Bill Bars Deductions for Improper Maintenance
Senate passes Wagoner’s SB 80

Juneau – The Senate unanimously passed a bill today preventing oil companies from deducting costs for repairs due to lack of maintenance or improper maintenance of property or equipment.

“This bill has finally made its way through the Senate, three months after it was introduced in February,” said bill sponsor Sen. Tom Wagoner, R-Kenai. “I’m extremely concerned that there is not enough time left this session for the bill to be properly considered in the House and adopted this year.”

Wagoner’s bill has companion legislation, House Bill 128, sponsored by Rep. Kurt Olson, R-Soldotna, which has also faced an uphill battle despite being sponsored by 20 of 40 representatives.  Typically, the active bill (SB 80) is directed to the same committee as the companion bill – which would be House Finance.

But Wagoner notes that this is very late in the session, with only 7 days left, and he is uncertain whether the House Finance Committee will have time to address the bill.

“Since this bill was so late in passing the Senate, I’m hopeful the House will be able to schedule it in their Finance Committee,” said Wagoner.  “Otherwise, we will probably have missed our window of opportunity and it could cost the state tens of millions of dollars with just the recent Prudhoe Bay incident.”

For the purpose of determining the value subject to tax, the petroleum production tax enacted through House Bill 3001 in August of 2006 allows producers to deduct costs associated with the production of oil and gas from the gross value at the point of production. Senate Bill 80 prevents oil companies from deducting expenses resulting from improper maintenance. Similar language was offered as an amendment when HB 3001 was under debate in the Special Committee on Natural Gas Development in August, but failed by a vote of 5 to 7.

Fact Sheet Attached.
http://www.aksenateminority.com/pdfs/25/sb0080.pdf
Please Note: A sound actuality by Sen. Wagoner can be downloaded from the following link:
http://www.aksenateminority.com/media/25/wagoner2007051001a.mp3