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Alaska House sends oil tax overhaul to Senate

  • Author: Nathaniel Herz
  • Updated: April 10, 2017
  • Published April 10, 2017

Anchorage Democratic Rep. Geran Tarr speaks in support of House Bill 111, the House’s legislation to adjust oil taxes and close off companies’ cash subsidies, during floor debate Monday at the Capitol in Juneau. (Nathaniel Herz / Alaska Dispatch News)

JUNEAU — The Alaska House narrowly passed its oil tax bill Monday, sending a wide-ranging measure to the Senate that both scales back companies' cash subsidies and changes the state's base tax rate.

The 21-19 vote on House Bill 111 came along caucus lines, with Anchorage independent Rep. Jason Grenn the one member of the largely Democratic House majority coalition opposing the legislation.

The bill will head next to the Republican-controlled Senate, which has indicated an openness to reduced cash subsidies, but not to adjusting tax rates.

Monday's hourslong House floor debate embodied the same ideological divide.

Members of the GOP minority said they were willing to accept changes to the subsidy program, which would be nearly eliminated under HB 111. But they characterized the rest of the bill as a rewrite of the state's oil tax regime in a way that would discourage investments in new projects.

Anchorage Republican Rep. Chris Birch questions elements of the largely-Democratic House majority coalition’s plan to adjust oil taxes and reduce companies’ cash subsidies during a floor debate at the Capitol on Monday. (Nathaniel Herz / Alaska Dispatch News)

"Make no mistake, this is not a modest proposal," said Anchorage Republican Rep. Chris Birch. "This is a massive tax increase on the industry. This is bad for our economy. It's bad for our community and it's bad for our state."

House Democrats said they're asking the oil industry to help close the state's deficit of nearly $3 billion just as they're asking Alaskans to contribute through a broad-based tax and smaller Permanent Fund dividends.

"Everyone understands that everyone's going to have to give if we have a fiscal solution," said Rep. Geran Tarr, D-Anchorage, who carried HB 111 on the House floor.

The legislation is expected to add $130 million to the state's bottom line in 2019, growing to $325 million by 2023, according to projections by Gov. Bill Walker's administration.