House and Senate Democrats Put Forward Their Own Oil Tax Legislation

Feb 11, 2013

A handful of Democrats in the Alaska House and Senate have put forward their own plan to change the oil tax structure in Alaska. This comes as consideration of the Governor's plan moves into high gear this week in Juneau.

On Monday a handful of Democratic lawmakers in the House and Senate outlined the details of their bills that they are putting forward as an alternative to the Governor's oil tax proposal. One of the harshest critics of the Governor's plan is Representative Les Gara from Anchorage who claims the Democratic alternative provides tax breaks of about 10-percent for the oil companies to develop new oil from existing oil fields on the North Slope. He says,

"If you expand your production in existing fields or if you develop heavy oil you will earn a tax reduction. If you do nothing like under the Governor's bill you won't get a tax reduction at all."

The Democratic alternative also targets new oil field development by giving the oil companies a 20-percent tax break on those fields for the first 7-years of production. The bill also extends the small producer tax credit through 2022. Another of the provisions included in the Democratic alternative is to prevent what is commonly called "warehousing". That's where oil companies sit on oil leases rather than develop them with the thought that they can come back and develop those leases at a future date. That provision of the bill was addressed during Monday's press conference by Senator Bill Wielechowski from Anchorage. He said,

"When a company wants to go ahead and bid for a lease they need to put in development and exploration plans before they go ahead and bid. Then the state must go ahead and review those plans and make sure they are in the best interest of the State. This is done all throughout the world."

Other provisions of the new bill's include state loans for new production facilities at new oil fields and an overall cap of 55 on oil company profits from production in Alaska. The Democratic Minorities have introduced their alternative oil tax proposals in both the State House and Senate. In the Senate the bill is Senate Bill 50 and the companion legislation in the House is House Bill 111. The Senate Bill has been referred to 3 committees with the first committee assignment being the Senate Special Committee on TAPS Throughput. The House bill has been referred to the finance and resources committee's with Resources being the first committee to take up the bill.