By BECKY BOHRER | The Associated Press
JUNEAU – A vote could come this week on whether the state should cut oil production taxes as a way to boost investment.
Whether the vote will be on Gov. Sean Parnell’s plan, or a version of it crafted by the House Finance Committee, remains to be seen. The committee plans to unveil its proposal later Monday.
Leaders of the House’s Republican majority are pushing hard to get a bill passed before the Legislature adjourns next month. For weeks, lawmakers have heard dire predictions about the fate of the trans-Alaska pipeline if the trend of declining oil production isn’t stemmed or reversed, quickly. GOP leaders, like House Speaker Mike Chenault and Rep. Craig Johnson, consider passage a bill overhauling the state’s tax regime as critical to addressing throughput concerns.
Even if a bill passes the House, its prospects in the Senate are dicey, if not dim. A leader of the Senate Finance Committee has made clear his desire to delay action at least until lawmakers receive and review fiscal regime analyses they’re expecting later this year. And there remain questions about what Alaska will get in return and whether Parnell’s bill goes too far, too fast in altering the tax structure.
Johnson, R-Anchorage said he hasn’t received any commitments from industry that investment will rise if taxes are cut. But he told reporters Monday that he has “great confidence” that oil production will continue declining if the state does nothing.
Critics have charged that Parnell’s plan is little more than a corporate giveaway. But Parnell believes lower taxes will lead to more investment — and if it doesn’t, he has said lawmakers are free to tinker with the tax system again.
The Department of Revenue, in what has been cast as a worst-case scenario, said the state could begin running budget deficits by fiscal year 2013 if Parnell’s bill passes and there’s no new production. By 2020, the deficit would be around $2.8 billion and reserves would be around $10.3 billion, the analysis showed.
Those figures are most drastic than what Revenue Commissioner Bryan Butcher showed The Associated Press late Friday. Butcher blamed a computer glitch.