Bradners'

Alaska Legislative Digest

November 1, 2007     

Oil and Gas Bulletin

Comments? E-mail: timbradner@pobox.alaska.net

French threatens subpoena to get industry’s numbers

Senate Judiciary Committee Chairman Hollis French (D-Anch.) said he will “probably” seek Senate President Lyda Green’s permission to issue a subpoena to force North Slope producers to disclose Alaska-specific data if the companies’ representatives are not responsive to questions at his committee hearing today. French noted that he raised the issue with Green (R-Wasilla) before the Thursday session began.

Throughout the special session company representatives have questioned data presented by the Palin administration or used Department of Revenue numbers in their own presentations, but refused to provide their own figures.

Under state law a committee chairperson must have the support of a majority of the committee members and the agreement of the presiding officer to issue a subpoena. Sen. Green could not be reached last night for comment. Senate Majority Leader Gary Stevens (R-Kodiak) said he had not heard any discussion of a subpoena to date and suggested the bipartisan majority caucus would need to be “comfortable with that” before the order were issued.

Senate Judiciary’s bill expected Friday: French says tax rates will be “high”

The Senate Judiciary Committee should complete its information gathering Thursday morning and give legislative drafters about 24 hours to write a committee substitute for SB 2001 for review at a Friday afternoon hearing. Chairman Hollis French said the bill will include increases in both the Petroleum Profits Tax base rate and the progressivity surcharge rate and slope, among other amendments. He said he had not settled on specific numbers but that they would be “high.” After Wednesday's “gross-net smackdown” hearing, French, who has backed a return to a gross production tax system, said he is “a lot more net than I was this morning.”

French said he is still concerned with the state’s ability to audit net profits tax returns and may offer amendments that include “a long statute of limitations and a strong fine structure for noncompliance” with reporting requirements. Sen. Bill Wielechowski also indicated that Wednesday’s presentations by state officials and consultant Gaffney, Cline & Associates also moved him toward support of a net profits tax. Wielechowski said Gaffney, Cline supported suggestions last year from another consultant, Daniel Johnston, that a 30 to 35 percent PPT base rate and .375 progressivity rate on North Slope legacy fields (Prudhoe Bay and Kuparuk) would not reduce Alaska’s attractiveness for investments. Another Judiciary member, Sen. Gene Therriault (R-North Pole), said he is “comfortable” with a 25 percent PPT rate but had not settled on a progressivity number.

Senate minority Republicans propose CBR repayment plan

The Senate’s Republican minority released a proposed amendment to the ACES bill that would direct 50 percent of annual revenues from the PPT progressivity surcharge to begin repaying the $5 billion that has been borrowed from the state’s Constitutional Budget Reserve in previous years of low oil revenues to fund deficits in the general fund. State law requires the money to be repaid but the L:egislature has never done so. Drafted by Sen. Fred Dyson (R-Eagle River), the amendment would put some $583 million per year in the CBR with oil prices in the $90 per barrel range. Sen. Therriault said he may offer the amendment during Senate Judiciary Committee mark-up of the governor’s bill on Friday.

Documents and data are available on the Internet

The Legislative Budget and Audit Committee is posting all presentations, written testimony, letters and other data submitted during the special session on the Internet at:

http://lba.legis.state.ak.us/

Thursday’s schedule

• 9 a.m. House Resources Committee: presentations from ExxonMobil, Anadarko, AOGA, And Pioneer Natural Resources.
• 9 a.m. Senate Judiciary: litigation and settlement issues, interdepartmental information sharing, Dept. of Revenue wrap-up.
• 6 p.m. Senate Judiciary: public testimony on ACES proposal in Juneau, at local Legislative Information offices or by calling 1-888-295-4546.

Legislative Digest is a paid-for private subscription service. Our special session Bulletin is distributed free as a public service, and is supported by special grants from a group of subscribers. Editors: Mike and Tim Bradner. Contributing writer: Bob Tkacz.  Interested in getting the regular Legislative Digest and Alaska Economic Report? Contact: mbradner@GCI.net or fax at: (907) 522-1761.