Action Alert: Testify to Oppose HB 111
Plan to testify Monday, April 17th at 5:00 p.m.

RDC Testimony To House Resources Committee (March 1st)
RDC Testimony to House Finance Committee (March 25th)

Overview:
Despite overwhelming public opposition to increasing oil production taxes, the House majority has passed by a razor-thin margin a fundamental re-write of the state’s oil tax and credits bill. The bill, if it becomes law, would triple oil taxes at low prices, similar to the old, failed ACES tax system, which did the same at high oil prices.

HB 111 is now in the Senate. The Senate Resources Committee will hold a public hearing on the legislation on Monday, April 17^th  beginning at 5:00 p.m. at your local Legislative Information Office. 

The new version of HB 111 would change the state’s petroleum production tax for the third time since 2013 and the seventh time in 12 years. It represents a very significant increase in taxes that was worse than the previous version from the House Resources Committee. It essentially is a re-write of the current voter-approved tax regime, which has attracted major industry investment and resulted in the first year-over-year increase in North Slope production in 14 years..

HB 111 will weaken Alaska’s competitive position for attracting the investment required to develop major new prospects and increase production. The bill is a sharp increase in taxes at low prices, which is a sure recipe for more economic contraction. 

Requested Action:
Please present brief testimony opposing HB 111. Arrive at least 15 minutes early to expedite the sign-in process. Remarks must be concise as testimony is limited to 2 minutes. If you testified earlier on this bill before the House committees, we need you again as Monday’s hearing is before a new legislative chamber and committee. Please encourage your friends and colleagues to speak out against the bill.

If you are not able to testify in person, please call in to: 844-586-9085 at the start of the hearing. If you are unable to testify on the phone, please send an email to members of the Senate Resources Committee and your legislator to let your voice be heard.

Urge the Senate Resources Committee to avoid changing oil tax policy yet again. We have a responsibility to let policy makers know that changing the tax policy so frequently will impact investment decisions and lead to fewer jobs, less production, less revenue to the Permanent Fund, and lower state revenues over the long term. If HB 111 becomes law, the production decline rates of 6 percent or more annually may reappear and Alaska will end up with a much smaller economy. 

For a list of Legislative Information Office locations, visit: http://akleg.gov/lios.php

Point to consider for your testimony:
•The new version of HB 111 will push Alaska to the bottom of the competitive rung and will drive away new investment dollars, forcing more job loss, deceasing oil production and deterring investment in Alaska’s oil fields.
•Alaska cannot increase oil production by increasing taxes. Alaska cannot tax away the industry’s incentive to invest and still expect to have a sustainable economy.
• While it is tempting to collect every dollar possible from the oil industry through increased taxation, doing so makes Alaskan projects less competitive with those elsewhere and robs the companies of the investment capital they require to expand existing fields and discover new ones. In the long run, increasing taxes on the industry will do more harm to Alaska’s economy. Conversely, more investment means more production, more revenue for the state, and more jobs for Alaskans. 
• The oil industry has traditionally accounted for 88 percent of Alaska’s General Fund revenues and is the largest property tax payer in the North Slope Borough and Kenai Peninsula Borough. Even in these times of low oil prices, oil provides 67 percent of the state’s unrestricted revenues and supports one-third of our economy.
• Alaska cannot control the price of oil, but it can control what kind of business climate we create here: one that encourages continued investment and more oil for TAPS. 
• Under the current oil tax system, Alaska’s share is higher than the producers’ at every price point. In fact, the state gets paid even when companies are operating at a loss because it still collects royalties, property tax, and a gross production tax. 
• Oil tax reform in 2013 made Alaska more competitive and a more attractive place to invest. Oil companies have responded with over $5 billion in new projects. Alaska saw no production decline in 2014, a slight dip in 2015, followed by the first production uptick in 14 years in 2016. Oil tax reform played a significant role in the production increase in 2016.
• New oil plays by ConocoPhillips, Caelus, and Armstrong could trigger a major reversal in TAPS throughput by adding up to 550,000 barrels per day of new oil into the pipeline with commensurate economic benefits across the state. Maintaining a stable tax policy with incentives to invest is key to seeing these projects come into production.
• It takes an annual industry investment of $3 to 4 billion to keep production levels stable on the North Slope. This requires a durable and competitive tax policy to fund Alaska projects.
• The Department of Revenue conceded HB 111 represents a significant tax increase, but has failed to produce any models of economic impacts to jobs, oil production or the state’s economy.
• At $70 oil, HB 111 would increase taxes by approximately $2.5 million per day or about $900 million a year at current production levels. That’s about what it would cost ConocoPhillips to build the Greater Mooses Tooth-1 project in NPR-A.