Stoel Rives tax partner Jonathan Iversen authored an article for State Tax Notes titled “The Debate Over the Alaska Tax Credit Bond Program.” In Iversen’s latest article as a columnist for the publication, he examines H.B. 331, which was passed by the State Legislature to establish the Alaska Tax Credit Bond Corp. in the Department of Revenue and further authorizes it to issue up to $1 billion in bonds to finance oil and gas tax credit purchases. However, a lawsuit brought in superior court challenging the constitutionality of the law has led the DOR to put operation of the bond program on hold until the litigation is resolved.
H.B. 331 creates the bond corporation as a public corporation to finance the purchase of tax credits designated in certain sections of the Alaska Statutes, including all rebatable oil and gas production tax credit certificates for specific credits. Provisions included in the bill were meant to address possible attacks on its constitutionality regarding violations of the statutory requirement to not dedicate future revenue for a specific purpose or the limitations on contracting for state debt.
The lawsuit challenged the bill on those two bases, and a judge of the Juneau Superior Court dismissed the complaint based on a failure to state a claim on which relief can be granted. An appeal to the Alaska Supreme Court has been filed.
Iversen concludes: “My next article will include an update on the constitutional challenge to H.B. 331 and a legislative update. Notwithstanding the multiple changes to the production tax over the last 14 years … the threat of additional tax changes looms — while the explorers and small producers that invested in reliance on the rebatable tax credit program continue to endure the lack of meaningful payment for them.”
Read “The Debate Over the Alaska Tax Credit Bond Program” (PDF), published March 25, 2019.