Debate on whether the state’s oil tax system should be overhauled continued in fits and spurts on Wednesday. By early evening, the Senate had considered seven amendments to a bill flattening the tax rate on oil companies and shifting incentives for credits.
So far, only one has passed. An amendment supported by 11 members of the majority would set the base tax rate on oil at 35 percent. An earlier version of the bill would have included an automatic 2 percent reduction to that amount three years from now. According to state estimates, that would have cost the state an extra $300 million in lost revenue at forecasted levels of oil production.
The Democratic minority offered most of the other amendments, with some aimed at bringing back progressivity and others narrowing the application of certain tax credits.
But one of the more popular of the failed amendments actually came from Republican Gary Stevens. The Kodiak senator introduced a measure that would cause the tax changes to sunset after three years if the legislature determined they weren’t working. He said that, as written, the bill risks giving industry too much of a tax break without a guarantee of increased production.
“It is tying us into something that is enormously expensive for a very long time unless we have an escape clause,” Stevens said.
Those carrying the bill argued that a sunset on the bill would create uncertainty for oil companies. The measure ultimately failed 11-9, but earned the support of the Senate Democrats and Sitka Republican Bert Stedman.
The oil tax bill is one of Gov. Sean Parnell’s major priorities. Supporters say it’s necessary to put more oil in the pipeline, while critics are concerned that it would bring down state revenue by roughly a billion dollars each year without any commitments from oil companies to ramp up production.
As of press time, debate on the bill was ongoing, with more amendments expected.