JUNEAU (AP) — Alaska Senate Republicans put pressure on the House Thursday to end a program that financially rewards oil exploration and production, while a key House negotiator cited concerns with the Senate’s proposal and cautioned against a rushed approach.
The House and Senate agree the state can no longer afford providing cashable credits to small producers and explorers. Under the current structure, the state faces a potential credit obligation of about $1 billion between existing demand and demand forecast for next year.
But House majority coalition members have sought broader changes to oil tax policy as part of the credit debate. And they argue the Senate proposal could be costly in terms of future state tax revenue, a concern that Department of Revenue has tried to ease.
Rep. Geran Tarr, an Anchorage Democrat, said if the state isn’t getting a fair share of oil revenue that could mean increased pressure to take money from the earnings of the Alaska Permanent Fund, the state’s oil-wealth nest-egg.
“From our perspective, we feel a sense of urgency to fix the structural problems and be able to understand how oil tax revenue is going to fit into an overall fiscal plan going forward,” said Tarr, a member of the House and Senate conference committee tasked with finding agreement on tax credits.
Work toward that end could be done during the interim, said Tarr, who would like the issue dealt with all at once, rather than piecemeal.
The Legislature has hired oil and gas consultants to assist in their work.
Senate President Pete Kelly, a Fairbanks Republican, said the Senate wants to keep the focus for now on cash credits. He said the Senate plans to return to Juneau on July 10, the last week of the current special session.
“We just encourage the House, get on board. We’ve got to get this taken care of,” Kelly said during a Senate majority news conference in Anchorage.
Gov. Bill Walker last week added oil and gas tax credits to the agenda after lawmakers delivered a state operating budget.
The budget — passed two months behind schedule, under the threat of a government shutdown — had become entangled in a still-unresolved dispute between the House and Senate over how best to address a multibillion-dollar state deficit that has persisted amid low oil prices.
Kelly had earlier questioned how productive it would be to revive the debate on that contentious issue without giving lawmakers time to regroup. On Thursday, he said the time had come to act.
He cited a drop in oil prices and the Senate not getting the budget cuts it had hoped as lending urgency to the situation. The price for Alaska North Slope oil has been below $50 a barrel for nearly all of June.
Sen. Kevin Meyer, an Anchorage Republican, said the public wants action.
“Frankly, the time has come that, you just can’t get the whole enchilada, so to speak,” Meyer said. “You have to go for what we can get.”