A deal to cut the state subsidy of oil and gas drilling appears to be mortally wounded if not already dead.<\/p>\n
In a bizarre hearing Wednesday afternoon, members of a House and Senate conference committee offered two versions of a subsidy-cutting bill before adjourning with no votes taken.<\/p>\n
Alaska’s partisan divide was physically visible during the committee hearing: House and Senate Democrats participated from Anchorage, while House and Senate Republicans were physically present in Juneau.<\/p>\n
Saturday is the final day of the Legislature’s second special session this year, and if some version of the subsidy-cutting bill does not pass before midnight Sunday morning, the measure — one of four core pillars of the House’s deficit-elimination program — will die.<\/p>\n
If that happens, the Legislature will have failed to pass any bill addressing Alaska’s $2.5 billion annual deficit.<\/p>\n
“I remain optimistic until there’s no time left, and that’s how I’m going to operate if others will,” said Rep. Geran Tarr, D-Anchorage and chairwoman of the conference committee.<\/p>\n
Gov. Bill Walker and members of the House and Senate agree that the state’s existing subsidy program is too costly and must be replaced. They don’t agree on the replacement.<\/p>\n
“The point of agreement is on the end of the cash credits. The point of disagreement is on what the cash credits would be replaced with,” Tarr said.<\/p>\n
There are 40 sections of House Bill 111, which contains the subsidy cut. The latest House version and latest Senate version agree in 35 of those sections.<\/p>\n
“It’s only on five sections that we disagree,” said Sen. Cathy Giessel, R-Anchorage and the Senate’s lead negotiator on the bill.<\/p>\n
Those five sections are key.<\/p>\n
If oil and gas drillers lose money on the North Slope, they can deduct a portion of their losses from future tax bills. Small companies that don’t have oil production (because they’re still exploring and drilling) can instead receive what are known as “cashable credits.”<\/p>\n
These credits can be sold to other companies, used when there is production, or sold to the state (when the Legislature appropriates money to buy them).<\/p>\n
Lawmakers now agree that the state can’t afford the cashable credit program.<\/p>\n
The Senate has proposed a system of tax write-offs to replace it<\/a>.<\/p>\n The House has proposed nothing.<\/p>\n