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Committee begins hearings on oil tax plan

Published on NewsOK Modified: January 22, 2013 at 9:04 pm •  Published: January 22, 2013

Natural Resources Commissioner Dan Sullivan said there's an issue of fairness not only for the current generation but also for future generations. He said it's not fair to Alaskans if the status quo means a continued decline in production.

An analysis of the bill provided by the administration shows the plan would cost the state $900 million next fiscal year and as much as $1.1 billion by 2018. The fiscal note estimates were based on the Department of Revenue's fall forecast for oil prices and production, which predicts a continued net decline in North Slope production and oil prices ranging from about $109 a barrel next year to $118 in 2019.

Democrats say the plan could cost the state billions of dollars a year when oil prices are high, starting around $125 a barrel or higher. They have branded it a giveaway to the oil industry and dangerous for the state's economic future.

Some Republicans have also raised questions.

Rep. Paul Seaton, R-Homer, said the surcharge is the element "responsible for almost all of the budget surpluses generated in the last five years."

In a constituent newsletter Monday, he said what is most confusing about the administration's approach is that progressivity is the element that provides the tax incentive to reinvest in Alaska — that is, spend more, get more of a tax break. He said he looked forward to hearing more details. Seaton has introduced a bill of his own to address the oil tax and competitiveness issue.

Sen. Peter Micciche, who co-chairs the Senate committee on oil flowing through the trans-Alaska pipeline, said the panel plans to pass the bill on to Senate Resources by Feb. 7. Industry testimony is planned for next week in his committee.


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