The House Rules Committee Tuesday unveiled the latest attempt to rewrite tax credits for the oil and gas industry. The bill would save the state more money over the next three years than a previous version of House Bill 247. But the savings are much less than what Governor Bill Walker proposed.
However, the savings under the new version would grow beginning in 2020.
Anchorage Republican Rep. Lance Pruitt worked with others on the bill. He said the House could pass the legislation – something that it’s been unable to do with previous versions.
“I think the goal was to see if there something we could pass over to the Senate,” Pruitt said. “I mean, obviously, this was kind of at a deadlock, where it was.”
The bill would save the state up to $80 million in the fiscal year that starts in July 2017. Those savings would grow to be as much as $390 million in 2022.
Pruitt said the bill balances the interests of the state in reducing credits, with encouraging the industry to continue to invest. It also phases out credits more slowly than Walker proposes.
But Anchorage Democratic Representative Andy Josephson said he’s concerned with the bill. Josephson participated in legislative talks on the new version.
“We’re going to continue to look at spending close to a billion dollars a year on our total credit portfolio,” Josephson said. “I think that’s unsustainable and unaffordable.”
Even if enough members of the Republican-led House majority vote for the bill so it passes, it still faces a major hurdle. That’s because members of the Democratic-led minority caucus can block one of the principal ways that the state can pay for the budget – drawing from the Constitutional Budget Reserve. Democrats have said they won’t vote to spend money from the reserve if the state continues to pay out large oil and gas tax credits.
The tax credit issue has held up the Legislature from ending its session. An agreement could lead to several other major bills passing, including changes to the Permanent Fund and cuts to Permanent Fund dividends.
