Tuesday, May 09, 2006

Alaska State House Passes Oil Tax Bill

In a late night session, after a weekend of repeated debate, proposals, and counterproposals, the Alaska State House finally passed a new petroleum profits tax by a vote of 28-11. Click here for the full story in today's (May 9th) Fairbanks Daily News-Miner.

The House version calls for a 21.5% tax, a 20% tax credit for reinvestment into additional exploration and production, and a last-minute amendment which places a cap on the tax so that the total tax can't be higher than 50% of the oil value. Because this version differs from the Senate's version calling for a 22.5% tax, a 25% tax credit, no ceilings/floors, and a different escalator clause, the bill must go back to the State Senate for a concurrence vote. The regular session of the State Legislature ends tonight.

Several House members wanted to delay the vote until Governor Murkowski publicly releases the details of the proposed gas line contract this Wednesday (May 10th). The failure of the Governor to release this information has hindered the ability of the legislature to consider the effects of a revised oil tax on the proposed gas line contract. He could have at least let key legislative chairs see the contract in advance so they could guide the debate more effectively.

Speaking for the minority, Rep. Eric Croft (D-Anchorage) complained that it would still leave too much wealth in the hands of the producers, and claimed if oil prices fell, the state would lose money as compared to the present system. He favored a 25% profits tax. He's right - if oil prices fall. Under the current system, the producers would pay more to the state when the price is low and less when the price is high as a tradeoff. This protected the state treasury somewhat against volatile swings in the price of oil. However, the price has gone up and is staying up - this change warrants a new approach.

Speaking for the majority, Rep. Bruce Weyhrauch (R-Juneau) claimed the new tax as passed would double the state's revenue and spur investment. Each 1% difference means an additional $150 million revenue to the state, assuming a wellhead price of $70 per barrel.

The Anchorage Daily News also reported on this development and included a list of how the House members voted on this bill:

The bill is Senate Bill 305.
House roll call on oil tax
Results Tuesday as the Alaska House, on a 28-11 vote, passed a net-profits oil tax bill.
Voting yes were 25 Republicans and three Democrats. Voting no were 10 Democrats and one Republican.
A yes vote is a vote for passing the tax bill.
Representatives are listed by name and hometown.

Republicans (25)
Anderson, Anchorage; Chenault, Kenai; Coghill, North Pole; Dahlstrom, Eagle River; Elkins, Ketchikan; Gatto, Palmer; Harris, Valdez; Hawker, Anchorage; Holm, Fairbanks; Kelly, Fairbanks; Kott, Eagle River; LeDoux, Kodiak; Lynn, Anchorage; McGuire, Anchorage; Meyer, Anchorage; Neuman, Big Lake; Olson, Kenai; Ramras, Fairbanks; Rokeberg, Anchorage; Samuels, Anchorage; Seaton, Homer; Stoltze, Chugiak; Thomas, Haines; Weyhrauch, Juneau; Wilson, Wrangell.
Democrats (3)
Joule, Kotzebue; Kapsner, Bethel; Salmon, Beaver.

Republicans (1)
Kohring, Wasilla.
Democrats (10)
Berkowitz, Anchorage; Cissna, Anchorage; Crawford, Anchorage; Croft, Anchorage; Foster, Nome; Gara, Anchorage; Gardner, Anchorage; Gruenberg, Anchorage; Guttenberg, Fairbanks; Kerttula, Juneau.

Democrats (1)
Moses, Unalaska

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