House Votes to Clear $800 Million Oil Tax Credit Backlog
May 03, 2018
HB 331 creates a State corporation authorized to issue up to $1 billion in bonds for the sole purpose of purchasing outstanding oil and gas tax credits. The bill would also provide incentives for companies to receive a smaller discount on their credits if companies share seismic data with the state, agree to a larger royalty share for the state from some fields, or commit to reinvest the funds back into Alaska within two years.
This legislation will issue bond debt to pay off the more than $800 million balance the state owes for oil and gas tax credits. According to the Alaska House, the bill would discount the tax credit payments to more than cover the additional cost to the state of interest on the bond debt, which the state will then pay down over the next decade. In this manner, companies owed credits receive cash they can reinvest in additional development today while keeping the measure revenue neutral or revenue positive for the State of Alaska.
“We're making good on the state’s promise to pay tax credits to independent explorers in exchange for their investment. Not only does this save the State of Alaska money, it also gives companies cash to spend now that prices are trending upward, something that will help put Alaskans to work,” Governor Walker stated. “I thank the members of the House Minority whose votes made this possible.”
“At a time of fiscal challenge, in a State that largely depends on oil revenue, now is the time for innovative solutions to get these credits off the books, stimulate our economy, and allow projects that generate revenue to proceed,” Representative Grenn said. “H.B. 331 accomplishes all of this, all at no additional cost to the state. I am proud to be a part of this effort, and thank the Governor and his administration for developing a responsible, win-win plan forward for Alaska.”
“The uncertainty around these tax credit payments has led to projects being stalled and credit being frozen. HB 331 says, ‘let’s find a way to solve this problem.’ Let’s do it in a way that directly addresses the uncertainty, particularly for small, independent oil and gas exploration companies,” said Rep. Jason Grenn (I-Anchorage) who carried the bill on the House floor. “Getting these tax credits off our books on a defined timeline will allow the 37 small exploration companies impacted to receive payment almost immediately, giving them much-needed capital for additional investment and exploration when our economy needs it most.”
“The State of Alaska actively courted oil and gas exploration investment by promising cash reimbursable tax credits. I was raised to follow through on commitments, and I believe HB 331 is the best solution for the state to make good on its responsibility to those who’ve invested in Alaska’s oil and gas future,” said Rep. John Lincoln (D-Kotzebue) “I commend the administration for developing a responsible solution to our debts and the House leadership for moving this bill to the floor.”
House Bill 331 passed the Alaska House by a vote of 23-15. HB 331 now heads to the Alaska Senate for consideration.
On the Wed:
Reporting and Editing by Mary Kauffman, SitNews
Source of News:
Representations of fact and opinions in comments posted are solely those of the individual posters and do not represent the opinions of Sitnews.