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Alaska Senate approves Parnell's multibillion-dollar oil tax cut

Pat Forgey
"When you make a colossal financial error like this, its going to burn through our savings," said Sen. Bert Stedman, R-Sitka, about the Alaska Senate's passage of SB-21. Whaley, Frank H. photo. AMRC. Wien Collection

The Alaska Senate has given final approval to an oil tax cut approved by the House of Representatives, handing Gov. Sean Parnell a big victory and the state's big oil producers billions in savings.

Sen. Cathy Giessel, R-Anchorage, said Senate Bill 21 would spur new oil production for the state and jobs for a generation of Alaskans, but critics called it a "historic giveaway."

Giessel attacked the current ACES oil tax for its focus on exploring to find new oil to go into the trans-Alaska pipeline system, and said Alaska should instead be putting its emphasis on faster production of what's already been discovered.

Senate Bill 21 instead focuses directly on getting known oil into the pipeline quickly.

"It's not about exploring, its not about the state paying about a billion dollars in (tax) credits next year for no produced oil," she said. "It's about produced oil."

To get the full impact of Senate Bill 21's tax savings, companies will have to produce what's considered "new oil," she said, which might include new reservoirs in Prudhoe Bay or elsewhere that are at different levels from existing reservoirs.

Some of that known oil isn't being produced, she said, because of Alaska's high taxes.

New tax revenues from the extra oil will likely prevent a budget crises that is now foreseen, if nothing else changes, she said.

Senate Bill 21 "pushes off, and may actually push away, that fiscal cliff," Giessel said.

But the bill's opponents said that it would do the exact opposite.

"When you make a colossal financial error like this, its going to burn through our savings," said Sen. Bert Stedman, R-Sitka.

He called the bill "a race to the basement," which will result in dramatic budget cuts.

The vote to concur with House of Representatives approval of an amended version of Senate Bill 21 came in the afternoon, about a half-day after the 2 a.m. passage of the bill in the House.

Senate Bill 21 had earlier passed the Senate 11-9. Sunday's concurrence vote was 12-8, with Sen. Donny Olson, D-Golovin, the additional "yes" vote. He did not speak during the floor debate.

The action on the last day of the 90-day legislative session is a a success for Parnell that took him years and a changed Legislature to earn. The bill now goes to him for his signature.

Contact Pat Forgey at pat@alaskadispatch.com