JUNEAU -- The big fight in the Alaska Legislature this year over oil taxes is beginning to play out in the Senate Resources Committee and it may be epic.
A new version of an oil tax bill was unveiled Friday afternoon -- with 17 amendments or related ideas right off the bat. The committee is meeting again today to discuss them.
The measure rolls back oil taxes but not as much as Gov. Sean Parnell wants.
The Resources Committee is taking the lead in crafting a Senate alternative to tax legislation pushed by Parnell that cleared the state House last year, only to stall in a skeptical Senate.
The resources panel contains a lot of muscle: Senate President Gary Stevens, Finance Committee co-chairman Bert Stedman, two other Republicans and three Democrats. Sen. Joe Paskvan, D-Fairbanks and committee co-chairman, is leading the debate. Other senators are sitting in and aides to House members are watching.
"Alaskans expect that we will approach this topic as a sophisticated owner of a world-class resource," Paskvan said at the start of Friday's hearing. "This topic is a big math problem that does need to be looked at."
Under Alaska's current tax system, a Palin-era measure known as Alaska's Clear and Equitable Share, or ACES, the tax rate gradually goes up as oil prices rise. The state calls the increase "progressivity."
While Parnell has proposed capping taxes on oil production at 50 percent -- 40 percent for new fields -- the proposal outlined in Senate Bill 192 Friday would set the top rate at 60 percent. The tax -- essentially a profits tax -- is applied after certain operating and capital expenses are deducted. Producers also get to claim various tax credits.
Under ACES, the top rate is 75 percent.
Parnell and Alaska's oil producers say taxes must be lowered to spur oil production and halt a trend of decline in aging North Slope fields.
Critics call the governor's proposal corporate welfare, a loss of $8 billion over five years to the state treasury. Supporters counter that money could be recovered if oil production increased.
The state hasn't yet analyzed the lost revenue under the Senate version. A Washington, D.C.-based oil and gas consulting firm, PFC Energy, is creating models of how different proposals being floated would work in reality.
Some 90 percent of the revenue to the state's general fund comes from oil taxes and royalties. State spending in almost every area is supported by oil revenue: roads and schools, state troopers and health care for the needy.
The 16 Democrats and Republicans who are part of the organization that runs the Senate met privately earlier in the day Friday to set their oil strategy in general terms. They agreed that any reduction in taxes must lead directly to more investment by the oil industry and that the state and oil producers must share profits.
All the specifics are being discussed in public, Paskvan said.
On Friday, senators discussed a wide range of proposals, though not those that directly change the tax rate or amount. That's for Saturday's meeting.
One of the bigger ideas -- pitched by Anchorage Democrats Hollis French and Bill Wielechowski -- would give oil companies a $10-a-barrel allowance off their taxes for oil produced above the level from the year before. That would be a good way to encourage more production, French said.
Between them, French and Wielechowski are proposing nine different amendments to the Senate tax bill.
Another would let the state invest directly in oil field development, becoming a partner with the oil companies. Maybe Alaskans could invest directly too, perhaps through the Permanent Fund dividend program, under the proposal.
"Pick, click and drill," French said, a play on the existing "Pick. Click. Give." program in which PFD applicants can donate to charities online.
While the state has made poor investments before -- think of the fish plant-turned-church, or the Delta barley project -- that happened when it was investing on its own, not as a partner with an existing, successful industry, French said.
Another of the French-Wielechowski measures would reform the way the state leases its land for oil exploration and development. Oil companies bidding for leases would have to submit plans of development that the state would then evaluate to ensure it got the best deal. And the state Department of Natural Resources would have to make sure the oil companies did the promised work, under the proposal. As it is, many leases are essentially dormant.
Sen. Lesil McGuire, an Anchorage Republican, also is pitching several ideas, including one that would create a new nine-member board that would evaluate the state's competitive position in oil and gas development.
Stevens, the Senate president and a Kodiak Republican, said the process of crafting a new tax structure is taking longer than he anticipated but he wants to ensure the work is done well. Except for Sunday, the Senate Resources Committee is scheduled to meet daily -- sometimes twice a day -- on the measure through March 3. It should finish the first week in March, Stevens said.
The bill still would have to clear the Finance Committee and pass the full Senate as well as the House.
House Speaker Mike Chenault, R-Nikiski, said his group will need time with to deal with the tax issue too.
"I won't be in a hurry," he said Friday. "I won't be forced to have it done in a week."
The ACES tax bill was passed in less than a month, he noted. "But it seems like every time we do something quickly, there's unintended consequences."
Paskvan said he'll propose a new version of the Senate bill after all the amendments are heard rather than subject each one to an up-or-down vote.
If their ideas don't make his cut, senators still can try to amend the bill later.
Contact Lisa Demer at 257-4390 and ldemer@adn.com.
By LISA DEMER
Anchorage Daily News