Oil tax goes to House floor

Bleary lawmakers vote on 42 amendments Saturday morning

Posted: Sunday, May 07, 2006

House Majority Leader John Coghill, R-North Pole, hopes lawmakers have done their homework - today is the big day.

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The fate of the governor's exhaustively reviewed oil tax proposal will lie in the hands of the Alaska House today, as members are expected to begin arguing over various changes to the bill.

Realistically, House Speaker John Harris, R-Valdez, said members may not cast their final votes until Monday. After that, the bill can be brought up once again under reconsideration. It also will need to go to a conference committee with the Senate to concur with the changes, as the Senate passed their version last month.

One of the biggest questions looming over lawmakers' heads is whether they will be able to pass the bill before the session ends Tuesday.

"By the time you hit reconsideration, if you don't have a concurrence, you go into special session," said Coghill.

On Saturday night, the majority caucus met to figure out how to put the bill to rest without wasting any more time.

But some members are OK with the bill heading into the special session that will be called Wednesday.

"Yes, people want this to be in the special session. People want us to go slow and get it right," said House Minority Leader Ethan Berkowitz, D-Anchorage.

While meetings saw delays and committees discussed numerous amendments at length, some lawmakers are saying there is a conscious effort to slow the process so that the bill can't make the Tuesday deadline.

"We don't need to make an effort, it isn't ready," Berkowitz said. "You can't stop what isn't moving."

The House Finance Committee wrapped up its dealings with the net-profits tax plan on Saturday morning, with red-eyed lawmakers voting on the remainder of the 42 amendments offered the night before.

Despite repeated efforts, the panel changed the bill slightly, rolling back the effective date from July 1 to three months earlier. By making the date retroactive, the state will be able to use the new system to collect taxes on oil that has been flowing through the pipeline since April 1. The state treasury would reap another several hundred-million dollars for spending.

The rest of the bill mirrors much of the governor's original proposal, with a tax rate of 20 percent and a tax credit of 20 percent on expenditures.

Since the governor introduced his bill in February, lawmakers have struggled most with the tax rate and various incentives offered to encourage investment and lessen the blow of the increased tax. Lawmakers said they expect to review multiple amendments today from the many proposals that were suggested before in committees.

"We're going to make every effort to make this bill palatable," Berkowitz said. The Democrats have pushed for a tax rate of 25 percent or higher and also suggested a harder look at the overall structure of the plan.

"There's about 20 substantive corrections that we need to make, and we're not even talking about tinkering with some of the finer aspects of this," he said.

Alaska's current tax system, known as the Economic Limit Factor, collects on production. But economists have said the ELF is out of date during an era of high oil prices. Some countries have switched to a net-profits tax, which collects on the value of the oil, and are banking more money.

Experts say the new system would bring in at least $1 billion more than the current system.

Rep. Beth Kerttula, D-Juneau, said the state may see problems down the road if the Legislature doesn't make the right changes.

"It seems like there was a big push worldwide to go to a profits tax, and now nations are turning around and saying we're not so sure that it's a good idea, with the problem being that profits are much more difficult to measure," she said.

• Andrew Petty can be reached at andrew.petty@juneauempire.com.

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