House told to take its oil tax credit compromise and “put it in the shredder”

This week featured plenty of talk that a deal was coming together to end the spendy cashable oil tax credit program. A deal could be reached by the end of the special session on Saturday, they said. Just a last few points to hammer out, they said.

But just a few minutes into the House Bill 111 conference committee meeting on Wednesday, it was clear all that talk was just talk.

With the three committee Democrats in Anchorage and the three committee Republicans in Juneau, the meeting that was supposed to be the debut of a deal was a disaster.

In a very non-compromise move, the House and Senate both unveiled their own competing versions of House Bill 111. Legislators sparred over the rules of the meeting, spent plenty of time picking apart the other’s proposal and spent rest staking out their political differences on oil tax policy.

The Senate version of the compromise deal appears to be close to what Gov. Bill Walker proposed as a compromise, but the House version went beyond the limited scope of the committee. The House proposal seeks to repeal the cashable oil tax credit program and net operating loss credits without a replacement.

The meeting got off to a poor start when Sen. Bert Stedman, R-Sitka, asked just what rules the committee was operating under to allow such a dramatic rewrite of the bill. The Senate met in Juneau that morning to give the committee broad power to rewrite the bill, while the House had not.

Rep. Geran Tarr, the Anchorage Democrat who chairs the committee, fumbled through her response, saying that she and Sen. Cathy Giessel had an agreement about the meeting before offering to cancel the meeting outright.

“I’m asking you as a chairwoman to explain to the public what you’re doing,” he said at one point during the exchange.

The committee continued on with the understanding that no action would be taken on either version of the bill.

Once the bills got into discussion, Stedman wasn’t kind in his assessment of the House bill. Repealing the credits with a promise for the Legislature to one day return to figure out a replacement would be disastrous for the industry, he said.

“If you want to put the industry in the freezer and shut it down … this is how to do it,” he said. “We need to take this version x with a grain of salt and quite frankly put it in the shredder.”

Even Ken Alper, the director of the tax division who formerly worked for the House Democrats, said he understood why the Senate and industry would feel the House bill “might not a be a completely viable solution.”

The House Majority has got plenty of flack in the end of session for never holding a conference committee meeting on House Bill 111 and after Wednesday’s meeting now we know why.

House reasoning

A deal between the House and Senate was likely never coming together. The House Majority has been hinting since last week that it feels a viable solution to the cash credits is a repeal without a replacement. Behind this position is the desire to keep the issue open to continue pushing for increased taxes on the oil industry, but that’s something the pro-industry Senate simply won’t budge on.

The House Majority is right to say that everyone wants to repeal the credits, but wrong to believe it can be done alone. For the Senate, the industry and most folks familiar with business taxes, no replacement is an unacceptable solution.

Continuing to push the issue as the session staggers on toward day 180 is wishful thinking at best. With an oil tax initiative likely in the works, the House would be wise to settle what it can and end a session that’s making everyone look bad.

The end of the second special session is Saturday.

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