JUNEAU, Alaska — Alaska legislators have voted to cut oil and gas drilling subsidies from the budget.
The compromise proposal was approved late Saturday in an 18-0 vote in the Senate and a 33-6 vote in the House, the Juneau Empire reported (http://bit.ly/2tfVGEx). The move will save the state nearly $200 million per year within three years, officials have said.
Gov. Bill Walker said in a statement that the approval is a “meaningful step to shore up our financial situation.” But he acknowledged that “the work is not yet finished.”
The state has a deficit of over $2 billion per year while its Constitutional Budget Reserve will have only $2 billion left at the end of the current fiscal year. Lawmakers have been looking at cutting spending, raising taxes or drawing from the Alaska Permanent Fund to solve the issue.
The compromise proposal creates a system of tax write-offs for drilling companies. Under the proposal, they will be able write off drilling expenses on their future production taxes. Companies that do not produce oil from sites where they drilled will not be eligible for the write-off.
The Alaska Oil and Gas Association condemned the bill, claiming that it would keep oil and gas drilling operations away in the future.
A fiscal analysis of the bill by the Alaska Department of Revenue found that the state will not save any money from the proposal in the current fiscal year. But for fiscal year 2019, it will save $95 million and even more the following year, $185 million.
Walker is expected to sign the bill.
Information from: Juneau (Alaska) Empire, http://www.juneauempire.com