JUNEAU — An influential Alaska state senator plans to resurrect the debate over whether the state should continue taxing oil and gas production together.
It’s a fight Republican Sen. Bert Stedman lost against Gov. Sean Parnell last year. But it comes as Parnell seeks support for cutting oil taxes, a move the Republican governor considers key to boosting now-declining production and creating jobs.
His proposal must pass an uncertain Senate, including two committees on which Stedman serves, before it even gets a vote.
Stedman pushed to separate oil and gas taxes last year, arguing that without action, the state stood to lose potentially $2 billion or more in revenue once gas began flowing through a major pipeline. He owed this to a “dilution effect” on revenue when oil prices are high relative to gas and said it would amount to the state essentially giving away its resource.
The Legislature passed the change, though after a drama-filled night of voting that started with the House voting it down and later reconsidering the vote. When the bill got to Parnell, he vetoed it, saying it represented an overall tax increase on energy companies, a claim Stedman disputes.
Parnell has been loath to deal with gas taxes now, saying the focus should be on oil and trying to boost production through the trans-Alaska pipeline. But Stedman told The Associated Press the issue of whether to separate oil and gas production, for purposes of taxation, will be on the table again this year, either in the Senate Resources Committee, which began hearings on Parnell’s bill Wednesday, or in the Senate Finance Committee that he co-chairs.
He said waiting until next year to revisit the debate would be “a little long in the horizon.”
During Wednesday’s hearing, Stedman urged the committee to take up the matter. He said it would add to the complexity of the proposal at hand but said members have familiarity with the issues at play.
State Revenue Commissioner Bryan Butcher said his department is willing to have a discussion. He told the committee the so-called decoupling of oil and gas taxes hadn’t been looked at in putting the bill together, noting the administration’s focus has been on oil.
Parnell has proposed cutting oil production taxes and expanding credits as a way to increase investment. By some estimates, the plan could cost the state $2 billion a year or more in revenues, prompting critics — including House Democrats — to label it a corporate giveaway. The companies, for example, haven’t promised they’ll invest more here if taxes are cut but have said they’d welcome what they consider a step toward creating more hospitable business environment.