Governor Walker Introduces Second Slate of Alaska Economic Recovery Plan Legislation

Press Release

Governor Bill Walker today introduced legislation to allow the State to pay down its balance of cashable oil tax exploration credits owed to the small independent oil explorers at a discounted rate so there would be no additional cost to the State. The bill is the second part of Governor Walker's Alaska Economic Recovery Plan, designed to remove uncertainty and instability by injecting money into the economy, creating jobs for Alaskans, and paying down outstanding liabilities. Earlier portions of the Plan include the $1.4 billion Alaska Economic Recovery Act to address the state's deferred maintenance liability.

"I am proposing this bill to achieve fair resolution to the small independent oil exploration company tax credit purchase program, and to free up capital for the small companies who participated in the program to resume investing in future oil exploration leading to additional production," Governor Walker said. "Passage of this bill would allow the state to move past the uncertainty on these tax credits and focus on growing Alaska."

Under the Governor's proposal, the state would issue bonds to pay back the remaining $800 million in cashable oil and gas exploration tax credits, plus up to $200 million that are expected to accrue in the next 2-3 years before the last credit programs were sunsetted. That balance accrued as Governor Walker used the existing statutory appropriation formula for repaying credits in the absence of a complete fiscal plan.

The bond proposal allows the state to begin paying off the existing credit balance almost immediately in a cost-neutral manner. The Department of Revenue would buy back the credits at a discounted rate to finance the bond proposal, meaning that the state would not have to spend any additional money to pay off the existing credit balance.

Last year, the Legislature passed House Bill 111, officially ending the cashable tax credit program. The Governor's legislation allows the state to finally close the book on that program in a fiscally responsible manner while providing small oil and gas companies with the capital to continue investing in building a Stronger Alaska.

Source