Uncertain path forward for Dem minority's oil tax bill

GOP rep: Not inclined to hear legislation
Sen. Peter Micciche, R-Soldotna, talks about his work on the Senate Special Committee on TAPS Throughput in his office at the Capitol on Thursday.

Days after House and Senate Democrats rolled out an “alternative” proposal to Republican Gov. Sean Parnell’s oil production tax reform bill, it remains unclear whether the Democrats’ bills will get hearings in the committees to which they were referred Monday.


House Minority Leader Beth Kerttula, D-Juneau, prime sponsor of House Bill 111, and Sen. Berta Gardner, D-Anchorage, a cosponsor of its companion Senate Bill 49 and the only minority caucus senator on the Senate Special Committee on Trans-Alaska Pipeline System Throughput to which it has been referred, said Thursday they have not yet formally requested hearings for their bills in their first committees of reference.

“I’m going to ask,” said Kerttula, who returned to Juneau Thursday after more than two weeks out of town dealing with a family emergency.

For her part, Gardner said, “I’ve just been slammed with other stuff. But absolutely, we will ask for hearings.”

But whether the Republican legislators who co-chair the House Resources Committee, to which H.B. 111 has been referred, and the TAPS Throughput Committee will agree to take up the legislation during this 90-day session — one-third of which has already elapsed — is uncertain.

Rep. Dan Saddler, R-Eagle River, said he has not talked about the bill with his Resources co-chair, Rep. Eric Feige, R-Chickaloon.

“My personal inclination is that I would rather take up the governor’s bill as a vehicle,” said Saddler, noting the limited number of days left in the session. He explained, “I think the people of Alaska had a pretty fairly clear choice in approaches to the oil taxes in the election process of the fall. And a lot of folks’ position is fairly clear.”

Saddler added, “I think given the way elections went and the current structure of the House and Senate, the governor’s bill is going to be the vehicle for advancing the oil tax issue.”

Kerttula scoffed at that argument.

“After a gerrymandered state,” Kerttula said when asked about the outcome of last year’s elections, in which Republicans took a majority of Senate seats and expanded their majority in the House of Representatives. Of majority legislators, she added, “If they’re thinking that that gave them a mandate to do what the governor wants, I think they better think twice.”

On the Senate side, Sen. Peter Micciche, R-Soldotna, sounded more open to giving S.B. 50 a hearing in the TAPS Throughput Committee, which he co-chairs together with Sen. Mike Dunleavy, R-Wasilla.

“What I plan to do is meet with those that constructed the bill on both the House and the Senate side, and sit down and get their take on the details and their goals,” said Micciche. “And if it’s something that they feel needs a hearing on its own, I am certainly open to doing that. If they think can improve Senate Bill 21, I think we proved in our discussion in the TAPS Throughput Committee that we’re open to any ideas that make Senate Bill 21 a better product.

Micciche is not a fan of S.B. 21, Parnell’s bill to reform Alaska’s oil production tax system.

“If the bill were to come before us in its current form, I wouldn’t be supporting it,” Micciche said. “It needs some help in several different areas.”

Parnell’s proposal would strip the progressive element out of the oil production tax structure, leaving a 25 percent base tax rate in place. It would also eliminate or restructure certain tax credits and introduce a gross revenue exclusion on 20 percent of new oil from new areas of production.

Micciche said he believes new oil production is likelier to come out of legacy oilfields, and he suggested certain tax credits should act as a “reward” for companies when throughput increases.

Meanwhile, the Democratic proposal leans heavily on gross revenue exclusions for new oil — from new areas of production, as well as additional barrel production above what was produced in 2012 from existing oilfields — as incentives for companies to produce more in Alaska, while lowering the cap on the state’s total take to 55 percent and putting in an alternative minimum tax of 10 percent as a floor in case oil prices plunge.

But Gardner said she is “not expecting” S.B. 50 to get through the three committees to which it has been referred and come up for a vote before the full Senate this year.

“My expectations are that some parts of it will find their way, in one form or another, to anything that eventually gets to the Senate floor,” Gardner said. “And any part of it that gets there is likely to be an improvement over what’s already there. Will it be good enough for us to support Senate Bill 21? I’m not optimistic on that score.”

Gardner identified parts of the Democratic bill that she thinks majority legislators could support.

“If you don’t care whose name is on something, you can get a lot of stuff done,” said Gardner. “And the ideas there are good. They’re solid. We’re optimistic about some of the elements finding their way. I mean, the majority’s already talking about recognizing that we do want progressivity. … I think that progressivity has the biggest traction with them, and I know that there are some who do support retaining the credit system.”

But while some majority legislators have spoken in favor of progressivity and keeping the existing tax credits in place, Micciche himself is not one of them.

“I believe in a flat tax,” Micciche said, arguing that when oil prices go up, the state’s take will increase even if the proportion stays the same. “I think it’s fair for Alaskans.”

Saddler is not in favor of progressivity either.

“I think the governor has done a decent job in recognizing not just the current effects but the long-term effects of our existing oil tax structure,” said Saddler. “Reducing progressivity helps to make it more attractive — well, eliminating, I guess. Getting rid of the credits, most of the credits, stops the significant immediate outflow of revenue. And I think the GRE targets new production wisely.”

Neither Feige, Saddler’s Resources co-chair, nor Dunleavy, Micciche’s co-chair on the TAPS Throughput Committee, could be reached for comment Thursday.

• Contact reporter Mark D. Miller at 586-1821 or at mark.d.miller@juneauempire.com.


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