JUNEAU — The fiscal impact of a Senate committee’s revised oil tax plan will be similar to the impact of what Gov. Sean Parnell has proposed, or slightly less, according to an analysis released Wednesday.
The new fiscal notes for SB21 were released as the Senate Resources Committee advanced a rewrite of the bill, and the details of the notes were not discussed. Sen. Hollis French, D-Anchorage, complained the bill was being rushed through the committee, “and I don’t feel confident of the work.”
Senate Resources officially began hearings on the bill Feb. 11, though it had informational hearings surrounding the issue during the two weeks before that. The Senate Finance Committee is expected to take up SB21 as early as Thursday afternoon.
The Senate has taken the lead on oil taxes, a decision House Speaker Mike Chenault has chalked up to a matter of sharing the workload between the chambers and the best use of committee time.
The rewritten proposal kept some of the bones of Parnell’s plan, but it would increase the base tax rate from the current 25 percent to 35 percent and provide a $5-per-barrel credit for oil produced.
It would increase from 20 percent to 30 percent the tax break for oil from new fields and new areas of legacy fields proposed by Parnell, known as the gross revenue exclusion. The committee’s chair, Sen. Cathy Giessel, has said the proposal also would use that tax break as an incentive for companies in existing fields to try new technologies to access oil they otherwise wouldn’t be able to produce.
“Using the governor’s guiding principles, we strived to create an attractive investment climate by virtually flattening government take at a level that is competitive with other similar oil basins around the world,” she said in a news release Wednesday, noting that work still needed to be done on the bill. “There were many issues with fiscal implications that arose during our discussions more of the purview” of Senate Finance, she said.
The fiscal analysis tied to the Senate Resources rewrite indicates it would cost the state $800 million to $900 million next fiscal year. The fiscal impact — a mix of the measure’s effect on revenue and the operating budget — would drop to between $350 million and $550 million in 2015, hit $750 million to $950 million in 2017, and rise to an impact of $800 million to $1 billion in 2019.
Estimates are based on a fall forecast for oil prices and production that predicts a continued net decline in North Slope production through 2022. The note looks out until fiscal year 2019, and oil prices during that period are forecast to vary from about $109 a barrel next year to $118 in 2019.
The analysis with Parnell’s plan indicated a $900 million fiscal impact next year, dropping to $550 million in fiscal year 2015 and rising to an impact of $1 billion by 2017, according to the analysis.
Democrats, like French, have raised questions about how great an impact the gross revenue exclusion will truly have, among other things. It is listed as indeterminate up to a negative revenue impact of up to $50 million a year, based on the fall forecast, according to the analysis attached to the Senate changes.
Senate Resources advanced the bill with a list of things that members believe merit further review in Senate Finance, including whether the Department of Natural Resources needs broader authority to offer royalty relief and whether there should be a time limit on the gross revenue exclusion.
The committee also sent on a letter of intent, saying, in part, that the Legislature intends, through passage of SB21, to “reflect the policy determination that the Legislature chooses opportunity over decline.”
Parnell, in a statement Wednesday, thanked the committee for its work and said the administration would continue to review the changes “and look forward to evaluating the balance it strikes in the Senate Finance Committee.”
“Recognizing that the bill has a way to go — we are very pleased with how the bill is progressing,” said Parnell’s spokeswoman, Sharon Leighow.
Follow Becky Bohrer at http://twitter.com/beckybohrerap .