Mid-July, and still no adjournment of Legislature

The extended state legislative session continued June 15 with no resolution in sight, or to a complex dispute over state oil and gas taxes that is the main holdup to adjournment. There had been hopes for an agreement last Monday, and then Wednesda, but a House-Senate conference committee on House Bill 111, the tax bill, held that day ended with no agreement.

Meanwhile, bills needed to enact a state fiscal restructuring, mainly Senate Bill 26 allowing use of some Permanent Fund earnings for the budget, are held up by the disagreement. Basically, SB 26 as well as the now-enacted state operating budget place a cap on Permanent Fund Dividends, the annual payment to citizens, and Democrats controlling the state House want the oil tax changes as part of that deal. Also stuck in limbo is the state capital budget, which is needed to provide state matching funds for federal construction dollars. Without that passed the state cannot let new construction contracts or do design and engineering for new projects.

Both the House and Senate are grudgingly making concessions on the oil legislation but the remaining dispute is a big one. It is over how deductions against future production taxes liability for net operating losses are handled. The House would limit the deduction while the Senate would be more generous, allowing the deductions to be made against future tax liability with no limit. The House, meanwhile, backed away from ending per-barrel oil production tax credits affecting existing slope producers, while the Senate agreed to a House plan to “ring-fence” deductions, or require that they be taken against tax liability from only certain producing leases verses against tax liability on all state leases held by a company taxpayer. Cash payments for tax credit would end under either the House or Senate proposal.