JUNEAU, Alaska (AP) — Minority Democrats in the Alaska House and Senate on Monday introduced their own plan for increasing oil production in the state, calling it their alternative to Gov. Sean Parnell's oil tax "giveaway."
Both the governor's and Democrats' plans are aimed at new production but take decidedly different approaches.
The Democrats' proposal — HB111 in the House, SB50 in the Senate — would provide tax breaks for new oil produced from new fields or legacy fields. That includes a break for future production in legacy fields over 2012 levels, a nod to efforts to reduce the trend of declining production in those fields, which have been the mainstay of Alaska's oil industry.
The plan would cap the progressive surcharge that companies say eats too deeply into profits, discouraging new investment when oil prices hit about $180 a barrel. It also would require development plans from initial leases on state lands, set a tax floor to protect the state if oil prices plummet and make state loans available for production facilities at new fields.
Senate Minority Leader Johnny Ellis, D-Anchorage, said the proposal stands in "sharp contrast" to Parnell's, which would scrap the progressive surcharge credited with helping to fatten the state's coffers in recent years and revamp the system of tax credits, focusing those incentives on companies that produce new oil on the North Slope.
Parnell's proposal keeps the 25 percent base tax rate, as does the Democrats' plan, and includes a tax break for oil from new fields, including new areas of the legacy fields Prudhoe Bay and Kuparuk. It keeps in place credits for exploration but eliminates credits for qualified capital expenditures on the North Slope. It aims other credits toward production of new oil.
Ellis said with the Democratic alternative, "we as Democratic legislators believe, first and foremost as Alaskans, that we are the group standing up — truly standing up — for Alaska."
The Democratic plan is built around three tenets, Ellis said: that Alaska must get something in return for what it gives and what it gains must be commensurate with what it gives, any proposed tax break cannot "break the bank," and the proposal must "truly" reward new production.