Both the House and Senate passed versions of a new bill to overhaul the state’s oil and gas tax credits

After intense bargaining and twelve versions of the bill, Alaska legislators in separate votes Monday approved changes to the state’s oil and gas tax credits as the state struggles with declining oil and gas revenues.

House Bill 247 passed 21-19, requiring longtime Rep. Mike Hawker to fly into town and vote ‘yes’ for the plan to pass, reports KTUU. Hawker has been excused from legislative activities for most of the year while battling cancer.

The bill passed by a larger margin in the Senate, where the legislation received 13 votes in favor versus nine who were opposed.

Bill limits tax credits in Cook Inlet, keeps North Slope credits

In its current form, the bill would eliminate tax credits to oil and gas companies operating in Cook Inlet, but will keep credits for North Slope operations. Other reforms require public release of information about which companies receive credits, prioritizing credits to go to companies that employ 80% or more Alaskan residents, and continuation of credits of the so-called “middle earth” tax credit given to companies operating in places other than the North Slope and Cook Inlet.

The bill represented a compromise between the legislature and Governor Bill Walker, whose original plan would have positively impacted Alaska’s bottom line by $700 million during the next two fiscal years, while the legislature’s plan saves $115 million, reports Alaska Public Media.

“It protects our today as well, in terms of reducing the tax credit outlay, but also keeping in place a stable tax structure which will do what we can to ensure a major gas project in the future,” said Anchorage Republican Senator Cathy Giessel.

In order to provide the tax credits for this year, the bill depends on drawing on $430 million that would otherwise go into state savings.

Bill Walker Gov. Alaska

Alaskan Governor Bill Walker

Fate of the bill still in Governor Walker’s hands

Now that the bill has passed both the Alaska House and Senate, it will go to Governor Walker for final approval. The governor could sign the measure into law, reject some of the funds need to pay the credits this year, or veto the bill altogether.

Many were hoping the state would cut tax credit to North Slope operators as well, but legislators like Giessel said broader tax changes can wait.

“Certainly, we can have a discussion about tax policy sometime in the future,” she said. “This year, we’re focused on tax credit reform.”

Others, like Rep. Geran Tarr, said the North Slope credits need to be overhauled now. She said most companies become eligible for the credits when oil prices dip below $40 per barrel and that the upward trend has left some of her GOP colleagues counting on prices staying at least as high as they are.

“We didn’t model [the bill] under anything less than $60 a barrel,” Tarr said. “We should have learned our lesson. We’re very bad at predicting the price of oil.”

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