Oil and gas companies would continue to receive tax credits under a bill that a legislative committee passed Monday. But they may not be able to count on receiving much this year. That’s because the next round of credits depends on funding that one key lawmaker is already calling on Governor Bill Walker to veto.
The conference committee voted 5-1 to approve the Senate version of House Bill 247. It’s the twelfth version of changes to the the state’s oil and gas tax credits discussed this year. The bill provides much less in savings to the state government than the version the House passed.
It appears that the bill has enough support in both chambers to pass.
Anchorage Republican Senator Cathy Giessel said the bill protecConfts the state’s fiscal outlook and sends a message to the state’s partners in developing a natural gas pipeline.
“It protects our today as well, in terms of reducing the tax credit outlay, but also keeping in place a stable tax structure which will do what we can to ensure a major gas project in the future,” Giessel said.
To provide tax credits this year, the bill depends on drawing on four hundred thirty million dollars that would otherwise go into state savings.
Homer Republican Representative Paul Seaton opposes the bill. If it passes, he’d like to see Governor Walker veto the $430 million. That would leave tax credits at a minimum of $32 million, with most of this year’s credits pushed off into the future.
“With that bill, it makes it so without any production tax credits coming in, I don’t think we can possibly reach a sustainable fiscal plan, because we’re limiting one of the only sources of revenue the state has significantly.”
One reason the bill is on track to pass is that some Republican House members who voted for deeper cuts to tax credits now support the bill the conference committee passed.
Palmer Republican Representative Jim Colver said the bill isn’t perfect, but would be an improvement over current law.
“Are we reducing the cash burn to the state treasury? And, yes we are,” Colver said. “Is it as fast as some of us would like? No. But it’s going to make a substantial impact to the bottom line of our budget.”
While both the House and Senate bills reduced tax credits for oil production in Cook Inlet, the House version would have also eliminated the ability of North Slope oil producers to use operating losses to reduce future tax liability.
The conference committee bill disappointed members of the Democratic-led House minority caucus. Caucus members originally hoped that cuts in oil and gas tax credits would be part of a budget compromise. But they voted for the budget last week to avoid layoff notices to state workers.
Anchorage Democratic Representative Geran Tarr unsuccessfully sought to amend the bill to make it more similar to the House version. As the only minority member of the conference committee, she was outvoted five to one.
“I don’t think we could say that this is going to provide stability, because we have not dealt with a couple of the problem areas that if the prices dip low again, we’ll have to come back and address,” Tarr said.
Both chambers could vote on the bill as soon as Monday.