Senate Finance Opens Hearings on Oil Tax Rewrite

The Senate Finance Committee today opened its hearings on a bill setting up a new oil tax regime.  The bill comes as a small, but new response to the House’s version of tax cuts that passed last year.

The Senate Resources Committee took three weeks to put together its version of an oil  tax bill.  And in explaining and justifying the decisions that went into the new plan – Fairbanks Democrat Joe Paskvan summarized the notes, studies and reports he had assembled on a very complex issue.

One of the many comments that I have heard is, Why can’t we just poke another hole in the ground and get more Well.    If it was only so simple.

The tax rewrite is prompted by the governor’s push to increase the amount of oil produced for the TransAlaska Pipeline that has been in decline for many years.  Paskvan presented a 2011 report from the state’s Department of Revenue that indicates the future is not necessarily that bad.  He said the report shows that  since the Murkowski P-P-T tax regime and the Palin Aces tax regime went into effect,  the industry has increased capital investment and exploration for new oil – even while production has declined.

The number of companies filing annual tax returns doubled between 2006 and 2009.  And the reason why I believe the Commissioner of the Department of Revenue identified that is in relationship to the passes of P-P-T or Aces, it seems to have attracted new operators or new entrants into the central North Slope Region of the state of Alaska.

The Finance Committee is not solidly behind the Resources bill.  Anchorage Republican Lesil McGuire is a member of both committees – and opposed the measure that left the Resources Committee.   And, while Paskvan presented an eighty six page summary of committee documents, McGuire challenged it as only presenting one side of the issue.

This is a dialog.  And this committee is built on that foundation.  And this is one member of the Senate’s perspective and he’s laying his foundation for that perspective.  But others of us may choose to use different charts, different graphs and different information – even from exact web sites.

The committee has set aside every morning for the next two weeks – at least — to study and take action on the bill.