Today a state House committee discussed their downsized version of Governor Bill Walker’s proposed changes to Alaska’s oil and gas tax credit system.
Director of the Tax Division Ken Alper with the Department of Revenue detailed the differences between the committee’s version put forward on Saturday and the original proposals.
Alper: “The governor looked to repeal completely the 20 percent capital or QCE credit and the 40 percent well credit, WLE, and we had a fairly aggressive effective date of July 1 of this year, and we were looking to maintain the 25 percent operating loss credit.
The decision was made, in your committee’s substitute Mr. Chairman, to phase out the WLE’s expenditure over 2017 and 2018, keeping the capital credit in place until 2022, 2022 is very much a forward-looking year tied to the plan for a broader Cook Inlet tax reform bill. Meanwhile the operating loss credit was reduced from 25 percent to ten percent.”
In a release, House Resources co-chair Benjamin Nageak of Barrow stated the committee worked to balance policy between exploration and production.
House Democrats are concerned the rewritten version doesn’t cut enough out of the program to make it sustainable as Alaska faces a multibillion dollar budget deficit.
Some oil and gas companies like BlueCrest Energy have paused production while they await a final version of the program.
BlueCrest CEO Benjamin Johnson said the credits were a central part of the Cosmopolitan Unit plan to produce natural gas near Anchor Point…
Johnson: “There is truly value in providing these incentives for the oil and gas industry to come in and make these developments, get things going. That makes money for the state in the long term. It’s an investment, it’s not a cost.”
An initial analysis by the Department of Revenue projects $45 million in reduced spending on credits under the rewrite for next year. The estimate under the original version of the bill was $400 million.
Click here for the latest summary of changes made by the House Resource Committee.
