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Oil taxes highlight busy week for lawmakers

Posted: February 6, 2012 - 1:03am

JUNEAU — Alaska lawmakers this week are expected to take up three of the biggest issues facing them this session, with all eyes on the Senate for perhaps the biggest issue of all: oil taxes.

A measure, billed as a starting point in the debate, is expected in front of the Senate Resources Committee on Friday, with options for how best to split the profits between oil companies and the state during times of high prices.

Also on tap this week: a hearing on a proposed ballot initiative that would revive Alaska’s coastal management program and a bill aimed at advancing an in-state natural gas pipeline.

The oil tax debate overshadows all others this session because of the significance of oil to Alaska’s economy. Oil provides about 90 percent of the state’s unrestricted revenue but declining production has policy makers worried and looking for ways to reverse the trend.

Gov. Sean Parnell proposed a tax-cut bill that passed the House last year but it stalled in the Senate, where leaders said they didn’t have enough information to make a sound policy call. Senators now appear ready to act, having received consultants’ reports, an analysis showing average annual employment on the North Slope at a 20-year high, more information from state agencies and a decision in a property tax case that found the trans-Alaska pipeline — despite concerns raised during last year’s debate — has decades of life ahead of it.

The still-unanswered question is: How far might the Senate go?

Progressivity, tax credits and the question of whether to change the current practice of taxing oil and gas production together are part of the debate. But Bert Stedman, R-Sitka, cautioned against getting too far ahead of the process.

He said the goal in weeks ahead will be to try to identify the most significant problems at hand and solutions for those.

“If we dump solutions on the table before we identify the problem, I think we’re going to end up going around the totem pole more often than we need to be, and we have an April 15 deadline,” he told reporters last week.

The Legislature is scheduled to adjourn April 15. The Senate’s goal is to get a bill to the House with about a month left in the session.

Under the current tax structure, which features a 25 percent base tax rate, a progressive surcharge is triggered when a company’s net profits hits $30 a barrel. The idea when the law was passed in 2007 was that the state would help companies on the front end, with things like tax credits, and share with them when oil flowed and prices were high.

But critics, including Parnell and the oil industry, argue the surcharge at times of high oil is excessive and a disincentive to investment.

Senate President Gary Stevens said he hasn’t heard from anyone in the Senate who isn’t interested in dealing with progressivity. And Sen. Lesil McGuire, R-Anchorage, said she thinks that’s the one aspect of the fiscal regime that’s broken.

“And if we continue to do nothing, and the production declines in the trans-Alaska pipeline, I don’t want to say, ‘What could we have done to incentivize (new production),’” she told reporters. “So I think what we’re saying as a Senate is, Let’s throw some options out there and get the dialogue going.”

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