House approves tax break for new gas production

Posted: Friday, May 02, 2003

JUNEAU (AP) Companies could get a tax credit for bringing new natural gas on line under a bill that passed the House on Thursday.

The measure would allow a credit of 10 percent of what a company spends exploring for and developing natural gas supplies south of the Brooks Range. Rep. Mike Chenault, R-Nikiski, sponsored the bill.

Supporters say it will help entice firms to find new natural gas reserves to replace dwindling supplies in Cook Inlet.

Opponents question whether the state could afford the tax break without knowing if it will spur development.

Companies could write off half their state income tax bill in a given year under the plan. They could carry forward the credits for five years, or until the end of 2017.

State petroleum economist Chuck Logsdon said the Revenue Department could not calculate how much the tax credit would cost the state.

He noted the credit could cost the state money, but if it brings new production on line, that could generate new revenue for the state.

There's no way to know exactly how much new activity the bill would create, or if the activity would have happened without the incentive, he said.

The bill passed the House 33-4. Democratic Reps. Ethan Berkowitz and Les Gara of Anchorage and Beth Kerttula of Juneau, voted against it, as did Republican Beverly Masek of Willow.

House Bill 61 now goes to the Senate.

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