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.
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Follow Becky Bohrer at http://twitter.com/beckybohrerap .
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Online:
SB21: http://bit.ly/155354v
Comments (2)
Add commentThere it is again!
"...flattening government take at a level that is competitive with other similar oil basins around the world."
That "competitive" buzz-word again. But this time we're competing with the WHOLE WORLD, not just North Dakota! Last year, when we had an actual dissenting voice in the Legislature, they would have brought in credible experts who would have completely obliterated Giessel's claims, demonstrating that other oil fields have similar or higher takes. But with the rubber-stamp legislature we have now, no dissent is allowed.
Also note the term she used, "government take"...excuse me, but that should be: "Alaskans' share for their resource"
If you're not feeling...exploited...by this move, it's because they've slipped you a date rape drug.
Projections
"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."
HELLO????
I'm no oil economist, but my handy little investment calculator says that's an annual inflation rate of 1.3%
When is the last time we have EVER seen oil prices rise at 1.3% for any extended period of time?? As Paul Beran points out in his excellent Letter to the Editor today, the world economy has been going through a major 5-year recession and the price of oil has still been rising rapidly. What do you think is going to happen once the economy gets back on its feet and all those emerging middle-class Chinese and Indian's start buying cars?
The only reason I can see for forecasting such an outrageously low rate is to sell this massive giveaway.
Think about it. Our rubber-stamp legislature strips out the progressive tax component of the oil tax, right before the price of oil shoots to $200/bbl. By allowing Parnell and this legislature to gut our oil tax, we will be missing out on an opportunity to fix our schools, build new roads and ferries, invest in energy projects, and address the many other needs that Alaskan communities have.
The time to storm the Capitol with torches and pitchforks is NOW. Every Alaskan should be outraged by what these crooks are doing to us.