JUNEAU, Alaska — Gov. Sean Parnell plans to introduce oil tax legislation this week that would provide tax breaks for production from existing and new fields.
It's a take off the Senate's proposal to provide a production allowance for new-field oil, but will go a step further, also addressing existing fields. The issue of how best to deal with incremental production from legacy fields is what stalled an oil tax overhaul in the Senate's bipartisan majority during the just-ended regular session.
Parnell plans to introduce the bill Wednesday, the first day of a special session.
Early Monday, Parnell said he is calling legislators back this week to start a 30-day session to deal with oil and gas production taxes; HB9, a bill intended to further advance an in-state natural gas pipeline project; and HB359, his bill to strengthen penalties for human trafficking that got caught in the back-and-forth political tussle between the House and Senate in the regular session's waning hours.
Later in the day, Reps. Bill Stoltze and Bill Thomas accused the Senate of playing politics with a handful of bills, including the trafficking bill and legislation related to veterans, while Sen. Johnny Ellis said the House and Senate had an agreement to move forward on certain bills, but the House gaveled out from under the Senate.
Rep. Craig Johnson said there was no deal and the House did its best to take up the bills it had. But he said it also was committed to gaveling out at midnight and the Senate knew that. Johnson said it was an effort by the Senate to lay blame on the House after the Senate "didn't do anything" all session.
Despite the harsh words on both sides, Ellis said the special session represents a fresh start.
Senate President Gary Stevens said he expects no problem with HB359 passing through. Oil taxes and HB9, though, a bill that some senators worry goes too far, are trickier.
The Senate took the lead on oil taxes during the regular session after last year refusing to follow the House's lead and pass a plan by Parnell cutting taxes. Senators spent two months delving into the issue, sometimes in excruciating detail. But an overhaul of the tax structure faltered in the Senate bipartisan majority late last week amid differences about how best to address Alaska legacy fields like Prudhoe and Kuparuk, long the mainstays of the state's oil industry, where production has been declining.
Some senators are concerned about giving too much money to oil companies, particularly for oil they would have produced anyway. Others have felt that a tax cut is needed to boost incremental production.
The Senate instead, on Saturday, took a version of a new-field oil tax break from its stalled bill and grafted it onto a House bill intended to encourage oil and gas drilling in parts of the state outside the North Slope and Cook Inlet. The House on Sunday torpedoed that plan.
Parnell told reporters the Senate's actions were one of the reasons he called a special session. He said there's now a new dynamic at work "that I think might lead to a compromise that could produce new production both now but also in the future."
While he said the new-field provision is similar to what he proposed in his oil tax bill last year, he said it alone doesn't go as far as he would like to try to get more oil into the trans-Alaska pipeline.
"Because without a comprehensive tax change and a comprehensive look, we're not taking care of Alaskans now and into the future," he said. Making a "significant" tax change in existing fields could lead to 100,000 new barrels a day in 1 ½ -2 years, he said.
Stevens said the Senate has done the heavy lifting on the oil issue so far, and that it's time for someone else — the governor or the House — to step up if they don't like the approach the Senate has taken.
He said senators are open to what the administration or House might present when it comes to existing production. But he said it can't be Parnell's bill from last year, HB110. The bill is a non-starter in the Senate, and critics have labeled it a corporate giveaway without any guarantees the state will get anything in return. HB110 has garnered support from within the oil industry.
At this point, Stevens said, "it really is necessary that the House move ahead, consider a bill and tell us what it is they want. That is how it should be done."
Sen. Bert Stedman, co-chair of the Senate Finance Committee, told reporters it's unlikely the Legislature will be able to come to terms on changing Alaska's tax structure during the special session. Stedman said he thinks agreement on new oil is possible. And he said he thinks that should be dealt with — even if lawmakers can't reach consensus on how to deal with oil from the legacy fields.
Revenue Commissioner Bryan Butcher said the department was still running numbers but Parnell's new plan won't look identical to HB110 and "wouldn't likely be a more drastic effect on the state than" HB110.