Speaker: Bipartisan vote needed to pass oil tax

Tax bill may extend into a special session

Posted: Tuesday, April 11, 2006

Alaska House Speaker John Harris says some within the Republican majority probably won't support a proposed oil tax, and Democratic votes will likely be needed to get the bill passed.

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The bill calls for the biggest change in decades to Alaska's oil taxes and is considered by Gov. Frank Murkowski a prerequisite to reaching a North Slope natural-gas pipeline deal.

But because of the interests of Republican members in both the House and Senate, Democratic votes will likely be needed in both chambers to pass the bill, known as the Petroleum Production Tax, or PPT, the Valdez Republican said Monday.

"I think you're going to have to have a bipartisan vote in both bodies to carry a PPT bill," Harris said. "I think there are members of the majority who may have a difficult time voting for a PPT. They have their own reasons and I'm not going to elaborate on them and I won't say who they are, but there may be underlying reasons why they wouldn't."

Republicans hold a 12-8 majority in the Senate and a 26-14 majority in the House. Murkowski, a Republican, introduced the net-profits tax bill, but legislative committees have proposed raising the tax rates and trimming some of the tax incentives from the governor's bill.

Several legislators have ties to the oil industry. For example, Rep. Kevin Meyer, R-Anchorage, works for ConocoPhillips, and Senate President Ben Stevens, R-Anchorage, has collected hundreds of thousands of dollars in consulting fees from VECO Inc., an oil field service company, since he's had to file disclosures with the Alaska Public Offices Commission in 2001.

He has been collecting fees from VECO since 1995, he said.

Stevens, R-Anchorage, wouldn't speculate where Senate Republicans stand on the bill, saying what ultimately reaches the floor is still unknown.

"Speaker Harris must have more time to count votes than I do," Stevens said. "I haven't spent a lot of time worrying about that yet."

Meyer said he supports changing the tax, but he is not sure how far he is willing to go beyond the governor's 20 percent tax rate proposal.

"The concern I guess I would have is that if you tax it too much, the oil industry won't be putting money back into Prudhoe and Kuparuk to slow down the decline," he said.

If Democratic votes are needed to pass the bill, Harris said he would like to keep politics out of the process. Specifically, he wants to keep the capital budget - and the public works projects within that budget - from being leveraged for votes on the tax bill.

House Minority Leader Ethan Berkowitz, D-Anchorage, said anybody who attempts to turn the net-profits tax into a partisan issue doesn't understand how significant the bill is to Alaska.

"We are looking at the oil tax as Alaskans, we are not negotiating for other projects or on other legislation," Berkowitz said. "It's too big; it's too important. I hope the majority has that same kind of statesmanship."

Harris also said the net-profits tax bill may not be finished by the May 9 end of the regular session and it could become part of a special session that begins immediately afterward.

House Majority Leader John Coghill, R-North Pole, said there are still a lot of differences between the House and Senate's versions of the bill, and agreed the bill could bleed into a special session.

"We're working hard to not have that happen, but it is a real possibility," Coghill said.

The tax proposal would replace Alaska's current production tax. Different versions of the bill set the base tax rate at either 20 percent or 25 percent of a company's profits, with deductions and credits allowed for capital expenditures that company makes in the state.

In both the House and Senate versions, the tax rate increases once the price of oil reaches a certain level.

Murkowski called the tax a prerequisite to the state signing a stranded gas contract with BP PLC, ConocoPhillips and Exxon Mobil Corp., which is a key step to building a $25 billion North Slope natural-gas pipeline.

The three producers support Murkowski's original tax proposal, but have come out against changes made in legislative committees that reduce some of the tax incentives and increase the rates.



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