Lawmakers say cutting tax credits to oil and gas companies may be a necessary step to close the state government’s budget deficit.
But Alaska Oil and Gas Association President and CEO Kara Moriarty said the House Rules Committee substitute bill, known as a “C.S.,” would be disastrous.
“We see the C.S. as a money grab that will without question lead to less oil production, less investment, fewer Alaskans working, and ultimately – and somewhat ironically – less revenue for the state,” she said.
Moriarty spoke during a committee hearing Wednesday on the bill.
Sitka Democratic Rep. Jonathan Kreiss-Tomkins challenged Moriarty, saying that reducing subsidies isn’t a money grab.
“It would seem to me that the money is Alaska’s money – and it’s going to you – and not the other way around,” Kreiss-Tomkins said.
Moriarty said the industry is losing money today, and the government is asking it to pay more – whether through cuts to tax credits or through paying more in taxes.
The bill doesn’t raise oil and gas tax rates. But the changes to subsidies would have the effect of requiring companies to pay at least 4 percent in production taxes. This would begin in roughly 2020.
Members of Gov. Bill Walker’s administration have raised concerns about the current version of the bill. They said it will benefit established oil producers, but not companies that are looking to start production.
Bill Armstrong, president and CEO of Armstrong Oil and Gas, also is concerned about House Bill 247. He said ending the ability of companies to receive tax credits based on net operating losses would hurt companies that want to expand into the North Slope.
“The new version of HB 247 – the nickname should be hell-bent 24-7 on kicking all the new players off of the North Slope,” Armstrong said. “Because the new version of HB 247 is heavily stacked to the benefit of the three existing producers up on the North Slope.”
The committee heard public testimony on the bill Wednesday evening.
