subsection (k) under section 3 limiting the application of the $5 per-barrel credit for new fields receiving a gross value reduction. Section 2. Amends AS 43.55.024(j): Adds both conforming language for subsection (k) under section 3 and reduces the per-barrel credit slider from an $8 to $1 slider to a $5 to $1 slider.   Section 3. Adds a new subsection (k) to AS 43.55.024: This new subsection will tie the amount of per- barrel credits a producer may claim to the amount of qualified capital expenses that producer incurs on their property or leases. Limits a producer's ability to carry forward unused per- barrel credits.   Section 4. Adds an applicability section: This Act applies to credits from oil production on or after January 1, 2025. Section 5. Adds a new uncodified law section: This section addresses the transition of tax payments under this Act. Section 6. Adds a new section of uncodified law: This section addresses the Department of Revenues ability to make regulations retroactive.   Section 7. Adds a new section of uncodified law: Sets a retroactive date of January 1, 2025. Section 8. Sets an immediate effective date. 3:57:34 PM CHAIR GIESSEL stated that CSSB 112, workorder 34-LS0566\I was before the committee. 3:58:16 PM CHAIR GIESSEL opened public testimony on SB 112. 3:58:52 PM TIM HINTERBERGER, representing self, Anchorage, Alaska, testified in support of SB 112. He recalled Senate Bill 21 (2013), which assumed oil prices of above $90/barrel with a ten- year average forecast of $106/barrel. He stated that those assumptions have proved inaccurate and offered examples to illustrate this. He said SB 112 would generate $191 million for fiscal year (FY) [2026] and approximately $100 million annually over the next decade. He noted that the administration supports SB 112. He encouraged members to move SB 112 from committee and allow the State of Alaska to use its limited revenues on funding education rather than giving money away to major oil corporations. 4:00:46 PM LUANN MCVEY, representing self, Douglas, Alaska, testified in support of SB 112. She said she is a retired teacher with several grandchildren under age 5. She expressed an understanding of how funding deficits impact teachers, children, and families. She expressed frustration that the State of Alaska gives money away in tax credits and does not adequately fund education. She stated that this effectively starves schools and added that if the state maintains current education funding levels, schools will experience a large budget deficit. If SB 112 passes, the state savings of $191 million for FY 2026 would have a sizable positive impact on schools. She offered examples of possible positive changes. She encouraged support of SB 112. 4:02:33 PM EMILY KANE, representing self, Juneau, Alaska, testified in support of SB 112. She said the restructuring of the oil and gas taxation credit system is long overdue. She said the state has lost billions of dollars under the current structure and SB 112 is a reasonable adjustment. She emphasized the importance of taking care of people, who are the most precious resource. She encouraged keeping Alaska's natural resource revenue in-state. This would positively impact education funding, transportation funding, and would allow Alaska to modernize. She encouraged support of SB 112. 4:04:10 PM TERRANCE DALTON, representing self, Anchorage, Alaska, testified in opposition to SB 112. He said he has worked in the oil and gas industry and has children. He stated that SB 112 appears to be a short-term budget solution; however, it would be detrimental in the long-term. He offered examples to illustrate this, including a decrease in investment and jobs. He emphasized the negative impact this would have on Alaskan families and on the state. He said that the current tax structure provides stability and encourages investment and offered examples. 4:06:03 PM KELLY DROOP, representing self, Anchorage, Alaska, testified in opposition to SB 112. She briefly discussed the importance of Alaska's natural resource industry. She referenced Senate Bill 21 (2013) and briefly discussed the positive impact of that legislation. She said that critics do not take external factors into account. She opined that changing the terms after companies have made investment decisions creates a sense of instability. She indicated that stability is needed for companies to invest in, maintain, and grow oil production in Alaska. 4:07:59 PM JIM HILL, representing self, Anchorage, Alaska, testified in opposition to SB 112. He said he has a small business with 20 employees. He shared his belief that all companies rely on a robust oil and gas sector. North Slope development has benefited his business. He credited North Slope development to Senate Bill 21 (2013) and the stability of the current tax structure. He said tax policy should not target a single industry, particularly when other industries are lagging. He said SB 112 discourages future investment. He stated the current tax policy is working and emphasized the economic and social importance of increased production. 4:09:42 PM AURORA ROTH, representing self, Anchorage, Alaska, testified in support of SB 112. She said oil prices have rarely exceeded $80/barrel since 2013. She said oil companies are receiving the maximum credit possible. She opined that this is a very good deal for oil companies. She further opined that it is reasonable - particularly in the face of a budget crisis and school closures - to lower the tax credit cap to reflect the current economic reality. She shared her understanding that companies would remain profitable with a lower tax credit cap. She rejected the idea that any tax on oil and gas (or reducing the tax credit for oil companies) would be the downfall of Alaska. She shared her understanding that SB 112 would restructure the tax credit to benefit Alaskans in a time of economic difficulty. She urged support of SB 112. 4:11:38 PM GARY DIXSON, representative, Keep Alaska Competitive, Anchorage, Alaska, testified in opposition to SB 112. He said he is the Secretary-Treasurer of Teamsters Local 959. He gave a brief overview of that organization. He stated that industry jobs are not limited to the work done on the North Slope. He explained how supplies are transported from the Lower 48 to Alaska through the Port of Anchorage and on to Deadhorse. He emphasized that many Alaskans benefit from the oil and gas industry, which is a cornerstone of the state's economy. He offered examples to illustrate the various benefits. He said consistency is needed to ensure future development. He stated that SB 112 creates a risk for the future of the oil and gas industry and the jobs it provides. He reiterated that North Slope development is important to economic growth in Alaska. 4:14:09 PM RACHAEL POSEY, representing self, Anchorage, Alaska, testified in support of SB 112. She said SB 112 reduces the tax credit, which she opined is a reasonable and prudent decision considering the state's current fiscal crisis. She emphasized the importance of a strong education system. She said reducing the tax credit for oil companies would provide additional revenues that could fund education. 4:15:11 PM JESSE CARLSTROM, representing self, Anchorage, Alaska, testified in opposition to SB 112. He referenced Senate Bill 21 (2013) and emphasized the importance of the per barrel tax credit. He stated that companies made long-term, multibillion dollar investments in the state based on the stability of that policy. While oil prices and production levels are beyond the legislature's control, it does control policy. He opined that changing the rules after companies have invested sends the message that Alaska is unstable and unreliable. He said this impacts all Alaskans. He shared that he has two young children and would like the economy to support opportunities for them in the future. He encouraged a no vote on SB 112. 4:16:56 PM CAROLINE STORM, Executive Director, Coalition for Education Equity, Anchorage, Alaska, testified in support of SB 112. She said the state is in a fiscal crisis. She recalled that Senate Bill 21 (2013) originally contained a $5/barrel tax credit, and the $8/barrel tax credit was a last-minute addition. She opined that oil companies are making an absurd profit in Alaska and can afford to receive a lower tax credit. In contrast, the State of Alaska needs revenue to support schools, Medicaid, and Alaskans in general. She stated that industry would not make Alaska more livable - schools, roads, and government services will. The State of Alaska must find adequate funding for these. She said SB 112 is the mechanism by which the state can provide programs and fulfill its constitutional obligations. She read from art. VIII, sec. 2 of the Constitution of the State of Alaska, which states, "The legislature shall provide for the utilization, development, and conservation of all natural resources belonging to the State, including land and waters, for the maximum benefit of its people." She emphasized that the benefit should not be given to oil companies and added that oil companies make billions of dollars of profit from Alaskan resources. 4:19:13 PM MARGI DASHEVSKY, representing self, Anchorage, Alaska, testified in support of SB 112. She said it is important to stop giving money away to oil companies who should pay a fair share of taxes. She opined that SB 112 is an important step in reducing the per barrel oil tax credit. She noted that the per barrel oil tax credit is projected to cost the State of Alaska $6.5 billion over the next 8 years. She said education funding is critical at this time. She added that the additional funding SB 112 would create is vital. She briefly discussed the importance of creating social and economic stability for future generations of Alaskans. 4:21:13 PM LEON LYNCH, representing self, Ester, Alaska, testified in support of SB 112. He briefly discussed the history of oil tax legislation in Alaska. He emphasized that legislators with conflicts of interest voted in favor of Senate Bill 21 (2013), which passed by a single vote. He briefly discussed how the tax structure created by Senate Bill 21 (2013) negatively impacted the State of Alaska. He opined that SB 112 is a modest effort to provide additional income to the State of Alaska. He acknowledged that oil companies oppose this change but argued that it would not deter investment. 4:23:48 PM KEN HUCKABA, representing self, Wasilla, Alaska, testified in opposition to SB 112. He stated that this would strangle the oil industry and the future of Alaska. He noted that the oil industry funds many state programs, including education. He said he would like to see lobbyists and non-governmental organizations (NGO) taxed, as they are stakeholders. He observed that the state's budget has increased over the past decade and surmised that SB 112 would add to that growth. He said Alaska has neglected the private sector and offered examples. He stated that fiscal crises increase the likelihood for bad decision- making. This hurts the private sector. He said the State of Alaska needs to encourage investment in the state but opined that many decisions do not reflect this. 4:26:32 PM JANE ANGVIK, representing self, Anchorage, Alaska, testified in support of SB 112. She said all Alaskans are stakeholders. She suggested that the state should reduce the per-barrel oil tax credit from $8/barrel to $5/barrel and use the excess funds for education. She shared that she has been working to make this change. She opined that it is a modest change that would create an opportunity for Alaskans to gain strength and independence in education. She shared a brief anecdote to illustrate her connection to Senate Bill 21 (2013) and support of SB 121. 4:28:08 PM JANELL GRENIER, representing self, Nikiski, Alaska, testified in support of SB 112. She noted that previous testimony has touched on her reasons for supporting this legislation and emphasized that she supports SB 112. 4:28:49 PM DANIELLE REDMOND, representing self, Juneau, Alaska, testified in support of SB 112. She briefly shared about her education and work history and connected this timeline to the passage of Senate Bill 21 in 2013. She pointed out that, while Senate Bill 21 (2013) projected that oil prices would remain above $90/barrel, oil prices have remained low. As a result, oil producers have benefitted from the per-barrel oil tax credit and the legislature has sought ineffective short-term solutions to the state's fiscal crisis. She shared that she has three children in school. She emphasized that the short-term fiscal solutions have negatively impacted Alaskans. She expressed disgust that those with conflicts of interest are able to impact discussions and outcomes. 4:30:54 PM CHAIR GIESSEL left public testimony on SB 112 open and held SB 112 in committee.