Gov. Sean Parnell’s oil tax proposal is steadily making its way through the Senate.
His bill advanced out of the Senate resources committee on Wednesday, with a few changes. Instead of setting the base tax rate at 25 percent, it bumps it to 35 percent. It offset that by increasing a tax break for oil produced from new areas, and giving oil companies a $5 per barrel credit. Like the governor’s bill, it gets rid of a mechanism that would raise taxes on oil companies when profits are high. Parnell described the changes as a positive step forward at a press conference on Thursday.
The new version of the oil tax bill’s impact on the state’s revenue is close to Parnell’s original version. According to the bill’s fiscal note, the bill would cut taxes on oil companies by up to $900 million over the next year. Parnell’s would cut taxes by roughly the same amount.
The new version of the bill got support from all members of the resources committee, save one. Sen. Hollis French, an Anchorage Democrat, still had questions about the effect the bill would have both on oil production and revenue, and he had concerns about the pace of the review process.
“The amendments we’ve adopted make some significant changes. The CS [committee substitute] we put in front of us last Friday basically revamps the governor’s bill and adopts some significant new measures. I don’t feel like we’ve fully vetted that. The fiscal notes, which we’ve all received this afternoon, have not been discussed by the committee,” said French. “And so, I believe that the totality of the circumstances are that this is rushing through this committee to the next one, and I don’t feel confident of the work.”
Sen. Peter Micchiche, a Republican from Soldotna, countered that a previous committee had already spent time with the bill, and that more hearings are still to come.
“Some of us have spent hundreds of hours processing this bill in two different committees,” said Micciche.
The bill is now being heard in finance, the last Senate committee that will review the plan.