Tax bill may not be done by session's end

Posted: Tuesday, May 02, 2006

Time may be running out on the Alaska Legislature to pass a priority oil-and-gas tax bill by next week's end to the regular session.

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That means the proposal to tax the profits of oil companies' Alaska operations could bleed in to a special session slated to start the next day.

"The time schedule is tight enough where realistically it would slip into special session unless things fall together rather nicely," said House Majority Leader John Coghill, R-North Pole. "At this point, that hasn't been true of the whole process. It's been a very arduous process."

Gov. Frank Murkowski has said he'd call the Legislature in for a special session the day after the regular session ends. He said he would release on that day a draft contract with three oil companies on fiscal terms for recovering the North Slope's natural gas.

But the governor's office on Monday backed away from that release date upon hearing the tax bill may not be finished by session's end.

The draft contract with BP PLC, Exxon Mobil Corp. and ConocoPhillips will remain under wraps if the Legislature does not approve the petroleum production tax, or PPT, said Becky Hultberg, Murkowski's spokeswoman.

"We've said all along that we want to release a complete contract with a fiscal interest finding and those two documents can't be completed until PPT is passed," Hultberg said.

The gas contract is seen as a major step toward building a $25 billion natural-gas pipeline from the North Slope to Canada and markets in the Midwest. But the three oil producers want the tax rates set in the profits bill rolled into the contract and locked in for 30 years.

That tax stability is necessary before they would invest the money to build the pipeline, company executives have said.

Besides setting up a contract that could lead to a gas pipeline, the proposed tax would be the biggest change to Alaska's tax structure in decades and would bring billions more to the state treasury at high oil prices.

Several lawmakers say they want to see how the tax bill and the gas contract fit together. They say a reason they want to wait until a special session to vote on the tax bill was so they could see it side by side.

Those legislators were dismayed to learn the governor's office said the release of the contract was conditional on the Legislature's passage of the tax bill

"It strikes me that the governor has it exactly backward," said Sen. Hollis French, D-Anchorage. "We have to see the contract before we finish work on PPT so that we don't walk into - blunder into - a dead end."

French is suing for the release of the contract. In a status hearing Monday, he asked Superior Court Judge Larry Weeks to order Murkowski to make it public.

Weeks said he planned to make a ruling on Friday after hearing from both French and the Department of Law.

Lawmakers have been considering the petroleum production tax since Murkowski introduced it in February.

The House Finance Committee is working on a version of the tax bill that passed the Senate last week.

That version has a tax rate the oil companies call unacceptably high and which they say destroys the balance that was in the governor's bill.

The House Finance Committee is expected to come out with a new version of the bill and hear amendments by Wednesday, Coghill said.

Once the bill leaves the committee, Coghill said he wants to go over the changes in a public forum either Thursday or Friday.

The bill could then be on the floor for two or three days, possibly not being passed until the end of the weekend.

If the Senate does not concur with the House's changes to the bill, time would be short to appoint a conference committee before the Legislature is required to gavel out Tuesday at midnight.

Still, some say it can be done.

"I'm an optimist," said Rep. Norm Rokeberg, R-Anchorage. "We've done it before with other issues and I think we're a lot closer than most people think. There's a lot of detail here, yes, but we've been working on it for some time."

House Minority Leader Ethan Berkowitz, D-Anchorage, ticked off several reasons why he would like to see the bill go to a special session.

"What's happening now is with the press of immediate responsibilities, people can't give the oil tax the consideration that it needs, the administration has not been forthcoming with the information that the Legislature deserves to make a quality, informed decision, and what's also happening is the PPT is getting bound up with the end-of-session negotiations over bills and budgets," Berkowitz said.

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