It was an alley-oop pass gone awry.<\/p>\n
On Wednesday night, as Kobe Bryant played his final game of professional basketball, the Alaska House prepared to toss the Senate a multimillion-dollar bill reforming the state\u2019s subsidy for oil and gas drilling. While Bryant finished with 60 points, the House\u2019s pass didn\u2019t go as well.<\/p>\n
After lawmakers spent five days waiting for a vote on House Bill 247, Speaker of the House Mike Chenault sent it back to the House Rules Committee, saying there wasn\u2019t enough support for the measure.<\/p>\n
\u201cI didn\u2019t see there was support from either side,\u201d he said, adding that the governor\u2019s office – which originally proposed the bill – asked him to postpone a vote.<\/p>\n
\u201cWe asked them if they had the support, and they said they didn\u2019t,\u201d he added.<\/p>\n
The action doesn\u2019t mean the bill is dead. \u201cIt\u2019s just not sitting there, languishing on the floor,\u201d Chenault said. \u201cIt can be brought back out of Rules at any time.\u201d<\/p>\n
When it will be brought back out is unknown.<\/p>\n
In a Wednesday morning press conference, Rep. Chris Tuck, D-Anchorage and leader of the House Minority, said reducing the oil and gas subsidies are crucial to a deal on slashing the state\u2019s $4.1 billion annual deficit.<\/p>\n
\u201cWhat is clear is this is key to having a fiscal plan for the state of Alaska,\u201d he said.<\/p>\n
At the start of the Legislative session, Gov. Bill Walker proposed HB 247 and a companion bill, SB 130 in the Senate, to reduce the state\u2019s subsidy by some $500 million.<\/p>\n
Other than a plan to use earnings from the Alaska Permanent Fund, no other single bill has as large an effect on the state deficit.<\/p>\n
In the House, however, lawmakers from the Republican-led majority worried about the effects that Walker\u2019s bill would have on long-term oil and gas production.<\/p>\n
\u201cThe truth is, Alaska\u2019s oil industry is struggling just like Alaska\u2019s economy,\u201d Alyeska Pipeline Service Co. president Thomas Barrett wrote in an open letter released Thursday morning. \u201cA truth remains: the long-term health of Alaska\u2019s oil and gas industry is as connected and vital as ever to the health of our state.\u201d<\/p>\n
In the House Resources Committee, members of the Majority rewrote Walker\u2019s bill, restoring hundreds of millions of dollars in subsidies.<\/p>\n
The House Finance Committee took that rewrite and made more changes, coming up with a version that contained about 40 percent of Walker\u2019s savings, according to Ken Alper, director of the state tax division. <\/p>\n
That was the version that advanced to an evenly divided House floor. Many members of the House Majority felt it cut too much from the state subsidy. Many members of the House Minority felt it cut too little.<\/p>\n
Without significant cuts, they said, they cannot support measures that would divert money from Alaska Permanent Fund Dividends to state operations. Without cutting oil and gas subsidies, the state would effectively be diverting dividends to oil and gas companies, they said.<\/p>\n
In between the two sides were people like Rep. Cathy Mu\u00f1oz, R-Juneau, a swing voter.<\/p>\n
\u201cIt\u2019s really a key component to the endgame,\u201d she said of the oil and gas tax bill.<\/p>\n
In 2013, the Alaska Legislature approved Senate Bill 21, which rewrote the state\u2019s oil and gas tax structure. Lawmakers intended for SB 21 to implement a 4 percent minimum production tax effective even when oil prices dropped.<\/p>\n
Prices have dropped so low, however, that North Slope oil producers are losing money on each barrel of oil they pump through the trans-Alaska Pipeline System. <\/p>\n
Under SB 21, the producers can receive state tax credits worth 35 percent of their losses, and they can use those credits to go below that 4 percent minimum – all the way to zero.<\/p>\n
Furthermore, the credits (called Net Operating Loss credits) don\u2019t expire in a given year. Companies can roll over unused credits to the following year, and their losses right now are so large that the state is expected to have more than $1 billion in outstanding NOL credits within two years.<\/p>\n
\u201cIf we have those NOLs too high, then even when prices go back up, we lose out,\u201d she said.<\/p>\n
Mu\u00f1oz is among the lawmakers seeking to reduce the number of NOL credits and to \u201charden\u201d the 4 percent minimum tax so oil companies can\u2019t go below it.<\/p>\n
\u201cI think doing away with the floor is a mistake,\u201d she said.<\/p>\n
The version of HB 247 that reached the House early this week contained a \u201chard\u201d 2 percent floor, but that was removed in an amendment approved 20-19 on Wednesday night in the House.<\/p>\n
The resulting bill, resting in the House Rules Committee, contains just 20 percent of the savings originally proposed by Walker.<\/p>\n
\u201cIt becomes, roughly speaking, a $100 million bill instead of a $200 million bill,\u201d Alper said of the amendment.<\/p>\n
House lawmakers had been expected to pass some sort of oil and gas legislation, an act that would move the bill to the Senate. The Senate, in turn, would pass a Permanent Fund spending bill to the House, and negotiations could progress on a compromise.<\/p>\n
Instead, the House turned the ball over, and unless lawmakers there can reach a compromise, it will be the Senate driving the discussion on both the Permanent Fund and on cuts to oil and gas subsidies.<\/p>\n","protected":false},"excerpt":{"rendered":"
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