Homer Alaska - News

Story last updated at 4:04 PM on Wednesday, February 29, 2012

Stevens: Fair oil tax law needed to ensure steady revenue stream

BY Hal Spence
For the Homer News



Guaranteeing a significant flow of oil through the trans-Alaska oil pipeline for 50 to 100 years will require an oil tax law fair to the industry and the state, Alaska Senate President Gary Stevens said Monday.

The Alaska House has already adopted a measure, HB 110, and sent it on to the Senate where it has been met with some concern, said Stevens, a Kodiak Republican whose district includes Homer and Seward.

"It seems like an enormous transfer of funds with no benefit to the state," he said, adding that he was pleased that the two House members in his Senate district, Rep. Paul Seaton, R-Homer, and Rep. Alan Austerman, R-Kodiak, voted against it. "We have been dealing with it, but it's not doing what we need it to do."

Instead, Stevens said, the Senate is looking for a fair way to encourage the industry to put more oil into the pipeline, thus extending its lifetime and generating steady tax revenues to the state.

The Senate Resources Committee has been wrestling with Senate Bill 192, a measure which would change the current progressivity rate of the oil and gas production tax. Finding a fair balance is the aim, Stevens said.

"We want to give them (oil and gas companies) reasons to keep producing. That's what this is all about in the end," he said. The intent, he said, is to ensure a steady stream of tax revenues without discouraging production.

The legislative effort is complicated, Stevens said, by a wealth of misinformation about the industry, the pipeline, and about state taxation rates.

"We are not the highest in taxing the industry," he said. "They're not going to close down the pipeline any time soon. There is 50 to 100 years of use left," he said. "The potential for Alaska is good, in shale oil, in the Outer Continental Shelf, at ANWR, and opportunities will be great for many years to come. But during this interim, we need to keep oil in the pipeline."

Stevens is optimistic that a "meaningful bill" will emerge from the Senate and said Gov. Sean Parnell "has made it clear to me" that he is "not stuck on House Bill 110."

The Senate Resources Committee is scheduled to hold hearings on the Senate's bill through next week. Stevens said he hopes a measure can reach the House with at least three weeks left in the session.

On other issues, Stevens said the Senate has been focused on education spending. A bill has been sent to the House that would increase the base student allocation, the per-student amount used to determine state funding to school districts.

Senate Bill 171 would set the base student allocation (BSA) at $5,805 in 2012, and raise it $125 each year through 2014, topping out at $6,055. The current BSA is $5,680 per student. The bill would increase the BSA costs by $190,875 the first year, by $198,510 in 2013 and by $206,145 in 2014. Stevens called it is "a reasonable" bill.

SB 171 was referred to the House Finance Committee on Feb. 13.