Legislator Gives ACES Presentation in Advance of Session
Gara opposes governor's proposed changes to oil and gas tax bill
Has ACES scored? Or should lawmakers who support it be sent to the penalty box?
The debate on Alaska’s oil production tax ramps up, days ahead of the next legislative session.
The tax called Alaska’s Clear and Equitable Share, or ACES, will once again dominate the 90-day session that begins January 17.
Governor Parnell’s bill would reduce the production or severance tax by about $1.8 billion a year – a move the governor says is necessary to encourage industry investment and reverse a longstanding decline in oil production.
Monday, a supporter of ACES, but who has introduced a bill to modify the tax system, HB 231, went into the lion’s den to make his case for the existing tax structure. Gara, in contrast to the governor, proposes tax incentives that would only kick in if companies invest in Alaska exploration or production.*
Democratic Representative Les Gara told members of the Anchorage Chamber of Commerce that they were going to hear a perspective on oil taxes that might be new to them.
Gara then said, counter to what he calls myths, investment and employment on the North Slope actually have increased since ACES was signed into law in 2007.
He says it’s no wonder that Alaska has an unemployment rate far below most of the Lower 48.
Republican Senator Cathy Giessel, who supports the governor’s bill, acknowledged that North Slope exploration is up due to what she calls overly generous tax credits under ACES.
One area of disagreement concerns what the producers have said they would do if the governor’s bill passed.
Gara had a slide projected with testimony from a House Finance Committee last year, in which lobbyists for BP and Exxon Mobil declined to make any promises in response to Gara’s questions.
But Giessel says all three major North Slope producers have made more bullish statements since last session, and she noted that the top executives met with Governor Parnell last week, although there were no announcements of written commitments.
Gara’s reception at the Chamber was polite and civil, but not enthusiastic.
The written questions that were submitted by audience members and presented by the moderator seemed to suggest that the overwhelming majority of the businesspeople were unconvinced by Gara’s presentation.
*Correction: Originally this article called Gara an ardent supporter of ACES, but he has indeed filed a bill to make adjustments to the oil and gas tax structure.