JUNEAU — This could be the week the Senate releases its long-awaited oil tax plan.
Senate Resources proposed its own plan, SB192, last month, but it’s been clear from the start that the Senate Finance Committee would rewrite the bill. Finance committee co-chair Bert Stedman said it won’t be totally new bill but there will be significant changes. He said it would be nice to have a new bill before the committee by the end of this week.
That would leave the House — to which the Senate president had once hoped to send a bill with at least a month left in session — just days to consider it, if lawmakers still plan to adjourn on time, by April 15.
Rep. Eric Feige, co-chair of the House Resources Committee, is tired of waiting. Monday marks the start of the second-to-last week in the scheduled 90-day session, and Feige questioned why the Senate wasn’t farther along in its work. His committee has been holding hearings on general elements of the tax debate to try to get members up to speed, but he said it’s been hard not knowing where Stedman’s committee will ultimately end up.
“I just want to see a bill,” he said.
Senate Minority Leader John Coghill, who was watching a finance committee hearing on oil taxes from his office last week, commended the committee and Stedman for delving so deeply into the issue.
Consultants brought before the committee have laid out options for addressing some of the more problematic elements of the tax structure, like progressivity, and in at-times painstaking detail, they have shown what certain changes would mean either in terms of impacting revenue to the state or encouraging industry to boost production — the latter being the end goal of this whole debate.
“It’s valuable. It’s important. I think it’s the right thing to do,” Coghill, R-North Pole, said of the analysis. “For me, I wish we had done this earlier in the session or prior to session.”
Senate President Gary Stevens said it’s tough to get lawmakers together during the interim, and he defended the process the Senate is going through, saying senators want to make sure they’re doing the right thing on an issue of great importance to this oil-reliant state.
Stedman said that while he would have liked to have given the House more time with a bill, he questioned where the legislative consultants were when the House was hearing Gov. Sean Parnell’s plan to cut taxes last year. The Senate last year refused to follow the House and pass Parnell’s plan, saying they didn’t have the information needed to make a sound policy call.
What ultimately comes out in Senate Finance won’t be an overhaul of the tax structure — Stedman said he expected perhaps several years of work still ahead — but it is meant to provide a fairer split of profit oil between the state and oil companies — an attempt to address the chief complaint of industry — and encourage new drilling and projects.
At $100-a barrel oil, the industry “has ample profits, and is comfortable” under the current tax structure, Stedman said. The committee is looking at prices above that level.
“It would be nice to have industry support a change, and a change going in the right direction,” he said. “I don’t know if they’re going to do that or not.”
Parnell last week said he will not accept a bill that doesn’t elicit pledges of new investment. He has repeatedly said his plan has garnered commitments of $14 billion in additional investment, including $5 billion that ConocoPhillips and BP have talked about, and it would likely be six-plus years before the bulk of that $5 billion — if the projects go forward — was spent.
Critics balk at Parnell’s use of the word commitments, saying there’s no guarantee behind those figures.
To put the numbers into perspective, it will likely take several billions of dollars in additional investment every year just to eat into the production decline and stabilize production, according to legislative testimony and Stedman.
Stedman said he’s not looking for industry to say it will invest “x-amount of dollars over a particular timeframe. They just don’t operate like that,” he said. “So all we can do is set what we feel is a competitive climate and let the markets work.”