State seeks oil taxes consultant

JUNEAU — The Parnell administration, criticized for rushing a bill into the special session this year that some lawmakers considered ill-conceived, is seeking a new consultant to advise it on oil and gas taxes.

The Department of Revenue is soliciting proposals for a consultant to provide expert economic analysis. The consultant will be asked, among other things, to identify issues with the current oil and gas tax structure that might limit industry investment in the state and to make recommendations for improving the existing system.

Revenue is “not automatically jumping to, ‘We see a problem.’ We do see a problem, but we want them to come to us, with what they see the issues are and some proposals and fixes that might be possible,” deputy Revenue commissioner Bruce Tangeman said Friday.

Gov. Sean Parnell, who sees cutting production taxes as a way to boost industry investment and declining oil production, failed in efforts to get his oil tax-cut plans past the Legislature during regular and special sessions this year and last. 

The proposal quickly put together by the administration before this year’s special session — building off a tax break on new oil production passed by the Senate near the close of the regular session — was criticized by lawmakers in both parties as ill-conceived. Some lawmakers also deemed Revenue Department officials, who carried the bill, unprepared.

It isn’t unusual for either the administration or Legislature to hire outside consultants to aid in work on highly technical oil and gas issues. Senators, who took the lead on oil taxes this year after refusing to act on a Parnell tax plan last year, looked to consultants as they worked to draft an oil tax plan. The state also recently extended for six months a contract it has had with Gaffney, Cline & Associates, Tangeman said.

The goal with the solicitation is to “get a fresh perspective on the situation Alaska’s in,” Tangeman said.

The contract would run for two years, beginning Aug. 20, with an optional one-year renewal. The budget for the work is estimated between $400,000 and $700,000, though Tangeman said Friday he’s not sure how far that money will stretch. He said it’s probably not enough to last until this time next year.

“We do see this (oil taxes) coming up next year, but the funding is limiting us right now to how far down this road we can walk,” he said.

Besides oil taxes, which remain a top priority for Parnell, the Legislature also could face issues related to a gas pipeline project. Parnell has said that if all the milestones he has set out for a project are accomplished, the Legislature can take up the issue of gas taxes next year.

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