THE LINK: JULY 2023 11 that taxes are lower in periods of low prices, encouraging continued activity, and higher when prices are robust. SB 114 would lower the credit range from $8 per barrel and down to $5 per barrel are down. Roger Marks, a private petroleum economist, estimates that this will increase the tax burden by 40 percent. The per-barrel tax credit was passed by the Legislature in 2012 as a part of Senate Bill 21, a major overhaul of the state’s petroleum tax laws. The 2013 changes have been criticized as giving away too much to industry, but the fact is that exploration and development work jumped just after the law was enacted and production, in decline for years, stabilized and has even increased. SB 114 remained in the Senate Finance Committee as the 2023 session adjourned by part of it, the Hilcorp change, was grafted into another bill, SB 121, which has to do with corporate income tax paid by digital businesses. This bill, with the Hilcorp tax, has advanced to the Senate Rules Committee. Were SB 114 to pass including both the Hilcorp tax and per-barrel credit reductions, the combined added tax on companies in FY 2024, which begins in July, would be $1.05 billion, the state Department of Revenue has estimated. Of that, the Hilcorp tax would be $190 million next year. However, those amounts are higher because SB 144 would be retroactive to Jan. 1 rather than starting on July 1, the beginning of the new fiscal year. This means FY 2024 covers an additional six months of tax collections. Going forward, if the bill were to pass, the tax would be lower. The Legislature had made tax changes retroactive before. What worried companies is that SB 114 seemed to have the support of the Senate’s leadership at the start. Sen. President Gary Stevens, R-Kodiak, spoke of it as “our” bill in press conferences. Sen. Cathy Giessel, R-Anch., the Senate Majority Leader, spoke favorably of the Hilcorp provision. Also of concern was that Gov. Mike Dunleavy, who is hunting for revenue to pay a higher Permanent Fund Dividend, was silent. State House leaders voiced strong opposition, however. — Tim Bradner
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