JUNEAU — Gov. Sean Parnell’s plan to cut oil production taxes hit a stumbling block — if not an insurmountable obstacle — on Thursday, with a leading senator predicting it doesn’t have the votes to pass out of committee.
An alternative plan from Sen. Tom Wagoner, R-Kenai, proposes tax credits for new oil and gas production. Wagoner said it is designed to do what the governor and many lawmakers want — that is, get more oil flowing through the pipeline — without losing possibly billions of dollars a year in revenue, as Parnell’s bill could have the state doing.
Wagoner said members of the Senate’s bipartisan majority told Parnell they would “try and do something.”
“We all look bad if we come out of here with nothing to our credit and nothing to spur on the development of additional oil” for the trans-Alaska pipeline, he said.
Senate President Gary Stevens said Parnell indicated he’d be deeply disappointed if lawmakers passed Wagoner’s bill only. Stevens said the governor was not supportive of the bill “in the sense of wanting his name on it,” but Parnell on Thursday expressed a willingness to listen to lawmakers if they believe they have a better idea than his.
His spokeswoman, Sharon Leighow, said later that Parnell “is willing to hear all proposals aimed at encouraging exploration and incentivize development.
“He is encouraged the Senate is signaling that they understand the urgency to act now to make Alaska more competitive,” she said in an email.
Unlike Parnell’s bill, Wagoner’s plan doesn’t touch the progressive surcharge that currently kicks in when a company’s net profits exceed $30 a barrel. Parnell has said the major problem he heard about from industry was the surcharge and capping the fee and changing how it’s calculated is a key piece of his bill.
Industry has supported Parnell’s bill as a step toward making Alaska more hospitable to business and investment. But oil companies have not given firm assurances that they’ll invest more here if taxes are cut, a point that bothers some lawmakers.
On Thursday, the state commissioner of Natural Resources, Dan Sullivan, told the House Finance Committee it’s not unreasonable for lawmakers to be looking for greater assurances; he said he wished industry would be more forthcoming with him.
But he also made clear, in outlining his support for Parnell’s plan, that he doesn’t “do anything to help Big Oil,” and this is just a case of where the state and industry’s interests intersect.
The Republican House majority leader has said he believes there are enough votes to pass the tax-cut bill if it reaches the floor. The committee is taking public testimony and plans to meet this weekend, as the end of session draws near.
The bill’s prospects in the Senate, though, seem grim: Senate President Gary Stevens said he doesn’t see Parnell’s proposal passing out of the Senate Resources Committee. Even if it did, it would have to go to Senate Finance, and a leader of that panel said he’d be loath to act on such a big issue under such time constraints.
The Legislature is set to adjourn April 17. Parnell said he has no intention of calling lawmakers back for a special session. But he also said he intends to get a bill passed before they leave.
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