JUNEAU — The Senate Finance Committee on Thursday released what co-chair Bert Stedman expects will substantively be the Senate’s plan to address oil taxes.
Stedman said he only expects some “language adjustments” and “slight tweaks” as the committee continues its work. Oil company officials are scheduled to testify Friday.
Stedman, R-Sitka, said he feels good about what the committee has put forth. He said the bill represents a good solution to what he said most people in the Capitol now see as a problem: progressivity.
Earlier this week, the committee unveiled a plan that changes progressivity as we know it. Instead of the current progressive surcharge triggered when a company’s production tax value hits $30 a barrel — a major complaint of the industry, particularly at higher oil prices — the Senate plan would levy a progressive severance on gross production after royalties.
Tax would be levied solely on oil, thereby decoupling oil and gas for tax purposes and addressing the current dilution effect on revenues when oil prices are high relative to gas.
The bill retains the current base tax rate of 25 percent. And it would have the Revenue department collect a range of non-confidential information related to oil and gas exploration, development and production that would be available to policy-makers and accessible to the public.
On Thursday, the committee adopted a version of the bill that, additionally, would reward producers in the legacy fields for production above a decline curve and address new production by lowering progressivity on new fields for the first seven years.
The end goal of the oil tax debate is to boost production. Alaska relies heavily on oil revenues to run, but production has been declining.
Stedman said time would tell how much of an impact the proposal would have on the decline curve. He said the committee with the bill “significantly moved the needle” on the companies’ economics. Whether that’s enough for them to invest more, he couldn’t say.
“’We’re looking at billions of dollars moving around the table,” he said.
Stedman told reporters he wants to move the bill out as soon as possible but couldn’t precisely say when that might be.
He said he thinks there will be sufficient support in the Senate to pass the bill and send it to the House.
Speaker Mike Chenault on Monday said it’s “very unlikely” an oil tax bill will pass before the legislative session’s scheduled adjournment date of April 15, raising the potential for lawmakers to stay longer. Rep. Craig Johnson, also Monday, said House members would review the bill to see if it accomplishes the goals of spurring investment and boosting production. If it doesn’t, and the House and Senate can’t compromise, he said lawmakers have the option of saying they’ll take it up next year.