JUNEAU — The Alaska House on Sunday gutted the Senate’s proposal to boost new-field oil production, fusing parts of the bill to another intended to extend Alaska’s film tax credit program — and effectively killing any attempt at changing Alaska oil taxes this session.
The only remaining question was: Would Gov. Sean Parnell call a special session? Parnell had said he would if the Senate passed an oil tax bill, to give the House time to vet it. But that’s before an oil tax overhaul stalled in the Senate bipartisan majority caucus, and the caucus went another route.
On Saturday, the Senate passed a bill that would give a tax break to new-field oil production. The new-oil provision was similar to one from the stalled SB192 and was grafted onto HB276, which was intended to encourage oil and gas drilling in basins around the state. Some senators hailed the new version of HB276 as a way to bring more independent companies into Alaska.
On Sunday, House Rules, in a packed committee room, 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, 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, another Thompson bill — one that, on its own, had broad-based support. The bill passed 36-3.
The Senate had the option of agreeing to the House changes or going to a conference committee but senators decided to expand their options, adding the film tax provisions and incentives for drilling outside the North Slope to HB252, a bill from Rep. Mia Costello, R-Anchorage, exempting certain small businesses from corporate income tax.
The House responded, hours later and near the end of the night, by rescinding its vote on SB23, then adding Costello’s bill to it before sending it back to the Senate. Sen. Bert Stedman, R-Sitka, had objected to the Senate passing a bill with the gas-storage provision, saying the issue wasn’t ready for an appropriation yet.
Costello withdrew HB252.
House Speaker Mike Chenault told reporters the Senate version of HB276 was too big a policy call for a conference committee, and said he’d rather see a more comprehensive approach to oil taxes.
Besides that, Chenault’s bill to further advance an in-state natural gas pipeline project had stalled in the Senate.
Stedman called the House’s decision to set-aside the Senate’s oil tax proposal “ridiculous.”
Parnell had said he wanted the Senate to pass a version of the pipeline bill, HB9, as well as the budgets and funding for his scholarship program by Sunday’s scheduled adjournment.
Early in the day, Senate President Gary Stevens said it would be up to the House to decide whether to accept the Senate’s plan, and up to Parnell to decide whether to call a special session. He said the bill passed by the Senate is significant, and goes a long ways toward efforts to get new oil into the trans-Alaska pipeline.
On Saturday, a vice president of Armstrong Oil and Gas Inc. — one of the independent companies targeted by the Senate plan — sent Stevens and Chenault a letter praising the bill 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 Parnell as problematic.