HB 386-EXTEND NORTH SLOPE SEVERANCE TAX CREDIT 1:45:12 PM CO-CHAIR RAMRAS announced that the final order of business would be HOUSE BILL NO. 386, "An Act making uniform throughout the state the deadline for certain exploration expenditures used as credits against the production tax on oil and gas produced from a lease or property in the state by extending to July 1, 2010, the deadline for those expenditures on leases or properties located north of 68 degrees, 15 minutes, North latitude." The committee took an at-ease from 1:45 p.m. to 2:02:23 PM. REPRESENTATIVE VIC KOHRING said HB 386 is the same as what the House Resources Standing Committee put in the committee substitute (CS) [for HB 488]. He said it is not the same in its entirety, but it is the same with regard to the incentives for the industry. "We tried to make that bill better by rolling in, in the form of the CS, some things that essentially sweeten the pot and made it better for the industry in terms of incentives." He said the incentives included providing tax credits against not just the production tax, but against bonus bids, lease rental payments, property taxes, corporate tax liability, "and so forth." He said that was all part of the CS, and he is bringing this bill before the committee "because of the volatility of the whole situation." He said there is no guarantee that the provisions in the CS will pass, and, thus, HB 386 can pass on its own. 2:04:19 PM REPRESENTATIVE KOHRING said HB 386 will provide tax credits to offset taxes on oil and gas produced in the state, and those credits can be sold to other companies. He stated that the amount of expenses that could be claimed are up to 40 percent, "not that the full 40 percent would be granted; it will be at the discretion of the department to provide once they have looked at the application and examined what credits are being applied for." He said it has been a fairly successful program in encouraging more development in marginal fields. He said there are five applications pending for a total of $15.1 million in credits. There are seven that have already been granted, he stated. "It's not like it's a statute that we put on the books that's just been sitting there unused, as some bills end up being. This is one that has actually been used by the industry." He said small companies feel that this bill will make a difference in terms of development in the state, and he noted there are ten letters in support, including one from Anadarko Petroleum Corporation. The bill "enjoys strong support from those companies," and he asked who would not support a tax credit to their industry. 2:06:28 PM REPRESENTATIVE KOHRING spoke of support from the Alaska Oil and Gas Conservation Commission and other oil companies. 2:06:50 PM REPRESENTATIVE CRAWFORD said he has a concern of expanding the credits to property taxes because there are boroughs and municipalities that really depend on those taxes. REPRESENTATIVE KOHRING deferred to Ms. Millett. CHARISSE MILLETT, Staff to Representative Kohring, said the bill only applies to state property taxes, not municipal taxes. She drew attention to page 2, line 17. 2:08:14 PM REPRESENTATIVE OLSON said with all the work the committee has done on this issue, he would prefer that the full committee look at it. He said he would probably support it, but it would be a disservice to the other members [to vote on it now]. 2:09:26 PM REPRESENTATIVE ELKINS said he agrees with Representative Olson. He will support it, but it is a good idea to wait. CO-CHAIR RAMRAS said he shares that opinion. REPRESENTATIVE KOHRING said he will be happy to come back. REPRESENTATIVE OLSON said the committee might lose some friends if it cut some members out of the process. [HB 386 was held over]