House guts Senate oil tax proposal

By Becky Bohrer

Associated Press

Published: Sunday, April 15 2012 2:47 p.m. MDT

JUNEAU, Alaska — A House committee on Sunday gutted the Senate's proposal to boost new-field oil production, adding parts of the bill to another intended to extend Alaska's film tax credit program.

It kicked off a wild last day of the regular legislative session, one in which the Senate president declared dead an in-state gas pipeline bill, a priority of House Speaker Mike Chenault, and questions turned to whether the governor would call a special session.

On Saturday, the Senate passed a bill that would give a tax break to new-field oil production. The new-oil provision was grafted onto HB276, which was intended to encourage oil and gas drilling in basins around the state after an overhaul of Alaska's tax structure stalled in the Senate majority. The new version of the bill was hailed by some senators as a way to bring more independent companies into Alaska.

On Saturday, a vice president of one of those companies, Armstrong Oil and Gas Inc., sent Chenault and Senate President Gary Stevens a letter praising the version of HB276 that advanced from the Senate.

"HB276 is a big step in the right direction for meaningful change in the tax code," Ed Kerr wrote in the letter, copied to all legislators. He added later: "The modifications provided for in HB276 as they relate to the development of new fields will be a catalyst to draw new companies to the state to help develop its resources."

Kerr also expressed hope that tax changes could be made to help make production in Alaska's legacy fields more competitive. The lack of that piece — a stumbling block within the Senate majority — was cited by the executive director of the Alaska Oil and Gas Association and a spokeswoman for Gov. Sean Parnell as problematic.

House Rules, in a packed committee room Sunday, glued HB276, as passed by the Senate, onto a bill intended to extend Alaska's film tax credit program — then pulled out the tax break for new-field oil production on the North Slope added by the Senate. The original HB276 was by Rep. Steve Thompson, R-Fairbanks, and a member of the House majority. The film tax credit bill, SB23, is a priority for Sen. Johnny Ellis, D-Anchorage.

The committee also added onto SB23 a gas-storage bill to help communities with energy needs, HB289, another Thompson bill — one that, on its own, had broad-based support.

Ellis said Sunday morning that he hadn't had time to fully review the changes. If the House passes the new version of SB23, the Senate would have to decide whether to accept the changes or go to a conference committee. Ellis said he's prefer that bills be kept "clean," and voted up or down on their merits, not used as leverage.

Chenault told reporters HB276 is too big a policy call for a conference committee, and he said he'd rather see a more comprehensive approach to oil taxes.

He said it's not his job to decide whether HB276 comes up in the House; he said that's up to the bill's sponsor, Thompson, and House Majority Leader Alan Austerman. The House also has the option to keep the bill in what's known as the "limbo file" — and let it die.

Thompson said he wants to move forward with the rewritten SB23 instead.

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