Governor Parnell Working on "Meaningful" Reform with the Oil Industry
Forum discusses reforming oil and gas tax law
ANCHORAGE - Governor Sean Parnell and the oil industry are digging in on what they call “meaningful” reform to the production tax structure known as ACES.
More than a thousand people rallied at the Dena'ina Center today in support of Parnell’s tax cut plan, and against the far more modest version under consideration in the state Senate in Juneau.
The governor's bill, HB 110, passed the house last year, but was declared dead by the senate on the first day of this year's session.
Now SB 192, which would give far fewer tax concessions, is being developed in the Senate Finance Committee, with 18 days left to go in the regular session.
As the clock winds down, the governor and the industry are ramping up the pressure.
Former Democratic Governor Tony Knowles joked to Parnell, "Governor, you've got them right where you want them."
Knowles described the senate's position on oil taxes this way:
Parnell declared: "Neither the senate's experts nor industry believe that SB 192 as it is currently written will incentivize new production. The bill has no financial pledges, no money on the table, no investment guarantee behind it."
Kara Moriarity, executive director of the Alaska Oil and Gas Association, said the industry isn't backing off of its support for Parnell’s approach, which would mean a tax cut of more than a billion dollars a year.
"We are dug in on something equivalent that moves the needle as much as the governor's bill moves the needle."
But Moriarity says AOGA might be satisfied this year if the legislature limited the progressive feature of the tax to high oil prices, rather than applying it to the entire value of a barrel of oil.
"It’d be a great first start. If we could get progressivity bracketed, that would be a great first start for us."
One person who doesn't think any reduction in taxes is warranted is former legislator Ray Metcalfe, a self-described corruption crusader who says AOGA has been misleading the public by describing Alaska’s taxes as the highest on the continent.
"Not true. Mexico has the highest oil tax in North America, by a wide margin, about 18 percent higher than Alaska’s."
But Parnell remains optimistic that he will prevail.
"Eighteen days in the life of a senator or the senate is a lifetime. A lot can change in that time."
So it should be clear soon whether this rally had any effect.
Governor Parnell was part of a similar rally a year ago at the Dena’ina center, almost to the day, when his HB 110 was pending.
No doubt the debate this year will remain lively through the end of the regular session on April 15.
The senate finance committee had another hearing scheduled on oil taxes at 9 a.m. Thursday.