Oil Tax Bill Amended to Appeal to On-the-Fence Senators
JUNEAU — As the governor’s proposed oil tax cut goes up for a vote in the Senate Wednesday, a proposed amendment to win Fairbanks Sen. Click Bishop’s support could save the state as much as $1 billion during the next six years.
Bishop, who is widely considered to be the most likely 11th vote on Senate Bill 21, hasn’t been a sure “yes” vote since hearing lukewarm oil industry support for cuts that could cost the state between $4.9 billion and $6.3 billion during the next six years.
A proposed amendment detailed by Sen. Lesil McGuire, R-Anchorage, on Tuesday could change that.
The amendment, as she described, focuses on a provision in the current version of the bill that drops the base tax rate from 35 percent to 33 percent in 2017 regardless if oil producers do anything to boost production. The bill also has a $5 credit for each barrel of oil, which in effect creates a slightly progressive tax.
According to a legislative analysis of the bill, the 2 percent drop coincides with a roughly $300 million drop to state revenue starting in 2017. That would amount to about $1 billion over the six-year forecast and the hit to the state treasury would continue at a rate of about $300 million per year as long as the tax regime is in place.
The amendment roughly outlined by McGuire would do away with the 2 percent drop, maintaining the 35 percent base tax with the $5 credit. It’s the same rate that was proposed by the Senate Resources Committee, where Bishop has a seat.
The amendment likely would be put forward today by someone other than McGuire.
Such an amendment has been floated by others to make the bill more palatable to on-the-fence senators.
McGuire said it would save Alaska about $300 million per year compared to the latest version of the oil tax plan. The precise hit depends on oil prices and production.
Bishop was unavailable to comment on the changes after the floor session on Tuesday, but he’s voiced support for the changes contained in McGuire’s amendment.
When the tax rate was rolled out in the Senate Resources Committee, he offered a positive initial reading of the bill.
“I think it’s as close to hitting the sweet spot as you can get for now,” he said.
While campaigning, Bishop said he supported cutting taxes somewhere in the range met by the amendment, a $600 million to $900 million reduction. He said he felt $500 million was too little to promote investment and $2 billion was too great a hit to the state’s treasury.