- Associated Press - Wednesday, April 13, 2016

JUNEAU, Alaska (AP) - The minority leader of the Alaska House said Wednesday that if his caucus isn’t satisfied with changes to the state’s oil and gas tax credit program, it will be hard to justify going into a major state savings account to help cover state costs.

Minority Leader Chris Tuck, D-Anchorage, said it also would be hard to justify asking people to pay taxes or make changes to the Alaska Permanent Fund dividends without tax credit changes at least on par with what Gov. Bill Walker has proposed.

Tax credits have become a point of contention in the waning days of the regular legislative session as lawmakers try to balance addressing what has become a major spending item with concerns about the impacts that changes would have on an industry also being hit by low oil prices. It’s an issue that’s even caused divisions with the Republican-led majority.

The Democratic-led minority was not satisfied with changes to Walker’s bill that came out of the House Resources and Finance committees. The House, which debated amendments to the House Finance version on the floor Tuesday, planned to resume debate Wednesday night.

The Senate also is working on its own version of the bill.

The state is not in a position to pay “huge subsidies” to the oil industry, Tuck told reporters Wednesday.

Under current law, the Department of Revenue estimates that during the next fiscal year the state will owe $775 million to companies with no tax liability, which are typically smaller companies developing and exploring on the North Slope and Cook Inlet. That includes newly earned credits and those beyond a cap imposed by Gov. Bill Walker for the current year.

The department, in its new spring forecast, also estimates there will be about $620 million at the end of the next fiscal year in credits carried forward by major producers with an annual loss. These credits can’t be cashed out, but can be used to offset tax liability.

In a written presentation to the Senate Finance Committee on Wednesday, the president and CEO of the Alaska Oil and Gas Association, Kara Moriarty, said the industry is asking for careful consideration of any policy changes. At these oil prices, any change will have a negative impact on the industry and result in less production and job losses, her presentation stated.

Lawmakers are considering structured annual draws from the earnings of the permanent fund to help pay for state government as part of a plan to confront a multibillion-dollar state budget deficit. Proposals under consideration would change how annual dividends are calculated.

Legislative leaders also have said they would look to draw from the constitutional budget reserve to help make up for any costs not otherwise covered. To meet the threshold generally needed to do that in the House, 30 votes are needed, meaning some support from the Democratic-led minority is necessary.

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