Seaton Has Reservations About Oil Tax Reform Bill
With just a few days left in this year’s session of the Alaska State Legislature, Senate Bill 21 – the controversial oil tax reform bill that is now in the hands of the House Finance Committee – is still the center of attention in Juneau. Homer Representative Paul Seaton got a close look at the bill before it passed out of the House Resources Committee last week.
Proponents of Senate Bill 21 say that it’s a good start toward making Alaska more competitive with other oil-producing regions of the world.
Seaton says he likes certain parts of the bill but thinks it gives much in the way of tax breaks to oil companies without any guarantee of increased production. He says the decisions made by international oil companies are influenced by many more factors than just Alaska’s tax system.
"All of the real consultants that we've had over the past number of years say that oil taxes are really a minor issue," says Seaton. "It's ... what it looks like to the board of directors of these integrated, international oil companies and what their vision for the future is around the world."
Seaton points out that in Alaska’s largest oilfield – Prudhoe Bay – the three co-operators – BP, ExxonMobil and ConocoPhillips – all have to agree on every new project and if just one of the companies vetoes a project, it’s effectively dead. Seaton says restructuring the oil tax regime is unlikely to change that.
Still, he is hopeful that if SB 21 becomes law, it could encourage new development.
"if not, then we should have some kind of a reviser in there that says that ... if these don't happen, then the taxes change back in some way," he says. "That would've ... protected the state better."
Seaton likes a part of the bill that provides a sliding scale for tax credits based on the price of a barrel of oil. But he thinks that at low oil prices – below $100 a barrel – the state is giving away too much.
He is still hopeful that that part of the bill will be changed, either in the House Finance Committee or on the House floor.
Seaton says he has received lots of feedback about SB 21 from his Kenai Peninsula constituents and was glad to hear many of them testify about it during a public hearing Tuesday night.
If and when Senate Bill 21 is passed out of the House, it will likely head to a conference committee, which will be charged with hammering out a compromise between the House and Senate versions.
The legislature will have to act quickly, though, as it faces numerous big decisions – including the operating and capital budgets – that will have to be made before the end of the session Sunday.
Representative Paul Seaton made his comments on the “Coffee Table” program, which aired Wednesday on KBBI and KDLL.