Stoel Rives tax partner Jon Iversen authored an article for State Tax Notes titled “Alaska Taxpayers Feel the Heat.” In Iversen’s most recent column for the publication, he provides an update on H.B. 331, which was passed by the State Legislature in 2018 to create a mechanism for the issuance of up to $1 billion in bonds to finance oil and gas tax credit purchases. Iversen also looks at budget tensions created by the impasse over H.B. 331 as well as a push by some state legislators for additional changes to the structure of the production tax.
A lawsuit was filed challenging in two respects the constitutionality of H.B. 331 – that it might violate the requirement to not dedicate future revenue for a specific purpose or violate limitations on contracting for state debt. In January 2019, a judge of the Juneau Superior Court dismissed the complaint based on a failure to state a claim on which relief can be granted. The plaintiff filed an appeal to the Alaska Supreme Court, and oral arguments before the court were scheduled for September, with the court promising to “decide the case expeditiously.”
With state budget tensions running high, the legislature made no appropriation to the oil and gas tax credit fund this year for the purchase of tax credits, but added a placeholder appropriation of an estimated $700 million for the H.B. 331 bond program to the operating budget, which was signed by the governor.
Iversen concludes: “The next installment will include an update on the constitutional challenge to H.B. 331, as well as further discussion about Alaska’s revenue outlook and legislative activity. The discussions about Alaska’s fiscal regime will no doubt be ongoing, as will the uncertainty about payment to the explorers and small producers that invested in reliance on the rebatable tax credit program.”
Read “Alaska Taxpayers Feel the Heat” (PDF), published August 19, 2019