Senate to return to Juneau to focus on oil and gas tax credits

Sen. Cathy Giessel, R-Anchorage, testifies before the Senate Finance Committee in April. She would like to see the end of oil and gas tax credits for which companies receive cash payments. (Photo by Skip Gray/360 North)

The Senate plans to reconvene in Juneau on July 10 to try to overhaul oil and gas credits. But it’s not clear if there’s room for compromise with the House, which has different goals.

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Neither chamber has held a voting session since it passed the state budget on June 22. But senators said they want to make changes to oil and gas taxes quickly, starting with ending the ability for companies to receive tax credits in the form of cash payments.

The House wants to increase the amount that oil and gas companies pay in taxes.

Anchorage Republican Cathy Giessel said the change proposed by the Senate is more urgent than the House’s proposal.

“That’s like a Band-Aid change,” Giessel, a nurse practitioner, said. “But the cash payments to oil companies, when the state itself is in deficit revenue, is actually urgent. It is the hemorrhaging of cash.”

Under the Senate plan, oil and gas companies would be able to reduce the amount their liable to pay in taxes in the future, rather than receive cash payments sooner.

Giessel and other senators said Thursday that they want to have changes go into effect on Saturday, six months sooner than they previously proposed.

Anchorage Democratic Rep. Geran Tarr said the Senate bill doesn’t do enough.

“We don’t want to just change the name of the incentive program, but have it cost the same,” Tarr said. “If it costs the same, it’s not going to work.”

Senators also want to limit the tax benefits for spending money on an oil field to reduce the tax liability from that same field. Gov. Bill Walker supports the change, known as “ring fencing.”

The trade group Alaska Oil and Gas Association expressed concern with both the ring-fencing proposal, and with the idea of moving up the end of tax-credit cash payments.

Walker added the oil and gas legislation, House Bill 111, to the special session that is scheduled to end on July 15.

The Legislature also hasn’t passed a capital budget for the 12 months beginning Saturday. Most lawmakers have returned to their homes from Juneau.