Parnell satisfied with Senate oil tax reform bill

Governor Sean Parnell

Governor Sean Parnell speaks to the Juneau Chamber of Commerce on March 21, 2013. Photo by Casey Kelly/KTOO.

Governor Sean Parnell says the Senate’s version of his oil tax reform bill meets the guiding principles he had in mind when it was introduced. But he says the House of Representatives should take its own look at the legislation, and make any changes members deem necessary.

Parnell says Senate Bill 21 meets his main objectives for the overhaul, namely simplifying the overall oil tax system, protecting Alaskans at low oil prices, encouraging new production, and being competitive with other oil producing areas.

“I’m urging those House members to look at the proposal that’s there – look at SB 21 as it is now – and the dials or nobs that are there,” Parnell said Thursday in a speech to the Juneau Chamber of Commerce. “And if you think the system as passed to you as House members needs adjustment, then work those nobs and dials and come up with what you think is a competitive tax system, one that is fair to Alaskans, and one that will inspire new production. But use those nobs and levers that are there. Don’t try to make it more complicated by putting in new levers, new nobs, new dials.”

Senate Bill 21 raises the base tax rate charged to oil companies from 25 percent to 35 percent. It eliminates some tax credits currently offered to oil companies, but replaces them with a $5 credit for every barrel of oil produced. It also would eliminate the progressivity feature of the current ACES tax system, which raises taxes as oil prices go up.

The overall effect is a tax cut estimated at $6 billion over five years for oil companies. Opponents say without any guarantee of new production, the bill is a massive giveaway.

SB 21 officially passed the Senate Thursday after a reconsideration vote. The margin was as narrow as possible, with eleven Republicans supporting the measure and all seven Democrats and two moderate Republicans opposing it.

Parnell touched on oil taxes for only about five minutes of his brief chamber speech.

He started his remarks by remembering Manokotak Village Public Safety Officer Thomas Madole, who was shot and killed in the line of duty this week. Parnell said he met Madole about a year ago on a trip to Southwest Alaska.

“He was a kind and gentle man,” Parnell said. “And I sat down at a Dillingham (Alaska State Trooper) post with him, and asked about how life was in Manokotak.”

Parnell said Madole’s death underscores the importance of public safety programs. He noted that on March 28th, his “Choose Respect” campaign to end domestic violence and sexual assault in Alaska marks its third year, with marches across the state.

“We have a long way to go when it comes to safety for all Alaskans,” the governor said. “Not just our VPSOs, but in our homes and in our families.”

Parnell also highlighted some of the economic successes the state has experienced during his administration. He said mining activity is on the rise, especially in Southeast; and the number of business license applications for land-based tourism transportation has increased from 19 in 2009 to more than 140 so far this year.

Parnell also touted the Alaska Class ferry redesign, saying the state expects the same or better service with shuttle ferries rather than the earlier large boat concept. The Department of Transportation is taking public comments on the draft Day Boat Alaska Class ferry plan through March 29th.