Seaton: End of session brings disappointing oil tax regime
• Rep. Seaton disappointed, but not surprised
By Naomi Klouda
Rep. Paul Seaton leaves the legislative session behind with misgivings about the oil tax credit bill that passed into law minus any of the 11 amendments he offered to protect the state treasury.
One amendment would have acted as a circuit breaker in case the incentives proved an unlucrative drain on state revenue.
“If (SB 21) isn’t working then, the automatic circuit breaker would say ‘We’re not going to renew this if it is not accomplishing its goal.’ That’s the biggest downfall in the bill, is that the (amendment) didn’t make it,” Seaton said Monday.
Seaton’s plan was to reward oil companies for production – or reward them for their performance. It would have required production levels equal to, or greater, than 2012 by 2018-19. If this requirement weren’t met, the per barrel credit would go away for the legacy or older fields.
Photo by Rich Mauer/Anchorage Daily News Rep. Paul Seaton, during the floor debate on oil taxes in the Alaska House.
“We got closer, but it didn’t pass. It had more support in the House. It was a way of, not having a guarantee, but at least we could have taken away some of the perks.”
One Seaton amendment seemed on its way to improving SB 21 for independent producers when it passed in House Resources. It would have allowed the state to fiance small producers’ processing facilities through the Alaska Industrial Development and Export Authority.
“That was identified as a bottleneck for them getting into the Trans Alaska Pipeline,” Seaton said. But it was axed in the House Finance Committee.
The House Resources had also voted to go to a 33 percent production base tax rate for the state, knocked down from 35 percent.
“That passed in resources but didn’t sway in the finance committee. I don’t think it would have passed the Senate without the change,” Seaton said.
The bill now puts circumstances in favor of oil companies during times when the price of oil per barrel increases. That’s not going to help Alaska, Seaton said.
When the bill came from the Senate to the House, it gave a $5 credit for every barrel of oil produced in the older, or so-called legacy fields.
“In House Resources we changed it so that it was slightly progressive as the price increased. When we receive less revenue due to higher prices per barrel, they receive bigger credits,” Seaton said. “This excludes more of the oil from taxation. In times of lower and lower prices, that higher dollar amount becomes a larger portion of their profit. It’s excluding a higher and higher percentage when you get lower prices.”
Seaton worked with Rep. Bryce Edgmon to cap the $5 when the price rose to $150 per barrel. If prices rose beyond that, there wouldn’t be a tax credit. Seaton also sought to change prices under $100 per barrel when the cost could be $8, resulting in a high risk of lost revenue. These plans failed when put to a vote.
These are ideas that could be brought back next legislative session to make the new tax structure better. But any time oil taxes are changed by the legislature, it’s extremely difficult to go back at them and make amendments in the next session, Seaton said. The political will would need to be strong.
“That’s not the case, after the last election,” he said.
In the end, Seaton expressed disappointment but not surprise.
“Elections have consequences and we had a little action the last year. People decided they wanted to elect new people – they elected people who had the philosophy that we need to reduce oil taxes,” Seaton said. “That’s a consequence of what the people elected.”
Whether there’s a stronger political will among the general voting population is another matter about to get put to a test. A petition sponsored by Ray Metcalfe circulating as soon as the session ended is asking for a ballot referendum that would let voters reject or repeal SB 21.
Copies of the petition and list for signatures were dropped off at Captain’s Coffee on Monday morning.
Zack Fields, the communications director for the Democratic Party of Alaska, said lawyers have looked at the proposal put forth by Ray Metcalfe and others.
“It’s definitely legal. There’s a very specific process for repealing a law and he’s moving foward with it according to the law,” Fields said.
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Posted by Newsroom
on Apr 17th, 2013 and filed under Headline News
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