A panel that would be involved in any tax-law changes, the Senate Finance Committee, is spending this week and part of next trying to get to the bottom of the matter. The committee has scheduled hearings almost every day on oil production and jobs, tax deductions and tax credits.
The Finance Committee isn't scheduled to hear any particular bill rolling back taxes at this point. It's also sitting on dozens of other bills during the period set aside for the oil and gas tax review.
"Depending on the outcome of the presentations and the analysis, there may or may not even be a bill," said state Sen. Bert Stedman, a Republican from Sitka who co-chairs the Finance Committee.
The oil industry has been bombarding the state with advertisements about lost jobs and business as a result of the 2007 tax bill known as ACES, or Alaska's Clear and Equitable Share.
Republicans in both the House and the Senate are proposing big oil-tax rollbacks. One, state Rep. Mike Kelly of Fairbanks, wants to give oil producers a 10-year break on taxes for oil from new development -- a tax holiday for new oil in the pipeline, he said earlier this week. Gov. Sean Parnell is proposing tax credits, but not a rollback of the tax on profits.
"You've got to do the analysis before the conclusion. My concern is that there are too many conclusions and not enough analysis," Stedman said.
On Tuesday, an economist with the state Labor Department presented the Finance Committee with charts showing that monthly oil industry employment in Alaska grew by about 5,000 jobs between January 2005 and July 2009, when it topped 13,000.
But over the last half of 2009, Alaska oil industry employment began to edge down, and the department predicts it will decline by about 3 percent this year, compared to job losses of .4 percent overall, said Jeff Hadland, an economist and research supervisor with the Labor Department.
Major oil company employment was steady, with 3,700 to 3,900 employees in recent quarters; the dip came in employment by oil-field services contractors, Hadland told senators.
At the same time, unemployment claims from oil workers are way up, from 1,084 in 2007, the year ACES passed, to 2,844 in 2009, according to the Labor Department. With the national recession, unemployment was up for all industries, though not to the same degree. Many of the laid-off oil patch workers in Alaska are plumbers and pipe fitters, roustabouts and electricians, Hadland said.
The Labor Department did not analyze why people lost jobs. Hadland said that there can be high overall employment at the same time large numbers of workers are being laid off if oil companies are switching from one project to another. But some lawmakers wondered if oil companies are simply replacing Alaskans with out-of-state workers.
The debate is far from over.
House Speaker Mike Chenault, R-Nikiski, has been outspoken in his belief that the 2007 oil tax increases are hurting the industry and Alaska. He said in an interview Tuesday evening that legislators' analysis needs to go deeper, to examine what sorts of jobs are being lost or gained to understand whether the 2007 tax increase is affecting new exploration.
He pointed out that the oil industry had to beef up maintenance after corroded pipelines at Prudhoe Bay sprung big leaks in 2006.
"I think those projects are masking the true effects of ACES," Chenault said.
Some Democrats say they haven't yet seen evidence of the need to change the 2007 tax on profits. As they see it, jobs are up, investment is up and profits are high, said Juneau Rep. Beth Kerttula, who leads the Democrats in the House.
"We're viewing it with skepticism but it doesn't mean that if there's evidence, if there's information, if there's some good reason to make -- whatever it is -- a tweak or a change, that we won't listen," Kerttula told reporters Tuesday morning.
State Rep. Les Gara, an Anchorage Democrat, said lawmakers are all concerned about declining oil production, but it doesn't mean that lower taxes will encourage more drilling. When taxes were extraordinarily low, he said, oil companies invested less than now.
One of the tax rollback measures is Senate Bill 267 by Anchorage Republican Sen. Lesil McGuire. She said she introduced the bill, which mirrors one in the House, as a starting point. Her goal, she said, is to find a way to increase oil production, and jobs. Her bill has its first hearing today in the Senate Resources Committee, which she co-chairs.
"What would it look like, if we left (the tax) the way it was, five to 10 years from now?" asked McGuire. "Would we have a steep decline (in jobs)?"
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