Lawmakers say cutting tax credits to oil and gas companies may be a necessary step to close the state government’s budget deficit.
But Alaska Oil and Gas Association President and CEO Kara Moriarty says the House Rule’s Committee substitute bill – known as a “C.S.” – would be disastrous.
“We see the CS as a money grab that will without question lead to less oil production, less investment, fewer Alaskans working, and ultimately – and somewhat ironically – less revenue for the state,” Moriarty said.
Moriarty spoke during a committee hearing Wednesday on the bill. Sitka Democratic Representative Jonathan Kreiss-Tomkins challenged Moriarty, saying that reducing subsidies isn’t a money grab.
“It would seem to me that the money is Alaska’s money – and it’s going to you – and not the other way around,” Moriarty said.
Moriarty says the industry is losing money today, and the government is asking it to pay more – whether through cuts to tax credits or through paying more in taxes.
The bill doesn’t raise oil and gas tax rates. But the changes to subsidies would have the effect of requiring companies to pay at least 4 percent in production taxes. This would begin in roughly 2020.
Members of Governor Bill Walker’s administration have raised concerns about the current version of the bill. They say it will benefit established oil producers, but not companies that are looking to start production.
Bill Armstrong, president and CEO of Armstrong Oil and Gas, also is concerned about House Bill 247. He says ending the ability of companies to receive tax credits based on net operating losses would hurt companies that want to expand into the North Slope.
“The new version of HB 247 – the nickname should be hell bent 24-7 on kicking all the new players off of the North Slope,” Armstrong said. “Because the new version of HB 247 is heavily stacked to the benefit of the three existing producers up on the North Slope.”
The committee is scheduled to hear public testimony on the bill tonight.
Andrew Kitchenman is the state government and politics reporter for Alaska Public Media and KTOO in Juneau. Reach him at akitchenman@alaskapublic.org.
