Governor Bill Walker has proposed changing the Alaska oil and gas tax credits program into a long-term loan fund.
The proposal would end the program by July 2016 according to Alaska’s Office of Management and Budget Director Pat Pitney. That change would be both a $400,000 cut for state expenditures and a single transitional investment for this budget.
Pitney: “But to get to that reform, if we close it by the end of July, there will be over a billion dollars of earned tax credits. So we have to have a transitional fund for all companies that have earned the credits. And although we have that steady state going forward that’s much less, we have to have that on time transition fund that’s in the budget.”
A Senate oil and gas tax credit working group recently suggested any changes to the program be implemented gradually.
Another suggestion by the group was solidifying the percentage of mandatory taxes that oil and gas companies have to pay, a suggestion that administration seemed to build on.
Commissioner Randy Hoffbeck for the Department of Revenue detailed the governor’s proposal.
Hoffbeck: “We’re also looking at hardening the minimum floor for oil and gas production tax, and also increasing it from four percent to five percent and that will generate about $100 million per year.”
The governor’s financial proposals that were announced today will be reviewed and require approval by the Alaska Legislature during their next session in Juneau which begins January 19.