Legislature passes scaled back oil tax reform bill
Alaska lawmakers can't agree on much these days, but on Saturday, at the literal eleventh hour of the governor's second special session, they did manage to pass a law that ends cash payments from government to oil and gas companies effective immediately.
The deal came together on the 180th day of session this year, and it came after a week of particularly intense negotiations between leaders of the Democrat-led House and Republican-controlled Senate.
Beyond ending cash credits, which were set to cost the state $1.5 billion in the next several years, the compromise version of H.B. 111 that passed makes several other changes to the policies governing the state's key industry:
- Creates a new carry-forward loss tax deduction that will allow the same companies that previously received cash payments from the state to pay less taxes, if they're losing money.
- Makes it so companies either enter production or, over time, start to gradually lose the new tax deduction.
- Establishes a bipartisan, House-Senate working group to keep the perennial debate over oil and gas tax policy going a while longer.
The passage of oil and gas tax reform is the first significant policy from the Legislature this year, and the version of the bill does have a minimal impact on the state's bottom line compared to the multi-billion budget gap and years ahead of uncertainty over how government will be financed.
Still, even after six months at work, the longest the Legislature has consecutively been in session in state history, there still is lawmaking ahead yet this year.
While lawmakers did pass a budget that keeps government agencies operating for the next 12 months, they have not approved a capital budget, which funds construction projects, something that will soon cause construction to halt during the brief summer season when outdoor work is possible.
Gov. Bill Walker, too, has remained adamant publicly that lawmakers try again in earnest to pass measures that provide a new source of revenue, and lawmakers widely believe they will be back at work this fall to consider tax proposals, a measure restructuring the Permanent Fund so its earnings reserve helps pay for government, and maybe more.