News from the Alaska State Legislature, the Office of Senator Giessel
For Immediate Release: June 29, 2017
Senate Majority Offers Path to End Oil & Gas Cash Payments
ANCHORAGE – Today, members of the Alaska Senate Majority offered a path to end cash payments to oil and gas companies.
"We believe it is urgent to pass legislation ending these cash payments," said Senate President Pete Kelly, R-Fairbanks. "The state will bleed at least one million dollars per day between now and the end of the year – that could pay for seven troopers for an entire year – unless we act now."
With little more than two weeks remaining in the second special session called by Gov. Bill Walker, Senators are urging their colleagues in the Alaska House to come to the table and end a program both sides agree the state can no longer afford.
"Under this proposal, the state will stop offering cash payments for credits beginning July 1, 2017," said Sen. Cathy Giessel, R-Anchorage, chair of the Senate Resources Committee. "We must stop this cash bleed. It will save us at least $200 million between now and Dec. 31 – possibly more."
The Senate passed a bill to end cash payments to oil and gas companies on May 15, but the House failed to concur. In an effort to strike compromise, the Senate adopted several changes, including a provision to enact "100 percent ring-fencing."
The provision would mean that 100 percent of losses incurred on a lease stay with that lease until it enters production. Then, the losses could be applied against the taxpayer's overall segment (North Slope or Cook Inlet). As a result, the state will, essentially, require production before allowing loss deductions.
"The Senate is prepared with a proposal to move forward on, reach compromise, and end cash payments, today," said Sen. Giessel. "We are calling on the House to join us and take action. We can and must do our job, now."
For more information, contact Senate Majority Press Secretary Daniel McDonald at (907) 465-4066.